Met Council, Hennepin County reach agreement to close Southwest LRT shortfall

A much-anticipated agreement to close an estimated $272 million shortfall in the Southwest light-rail line's budget was revealed Monday.

Hennepin County, which has already contributed more than $1 billion to the project, would pay 55% of the amount through an existing transportation sales tax under the new pact, according to a council news release. And the Metropolitan Council, the regional planning body building the line, would cover the remaining amount using federal funds.

The agreement is subject to approval by the council and the Hennepin County Board, but Monday's announcement for now eliminates lingering uncertainty over how the remainder of the $2.7 billion project will be paid for.

The 14.5-mile line between downtown Minneapolis and Eden Prairie is about 75% complete, with passenger service expected to begin in 2027. But the state's most-expensive public works project is nearly a decade behind schedule and double its original budget.

The Met Council's announcement did not say how much funding the project actually needs to complete the job and get trains moving. That figure will be included in a new budget for the project that will be sent to federal funders early next year. Council officials declined to comment Monday.

But a report issued last spring by the state Office of the Legislative Auditor, which is probing Southwest's cost overruns and delays, said that amount is about $272 million.

The legislative watchdog's report also stated that through June 30, some $1.2 billion had already been spent on Southwest, most of it coming from the federal government and Hennepin County. The line, which will stop in St. Louis Park, Hopkins and Minnetonka, is located entirely within the county's boundaries.

In several reports, the Legislative Auditor has criticized the Met Council for not being "fully transparent" with the public and legislators about Southwest's burgeoning cost and delays. The probe also claims the council failed to effectively enforce the main contract overseeing construction of the line.

The Met Council news release said its funding will primarily come from federal funds normally set aside for other transportation projects that will be parsed over the next three years. For its share, Hennepin County will tap a longstanding half-cent transportation tax intended to fund transit and road projects.

In a statement Monday, Hennepin County spokeswoman Carolyn Marinan said: "We believe strongly in the long-term value of the Green Line extension to connect residents to opportunities, reduce disparities, combat climate change, and carry our state into the future. This project will bring immense value to our entire state and has already spurred billions in economic development."

Marinan added that the Southwest line "will have transformational benefits for generations to come."

The Legislature this year approved a new three-quarters-of-a-cent regional transportation tax that takes effect in October. The Met Council will glean 83% of the tax revenue, which council officials have said will be used to pay for transit operations and maintenance, along with other transportation projects.

But those proceeds can't be used to bolster the Southwest project until a task force studying the Met Council's current structure completes its work, likely by next February.

The task force is exploring, among other things, whether the Met Council should be an elected body, as opposed to the current structure where members are appointed by the governor. Proponents of an elected body say a debacle like Southwest could have been avoided if the council's members were accountable to the voting public.

The Southwest project has encountered costly difficulties in building a tunnel through the narrow Kenilworth Corridor in Minneapolis, along with the addition of a $93 million crash wall west of Target Field to separate light rail and freight trains, and a station in Eden Prairie.

The project has already received $929 million from the Federal Transit Administration , which raised concerns before construction began about the Met Council's ability to cover unexpected cost overruns, according to the Legislative Auditor.

The news release Monday states that officials with the council and the county "collaborated for several months to define funding sources" that might bridge the budget gap. As Southwest's funds have dwindled, tension has occasionally simmered between the council and the county over which entity would pick up the slack.

After the Met Council revealed Southwest had a budget shortfall of about a half-billion dollars in March 2022, Hennepin County Commissioner Marion Greene — who was then board chair — said it wasn't tenable "for Hennepin County taxpayers to continue to be solely responsible for completing the largest infrastructure project in Minnesota history." Greene was not available for comment Monday.

Hennepin County committed $200 million in August 2021 to support the project's dwindling contingency fund, and then another $100 million last year.

Monday's announcement drew criticism from Rep. John Petersburg of Waseca, the ranking Republican on the House Transportation Finance and Policy Committee, who said "it's unfortunate that taxpayers will be on the hook."

"This is a whole new, never-before-seen kind of debacle — a failure that's too big to fail," said Mary Pattock, a board member of the Lakes and Parks Alliance, a nonprofit that sued to stop Southwest nearly a decade ago.

"We know Southwest can't succeed," Pattock said, "but we Hennepin County taxpayers are being forced to pay for it anyway. And instead of using federal money for services residents will actually use, the Met Council is — wantonly, in my opinion — using it to backfill its own mistakes."