Of all the questions Met Council Chair Charlie Zelle received during his second public grilling over the massive cost overruns on the Southwest Light Rail project, one was the hardest to answer. Call it the $500 million question.
[image_credit]Metropolitan Council[/image_credit][image_caption]Charlie Zelle[/image_caption]
“It will likely not come from any one place,” Zelle said. He cited the federal government, the council’s own funds and Hennepin County as sources of money to fill the budget hole. “We know it’s a gap that needs to be filled. And I have been assured by county commissioners and everyone I talk to that stopping the project would not benefit anybody.”
The Met Council announced in January that it had renegotiated contracts to add three years and $500 million to project schedule and budget, bringing it to what it termed “revenue service” in 2027. The new plan also includes both incentives and penalties for exceeding or beating the timeline.
“The most-important thing is that we have come forward with a plan that is not what people want to hear but it is what it is, which is there’s going to be a deficit, there’s going to be a schedule delay,” Zelle said in an interview last week.
Hennepin County ‘cannot cover additional cost increases alone’
The announcement only added to the criticism of the agency and gave opponents fresh ammunition for questioning the route of the line and its management.
While there was some early money from the state and from local governments along the now $2.7 billion line that will run from Target Field to Eden Prairie, the bulk of funding for the project has come from the Federal Transit Administration and Hennepin County. But once the federal government signed what is called a full funding grant agreement, it capped what it will contribute: $929 million — 50 percent of the project’s cost at the time but now just more than one-third of the project budget.
Hennepin County is the primary local funding partner, but the Met Council as the manager of the project is obligated under the agreement with FTA to complete and operate the project.
[image_credit]Hennepin County[/image_credit][image_caption]Transportation tax projects[/image_caption]
Though it covered a previous $200 million budget add-on, the county doesn’t have much left. And even if it could scrape up some more, political leaders there aren’t sure it is fair to keep tapping the county’s tax sources.
“Hennepin County has shown our commitment to the Green Line Extension, providing more than $1 billion to the project, making up nearly 90% of the local funding share,” board Chair Marion Greene said in a statement. “We cannot cover these additional cost increases alone. More importantly, it is not tenable for Hennepin County taxpayers to continue to be solely responsible for completing the largest infrastructure project in Minnesota history.
“It’s time for other partners to step forward with a comprehensive funding solution that acknowledges the statewide significance of this project,” Greene said. “We remain committed to working closely with partners at every level to complete this project and advance this long-term vision together.”
Because the project is 60 percent completed, the Met Council says there are few ways of saving money by scaling back the scope of the project as was done in 2015 to meet a previous budget overrun. If the project is abandoned, the council must not only repay federal funds but return the corridor to its pre-construction condition.
Zelle said last week the agency doesn’t need to identify the entire half-billion dollar gap at once but said some needs to be found this year to keep the project going. The Metropolitan Council starts work this week on the SWLRT funding issue. The council will consider a staff proposal to carve about $80 million from current council resources to keep the project on track for a 2027 opening. Part of that is an additional $30 million from Hennepin County that must be approved by the county board.
As with everything in the funding of these major projects, however, even that is complicated. Last year the federal American Rescue Plan included transit money with a specific carve out for light rail projects already under construction. The $30 million SWLRT received at first allowed Hennepin County to reduce its contribution by $30 million, which was the intention of the funds. But now the Met Council wants that money back.
Other changes will involve shifting some of the federal transit capital construction funds that regularly go to transit agencies the light rail project and then replace those funds with proceeds from a motor vehicle excise tax dedicated to transit, taxes that have been collecting more money than originally forecast. Moving that money around among Met Council funds would be temporary and be repaid once the agency gets its final allotments from the federal infrastructure bill adopted last fall. Minnesota will receive $818 million over five years to improve public transportation options across the state.
Metro Transit finance chief Ed Petrie called it “an orchestrated number of movements.”
Zelle called the moves a “a prudent use” of state and federal dollars at a time when the Met Council needs it.
[image_credit]Metropolitan Council[/image_credit][image_caption]LRT construction sequencing and status[/image_caption]
But it will need more.
“We should show some leadership even though the Met Council — in the way these transit projects are funded — is not the source for local funds,” Zelle said. “We’re convinced this is the right thing to do.”
The Met Council is not allowed to permanently move state funds provided for regular and existing transit to cover expenses for the Southwest project. That is why the plan is to repay with federal infrastructure grants.
Still, Hennepin and Ramsey counties are the lead local funding partners thanks to their 50 cent sales tax, which replaced a quarter-cent sales tax used to fund projects under the now-defunct Counties Transit Improvement board, a five-county consortium that once helped fund regional rail and bus projects.
“We continue to have this conversation and are together in talking to our federal delegations and talking about federal sources,” Zelle said. “Nobody has put an ironclad no on the questions. If I were a county, I’d be saying the very same thing, that they’ve been burdened.
“The solution won’t be easy. Everyone is going to have to stretch,” he said.
