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Met Council unveils plan to cover state share of Southwest LRT funding

The plan would replace the state’s share with money from the Met Council, Hennepin County and the Counties Transportation Improvement Board

Met Council Chair Adam Duininck: “I want to be very clear, these are bad options.”
MinnPost photo by Peter Callaghan

The Metropolitan Council intends to proceed with the Southwest light rail project, despite a failure of the 2016 Legislature to come up with the final piece of state and local funding for the 14.5 mile extension of the Green Line.

At a meeting convened by Gov. Mark Dayton Thursday, the council revealed a plan to replace the state’s 10 percent share of the $1.84 billion project with money from the Met Council, Hennepin County and the five-county Counties Transportation Improvement Board (CTIB).

Those three bodies must approve their part of the final $144.5 million funding piece by next Wednesday, when the council says it will have to begin shutting down the project if the funding isn’t approved. 

“I want to be very clear, these are bad options,” Met Council Chair Adam Duininck said Thursday. “If there’s not a state solution at the legislative level, the only options are bad options.” But he argued that if the state delays now, mothballing the project, it will not be able to get back in line behind dozens of other projects from other parts of the country.

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The federal government will “dedicate time and resources to regions that have their act together,” he said.

Previous agreements with the Federal Transit Administration called for the federal government to pay half the costs of Southwest LRT, and for state and local sources to cover the other half. Initial distribution of financial responsibility was to have the Hennepin County Regional Rail Authority provide 10 percent via its property tax, CTIB provide 30 percent through its regional transit sales tax and the state provide the final 10 percent through its regular transportation funding sources.

But the Republicans who control the Minnesota House have refused to help fund the state’s share of the project, calling light rail wasteful and arguing that it competes for state funding with roads and bridges — improvements more popular and needed in Republican-leaning districts.

When state funding did not emerge from last year’s legislative session, Met Council leadership considered using a funding mechanism called “certificates of participation.” These certificates, similar to bonds, are sold to investors; the debt service would come from other Metro Transit funding sources.

“The implications of the council’s proposed alternative funding scheme are staggering for taxpayers and state and local policy makers,” state Rep. Tim Kelly, R-Red Wing, wrote to Duininck last summer. “Greater consideration of the proposal’s legality and risk are needed before any further action is taken.”

Duininck wrote back, asserting that the funding mechanism is legal and that Metro Transit could cover the debt service without straining other services. But he also offered an olive branch to House GOP leaders. “Should the Legislature ultimately choose not to fund the Southwest LRT project in a future legislative session, the project will not go forward,” Duininck wrote.

In an interview last summer, Duininck said he sent the letter to “avoid the fight” with legislative Republicans, something that he feared “could raise governance issues with the council and it jeopardizes us in the long run.” He said he was relatively optimistic about chances for light rail funding in 2016 either through a higher regional sales tax, direct appropriations or bonding. “It seems to me that both the House and Senate are really determined to get a [transportation] bill done.”

“My hope is that nobody’s going to stop those being the last dollars in to secure this project going forward,” Duininck told the project’s corridor management committee last July. “If it happens, then that’s when we’ll have to decide what we’re going to do.”

But when Duininck was asked Thursday about that pledge, Dayton stepped in and said. “I overuled him.” Dayton said he was acting on behalf of his constituents to keep the project moving forward.

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In the final days of the 2016 session, Kelly introduced his own transportation funding plan that would have included money for roads and bridges as well as the option for the five metro-area counties to raise a quarter-cent sales tax for transit. But the plan wasn’t backed by his caucus or leadership, who instead moved ahead with a deal that included one-time road and bridge funding and no money for transit. That plan failed in the final minutes of the 2016 session.  

Two GOP legislators took part in the Thursday meeting. Rep. Tony Albright, R-Prior Lake, noted the apparent deal Duininck made with Kelly and him last summer. He said the plan announced Thursday was “an end run” on the Legislature and also called on Dayton to convene a special session to work on a bonding bill and a transportation bill now that SWLRT has been dealt with outside the Legislature.

Rep. Linda Runbeck, R-Circle Pines, listed the GOP concerns with the project: that it is too expensive, that litigation is still pending, that it hasn’t been properly discussed in the Legislature, and that deals have been cut behind the scenes.

She said the purpose of the meeting Thursday was to find money to complete the funding, but she said it should be about the merits of the project itself. “We have deep concerns, we feel the process has been flawed, we feel the project at the exorbitant cost — that it is one that merits a lot of questions,” Runbeck said.

The plan unveiled Thursday would have the Met Council financing $91.75 million in certificates with the CTIB financing another $11.75 million. Those certificates wouldn’t be sold until next summer, giving the next Legislature an opportunity to come up with a different funding plan. One strategy could be a proposal made by Dayton in 2015 to let the counties that make up CTIB — Anoka, Dakota, Hennepin, Ramsey and Washington — increase the local transit tax from 0.25 percent to 0.75 percent with the proceeds going to cover the regional and state share of SWLRT and other regional rail and bus rapid transit projects on the drawing board.

In addition to the COPs, the plan calls for Hennepin County Regional Rail to up its share by $20.5 million and CTIB increasing it’s share by a comparable $20.5 million.

The plan would require three votes next week: from the Met Council, the Hennepin County rail authority and CTIB board.

Duininck said he has been assured that the new plan would likely be approved by the FTA, leading the way to the final major piece of the SWLRT plan — the full funding grant agreement. With that in hand, the project is assured that the FTA will cover its 50-percent share.

After Dayton and Duininck unveiled the plan to replace the state money, the hastily convened meeting was opened to comments from politicians and members of the audience. “These projects are never easy,” said Hennepin County Commissioner Peter McLaughlin. “But there comes a time when you have to move forward.”

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While most in attendance were supportive, there was also testimony from the project’s opponents. Complaints were raised about the route, especially the passage between Lake of the Isles and Cedar Lake. There were also complaints raised about the expense and the use of rail rather than bus rapid transit.

Speaking in support were members of organized labor, people speaking for low-income residents and communities of color and other transit backers.