Met Council: Funding to plug Southwest light rail's $534M shortfall to be identified by end of year

The Metropolitan Council expects to reveal by the end of the year how it will satisfy a $534 million shortfall in funding needed to complete the $2.74 billion Southwest light-rail line.

"This gap is something we are actively working on with our partners," Met Council Chair Charlie Zelle said during an hourlong meeting Thursday of the Legislative Audit Commission. "I have confidence we will have an answer by the end of the year. It's important for the project to move forward. It's in the region's best interest."

Zelle declined to identify a potential source for the funding. So far the 14.5-mile line between downtown Minneapolis and Eden Prairie has been funded from federal, state and local coffers.

The bipartisan commission convened Thursday following the release last week of a special review of the Southwest project by the Office of the Legislative Auditor.

That review noted that the cost to build Southwest has more than doubled since 2011 and its opening day has been delayed by nine years, with passenger service now slated for 2027.

A second report, or series of reports, exploring how and why the project ran afoul of projections is expected after the Legislature convenes Jan. 3, according to Legislative Auditor Judy Randall.

Lawmakers on both sides of the aisle clearly were hungry for answers Thursday.

Sen. Scott Newman, R-Hutchinson, chair of the Senate Transportation Finance and Policy Committee, pressed Zelle on whether $534 million will be enough to complete the project.

Zelle noted he wasn't aware of additional costs but that there was still some risk associated with the project, particularly with construction of the tunnel for light-rail trains in the narrow Kenilworth corridor in Minneapolis. "We're hopeful we're on track," he said.

The $2.74 billion project is now more than 60% complete, and Zelle said it would cost "drastically more" to abandon the project now. The report notes that the Met Council has not yet approved a final price tag; at this point, that figure is still unknown.

It is unlikely the Federal Transit Administration (FTA), which funded $929 million of the project's costs, will contribute more. The state is legally prohibited from doing so.

And Hennepin County, which has kicked in nearly $1 billion so far, appears to be digging in against making further contributions; a spokesperson last week said the county had "fulfilled our financial commitment to this project."

One financial wild card is a possible settlement with homeowners in the Cedar Isles condominium complex along the Kenilworth corridor. Residents discovered cracks in their building last winter while the light-rail tunnel was being constructed nearby. The council hired a nationally known engineering firm to investigate, which concluded light-rail construction was not a major cause of the damage.

Newman, who has toured the condo building, said what he saw "was really very troubling. For these folks, probably their largest major asset in their portfolio is their home, and the value of their homes has decreased drastically."

The Met Council and Cedar Isles homeowners currently are engaged in a mediation led by former Minnesota Supreme Court Chief Justice Kathleen Blatz. "This is not about attorneys, it's about doing what's right," Zelle said.

Several lawmakers Thursday wondered why the project had not been audited throughout its decades-long history, a process that they said may have unearthed its challenges sooner.

That sort of oversight, they said, would have likely flagged issues with the tunnel construction in Minneapolis, as well as a crash wall required by BNSF Railway west of Target Field to separate freight and light-rail trains that ended up costing $93 million.

"Clearly there appears to be a lack of oversight with this project," said Sen. Michelle Benson, R-Ham Lake. The legislative auditor's review comes, she said, "after the horse has been let out of the barn. There should have been a structure in place" for an audit.

Zelle responded that the FTA and the state auditor review the project, and that there's been oversight by "engineers within Metro Transit's orbit." He also noted that the Minnesota Department of Transportation, which he formerly led as commissioner, is currently conducting a "peer review" of the project.

"Internal people don't count," Benson said. "The definition of an audit is independence."