An even more-troubled light rail line — Maryland’s purple line — recently was restarted with a $1.7 billion loan from the Build America Bureau through the federal Transportation Infrastructure Finance and Innovation Act.
“There are a number of different solutions around the county that you look to that goes beyond grant dollars,” Zelle said. “In my opinion we should be looking at all of these solutions. Nothing should be off the table.”
Hennepin County’s plan for spending its half-cent sales tax includes subsidizing operating costs on SWLRT beginning in 2022 for $28 million a year and the Bottineau extension starting in 2023 for $15 million a year. SWLRT won’t need that subsidy until 2027, according to the current schedule, and Bottineau has no completion date.
Zelle said he didn’t want to comment on how Hennepin County allocates local tax money but said he has sympathy for the county’s obligations to pay for construction and operations costs over time.
“This is a problem that can’t be solved by one entity,” Zelle said.
Skepticism at the Capitol
The Met Council is unlikely to receive more help from the state. Republicans in the Legislature have long been hostile toward the Met Council in general and light rail specifically. They have blocked state help in construction and have threatened to end a 50-50 sharing of light rail operating subsidies.
A move to direct the Office of the Legislative Auditor to investigate the project received broad support from both Republicans and DFLers in the Legislature.
Walz proposed $200 million for another light rail extension project, the Bottineau Line from Target Field to Brooklyn Park.
There is skepticism among Republicans as to whether that money would aid that still-being-planned extension or simply free up some of Hennepin County’s commitment to that line, which would allow money to flow back into SWLRT. At a contentious Senate Transportation Committee meeting last month, GOP senators questioned the Walz request.
“You’re asking for $200 million more for the next rail line when we haven’t even learned our lesson from this one,” said Sen. Dave Osmek, a Mound Republican who has been a longtime critic of the Met Council and light rail projects.
Zelle told the committee that the council has delivered two other rail projects — the Hiawatha line from downtown Minneapolis to the Mall of America and the Green Line from downtown Minneapolis and downtown St. Paul — on a reasonable timeline and budget. Neither, however, required the tunnels and blast walls that SWLRT has, Zelle said.
In response to a similar question during the House Transportation Committee from Rep. Jon Koznick, a Lakeville Republican who called the project a boondoggle, Zelle gave a hopeful — or facetious — response.
“We are certainly open and interested in pursuing any proposals you have for state funding,” Zelle said. “That would be more than welcome.”
I hear earmarks are back. Perhaps reps Phillips & Omar can get some fed dollars appropriated…
Amen. BUT “fed dollars” in the form of forgiveness for those already expended on the existing disastrous routing. Add authorization to RE-ROUTE inside Mpls., easterly along “The Trench” to Nicollet, and then hang a left.
I just wanted to point out that in this detailed description of how the project is funded it doesn’t mention the gas tax anywhere. That’s because your motor vehicle fuel taxes are not used to fund light rail transportation, despite the discussion you may hear in public.
The gas tax can’t even fund half of what we spend on state and state aid roads. How could it possibly cover these costs, too?
And I should point out the the vast majority of streets and roads get not one dime of state money.
You know what the definition is of insanity? Doing the same thing over and over and expecting a different result. Kind of describes the Met Council. This group needs to be abolished once and for all. They answer to no one, and do exactly what they want. How is this even legal? I know how it started, but I don’t think the original people ever thought it would end up such a debacle,
We need a Met Council, but one that’s been elected to do their job. Not an appointed body.
It is truly sad that we have unelected officials spending taxpayer money with virtually no oversight. What could go wrong; perhaps $500 million dollar cost overruns! It is beyond time to change Met Council’s charter and oversight to having elected positions and directly responsible to the Legislature. The alternative is to simply dissolve Met Council and place the organization in the appropriate departments within the Executive Branch.
If my memory is correct the blue line and green line both came in under budget and first year projections of ridership blew the numbers out of the water. I have read that the SWA has an expensive tunnel project they did not want in the Cedar Lake area and that is the source of cost over runs. I don’t see any of these details in articles.
I wonder if the 94 moat from St Paul to Mpls came under budget- moving that much earth is not cheap. Anyone know?
I am reasonably confident 94 was not 6 years behind schedule
Beating ridership goals doesn’t mean much if those goals are set by people with a vested interest in creating a version of success that is easy to reach. Even by that measure of success light rail is an insanely expensive way to either move people around or reduce the environmental impact of transportation.
The environmental side is especially troubling because we don’t have the luxury of time to address that issue and there are other ways to spend those funds that would have more impact more quickly.
Maybe you should check the ridership levels now. Since a lot of people aren’t going to the office anymore, coupled with the crime on both of those lines. Just sayin
Watching the news from Ukraine has shown how advanced their subways, shelters and trains in general.
Does it make anyone else wonder how we got so far behind the rest of the world by indulging everybody with private cars and commutes?
Does it make anyone else wonder why so many people want to keep their money and stop any spending that does not yield immediate and individual benefits?
