Obama budget funds Southwest LRT — if everything goes right

Light rail train
Courtesy of Metro Transit
Southwest LRT is tucked into a $3.25 billion package of mass transit projects the Department of Transportation proposes to fund next year.

WASHINGTON — There was some good news for Minnesota’s planned Southwest LRT project buried in President Obama’s 2016 budget request on Monday: he wants to give the line $150 million to begin construction next year.

But getting that cash will require everything to work out just right.

Plans call for the federal government to provide half the funds needed to build the $1.68 billion light rail line, which would stretch from Target Field to Eden Prairie, with the state (10 percent), metro area (30 percent) and Hennepin County (10 percent) picking up the rest of the tab. The budget request seems to be a major step toward making that line a reality — and it is, assuming all goes as planned. But Obama wants to fund the line as part of a big increase in federal mass transit spending, which could be a complicated matter on Capitol Hill.

Big funding request

Southwest LRT is tucked into a $3.25 billion package of mass transit projects the Department of Transportation proposes to fund next year. The current budget is $2.1 billion, meaning Obama is asking a Republican-controlled Congress for a nearly two-thirds increase in funding for mass transit in 2016, paid for in his budget with a new tax on cash corporations are holding offshore.

Among the proposals in Obama’s budget, this is one that might — might — find some support on the hill, because some Republicans have pitched similar, if smaller, tax plans. Even so, Congress incrementally increased funding for mass transit between 2014 and 2015, and a 65 percent increase is a heavy lift, especially absent a long-term transportation bill, which is years overdue and whose prospects are perpetually dim.

If Congress trims down Obama’s proposal or keeps the mass transit budget flat, funding for certain projects could go out the window — which means a December tweak to a transit funding formula could loom large for Southwest LRT.

40 percent vs. 50 percent

Every year, the Federal Transit Administration creates a list of proposed projects to which it will grant funding agreements. Projects that have previously won a grant agreement get annual funding installments and are first in line every year to get cash.

In December, Congress decided to give second priority to projects whose federal share is less than 40 percent, before moving to other projects beyond that. Under that language, Southwest LRT’s federal share of 50 percent makes it a lower priority than, say, light-rail projects in Tacoma, Washington or suburban Maryland, whose federal shares are smaller.

Southwest LRT supporters said there isn’t much to worry about right now, noting there is enough buffer room in Obama’s budget request that the line should receive its federal funding next year even if Congress doesn’t appropriate the full $3.25 billion. Back-of-the-envelope math suggests that between existing projects ($1.35 billion) and new projects with a lower percentage federal share than Southwest LRT ($825 million at most), the project could get its funding even if Congress gives a minimal bump to the mass transit account flat next year.

Proposed 2016 new transit projects
Obama's budget, which calls for $3.25B in spending on federal grants for new transit projects, proposes funding the projects listed below, in addition to projects currently receiving funding ($1.35B) and spending on new project development and oversight.
Project2016 cost (Millions)% federal fundingProject rating
New Starts Program projects
Red Line (Baltimore, MD)$9234%Medium-High
National Capital Purple Line (MD)$10037%Medium-High
Southeast Extension (Denver, CO)$15044%Unknown
Mid Coast Corridor Transit Project (San Diego, CA)$10049%Medium-High
Southwest LRT (Minneapolis, MN)$15050%Medium-High
TEX Rail (Fort Worth, TX)$10050%Medium-High
Westside Section 2 (Los Angeles, CA)$100?Unknown
Total$792
Small Starts Program projects
Tacoma Link Light Rail Expansion (Tacoma, WA)$7535%Unknown
4th Street/Prater Way Corridor (Reno, NV)$647%Unknown
Provo-Orem Bus Rapid Transit (Provo-Orem, UT)$7147%Unknown
CityLYNX Gold Line Phase 2 (Charlotte, NC)$7550%Unknown
San Rafael to Larkspur Regional Connection (San Rafael, CA)$2053%Unknown
Montana Corridor BRT (El Paso, TX)$2759%Unknown
Van Ness Avenue BRT (San Francisco, CA)$3060%Medium-High
Fresno Area Express Blackstone/Kings Canyon BRT (Fresno, CA)$1180%Medium
COTA Northeast Corridor BRT Project (Columbus, OH)$3880%Unknown
Total$353

“We are hopeful that Congress will continue to support investing in our nation’s transportation and transit infrastructure at least at the current levels and that they support the President’s request for Southwest LRT,” said Meredith Vadis, a spokeswoman for the Met Council, which is charged with requesting the funding.

But opponents of the line have suggested the project’s FTA rating could hurt its chances of winning a grant. That’s what former Congressman Martin Sabo, who opposes the current alignment of the line, suggested last year when the 40 percent benchmark was first tucked into a budget bill.

Ratings are based on factors like land use, ridership and financing, and in September 2011, Southwest LRT won a “medium” rating from the FTA. (UPDATE: The FTA informed officials Tuesday morning that Southwest LRT has been assigned a "Medium-High" overall rating.) Opponents say higher-rated projects like the “medium-high” TEX Rail, a Fort Worth commuter rail project with a 50 percent federal share set to be funded at $100 million in Obama’s budget, could end up getting priority if funds are tight.

If it all goes wrong and Congress decides to cut into the mass transit account the safest way to improve its funding chances could be to increase the state and local contribution to the budget (a 10 percent increase would equal about $168 million). In an email, Vadis said, “we would have to look at a variety of sources to fill that gap with local funding” if that were to happen.

The Met Council is still waiting on the FTA to clarify what impact an increased percentage of local funding would have on the project’s funding prospects. “When we have more information, we’ll be prepared to address potential changes to the project's current funding formula,” Vadis said.

Minnesota politics confuses the issue

To make all of this even more confusing, if Minnesota wants to win a federal funding agreement in the 2016 fiscal year, it needs to have already secured state and local funding, a prospect complicated by state politics.

Gov. Mark Dayton supports the project, but he’s been hesitant to pursue the final $120 million state contribution for it until a dispute between the Met Council and the Minneapolis Parks Board is resolved, and Republicans in the Legislature have already said they’re against funding the line.

Transportation is such a hot issue for the Legislature this session that we’re likely months away from any type of deal on the light rail front. The line isn’t as controversial on the federal level as it is in Minnesota, and by virtue of putting Southwest LRT in its budget, it’s clearly a priority for the Obama administration. It’s a massive public works project four years in the making, and funding for those doesn’t just disappear overnight. But right now, the calculus for securing funding has gotten muddled in St. Paul and it isn’t exactly a slam dunk in Washington.

Correction: An earlier version of this story said Southwest LRT had a project ranking of "medium" and it could miss out on funding to projects with a higher ranking. Officials were told Tuesday morning that the project had been upgraded to "medium-high."

Devin Henry can be reached at dhenry@minnpost.com. Follow him on Twitter: @dhenry

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