Southwest light-rail costs increase by $30 million; hike helps secure federal dollars

A little over a month ago, the price of the Southwest light-rail line increased to $1.74 billion. But in documents submitted to federal transit officials earlier this week, the cost of the embattled project had crept up by $30 million.

Metro Transit officials attribute the increase to an "accounting maneuver" that reflects the value of a recent land transfer from the Hennepin County Regional Railroad Authority along the 14.5-mile route. They say the transfer will help the project get even more money from the Federal Transit Administration, which is already expected to foot half the bill. No changes in the scope of the project have occurred as a result.

But the uptick in the line's price provides fresh fuel to Southwest's critics, who question the project's "accounting sleight of hand. What other such tricks have they or will they play on the public?" asked Mary Pattock, spokeswoman for the Lakes & Parks Alliance, a Minneapolis group that has sued the Metropolitan Council over the transit project.

The regional planning body is overseeing construction of the Southwest line, which will link downtown Minneapolis to Eden Prairie. The price increase still leaves an $18 million budget gap in the project, and about $138 million in state funding is unclear, too.

Mark Fuhrmann, Metro Transit's deputy general manager, said Friday the Southwest project remains a "work in progress. As we do additional design and engineering work, we know more and there are less unknowns. That enables us to refine our cost estimate."

Which is what happened in April, when the Met Council revealed that the then-$1.65 billion price tag had ballooned to nearly $2 billion. That came after further investigation revealed deeper problems with soil contamination and conditions along the route, as well as higher land acquisition costs.

In early July, the Met Council approved $250 million in cuts from the inflated budget, which involved eliminating the final Mitchell Road station and deferring the Town Center station, both in Eden Prairie. Now, the line ends at SouthWest Station, the city's big bus hub.

Policymakers then agreed to a $1.74 billion budget, but that left a $91 million funding gap. Except for Minneapolis, cities along the line — St. Louis Park, Hopkins, Eden Prairie, Minnetonka and Hennepin County — are likely to pitch in cash or land worth $45.5 million to prop up the bottom line. It is expected that the federal government will match those contributions. So far, St. Louis Park, Minnetonka, Hopkins and Hennepin County have anted up $12.5 million.

The Hennepin railroad authority in July donated rail property from Minneapolis to Hopkins worth $30 million to the project. Half of that amount will augment needed local contributions. But that still leaves a funding gap of $18 million.

Hennepin County Commissioner Peter McLaughlin said, "These numbers move around with these big construction projects. But we're on track to get this thing done."

In July, Hennepin County said that the federal government would fully match the $30 million value of the railroad authority land. But Metro Transit documents now indicate only half would be matched by the Federal Transit Administration.

Pattock, of the Lakes & Parks Alliance, questions how Hennepin County came up with the $30 million appraisal for the rail right of way. "Does the land have legitimate marketable value outside of being used for transit? Or is $30 million just an arbitrary, made-up number?" she asked.

Fuhrmann said staff from the Minnesota Department of Transportation came up with an initial appraisal for the railroad land, and then a second appraisal was conducted by a private firm.

Should cities along the line decide to donate more land, Southwest's price tag will continue to go up, Fuhrmann said. But the scope of the project will remain the same.

Janet Moore • 612-673-7752