I think the SW corridor is very important to the Twin Cities transit system and yet many would gladly give it up and conclude it was a scandal. Anybody looking at the area should know it will be an engineering marvel that is long overdue. Long term thinking is needed. Austerity has no future. “You can’t take it with you..”
Our way of life is not the same in Europe. Yes, they have many forms of rail transportation but there are still many rural areas and roads and cars and everything we have. People in the US just aren’t that fond of forced rail lines that only take you to very few specific places.
And every naysayer does has every reason to be skeptical. Even with the initial popularity of the early blue and green lines, taxpayers were still subsidizing every single rider. Now that ridership has plummeted, that puts taxpayers more on the hook.
Look at the Northstar. That was handed as a promise to eliminate cars from the north metro and an overall good thing by those that affiliate in the same party as those who promote light rail. Northstar was a complete disaster and was shuttered for many reasons. The taxpayers were consistently on the hook for that boondoggle.
Light rail is almost the same thing. The idea that we are ‘behind’ other countries doesn’t hold water because the benefits don’t come even close to the positives.
You and I won’t have a subway bomb shelter either, Bob.
I have been to Europe and used the transit systems that allow people to move without cars or big expenses.
It’s a concept! Light rail moves people who don’t have cars or money to fuel them. The SW corridor is one of the most important links.
Over 70% of passenger miles in Europe with all mass transit being around 17%. Americans have a somewhat distorted view of European transportation since it is the areas that tourists frequent that tend to have mass transit. The trouble with light rail is that it is incredibly expensive per passenger mile and doesn’t reduce the total number of miles being driven. Adding capacity and subsidizing that capacity will simply increase the consumption of transportation. Any theoretical reduction in automotive traffic will never materialize because trips taken on rail will simply be backfilled by people spreading further and further out.
The additional significant issue with rail that has manifested recently is that standard full-time office work will never come back fully. The idea of designing a transportation network based on point-to-point rush hours doesn’t reflect the current or future reality.
There isn’t anything wrong with the intent of light rail, low impact and inexpensive transportation, but the realities of the design simply are at odds with that goal.
Dan, can you clarify your first sentence? I don’t understand it. Thanks.
Sure, it looks like I mistyped! 70% of passenger miles in Europe are by car, 17% by mass transit. I like looking at passenger miles because it is a good reflection of the overall transportation system. Even if we would reach a European level of mass transit use most transportation would still be by car. This indicates that if we want to reduce the environmental impact of transportation, we have to make automotive use lower impact. We shouldn’t pretend that mass transit will get us there. Especially given how expensive projects like light rail are and how long they take to implement. Focusing on green electrical generation and the infrastructure to use it is universally useful and has the side benefit of making us less dependent on autocratic oil-rich regimes.
Tim Pawlenty literally went around the Legislature to secure funding for Northstar, but go off anyway.
The SW corridor is like a nuclear power plant under construction that repeatedly suffers has cost overruns until investors disappear:
The decisions are not cheap.
“What is meant by sunk cost?”
“sunk cost, in economics and finance, a cost that has already been incurred and that cannot be recovered. In economic decision making, sunk costs are treated as bygone and are not taken into consideration when deciding whether to continue an investment project”
Many of the same NIMBYs who whined and complained enough to force SWLRT off of more affordable routes into the current route that has caused the cost overruns are also the first to complain about those cost overruns. Sorry folks, as much as you all would like to shutter the project and turn it into a memorial for NIMBYISM, it will be built and be seen as a smart investment after a few years of operation: Just like the Green and Blue lines.
It’s always the people who don’t have a mass transit system going through the backyards of their neighborhood who claim NIMBYISM.
I’m not aware of what metrics would indicate the current light rail system is a success. Billions of dollars to develop and ridership that doesn’t come close to paying the annual operating costs. The green line was a poorly chosen route and the people who are willing to pay their fares don’t ride it ….. for many reasons including crime and fears for their safety. Light rail is not providing the mass transit solution that encourages people to use it.
Maybe they could grab the money intended for the Purple Line. NE Metro isn’t interested in a boondoggle in their end of the world.
The $500 million should come from the unelected members of the Met Council who voted for this boondoggle in the first place. As numerous posters noted above, the price per passenger mile is obscenely high. These light rail projects make no sense, they serve very few people relative to their extraordinarily high startup and ongoing costs.
EVs are the solution to replace fossil fuel vehicles. You cannot beat the advantages of point-to-point transportation modes like EV’s, compared to any fixed route modes. In most of the US (except a few old East Coast cities), rail only makes sense between cities, not within them, when you accurately weigh all the pros and cons.
How about terminating the line in Hopkins, which still has its old downtown, for the time being? That at least would serve the Excelsior-Grand area, Methodist Hospital, and a few other employers. I always thought it was a stupid idea to start the line at a place where your average Northside resident would still have to take a bus to reach the northern end of it, to have a station between Cedar Lake and Lake of the Isles, and to run it into the Nowheresville known as Eden Prairie.
To be successful, a transit project needs to serve existing destinations, not run in undeveloped areas in the hope that the line will attract development .