Cyclists on the Cedar Lake Trail pass near the site of the future Penn Station stop for Southwest Light Rail Transit. A $12-million trail bridge was dropped from the project budget. Credit: Dylan Thomas

Cyclists on the Cedar Lake Trail pass near the site of the future Penn Station stop for Southwest Light Rail Transit. A $12-million trail bridge was dropped from the project budget. Credit: Dylan Thomas

Cities agree to $250 million in Southwest light rail cuts

Updated: July 1, 2015 - 3:46 pm

They’ll pitch in to keep a more expensive project — now at $1.74 billion — moving forward

Members of a key Southwest Light Rail Transit project committee agreed Wednesday to a package of cuts that will shave more than $250 million off its nearly $2-billion price tag.

Moving the project forward now requires Hennepin County and cities along the light rail corridor to kick in additional funding because the cuts fall short of the $341 million the Corridor Management Committee set out to save. In the end, committee members agreed that getting the line as far as Southwest Station in Eden Prairie was worth $1.74 billion, or roughly $90 million more than budget target of $1.65 billion.

The committee rejected two other scenarios that would have ended the line one stop earlier, at Eden Prairie’s Town Center Station. But Eden Prairie Mayor Nancy Tyra-Lukens was a strong advocate for the more expensive option, arguing it brought light rail closer to jobs and transit-dependent residents.

Hennepin County Commissioner Peter McLaughlin said the addition of light rail to Southwest Station, already a stop on suburban bus routes, would transform it into a “mini-hub” within the regional transit network.

“The value you get out of that as a transit system is enormous,” McLaughlin said.

McLaughlin introduced a plan to cover the difference at Wednesday’s meeting. It involves the Hennepin County Regional Railroad Authority donating to the project $30 million worth of land, much of it located in Minneapolis’ Kenilworth Corridor.

Adding that amount to the total project budget would trigger a $30 million match from the Federal Transit Authority, which is expected to cover half of all project costs. That left a $50 million gap to fill, or about $25 million in additional local funds plus the FTA match.

Those local pledges started to take shape around the committee table Wednesday, with pledged amounts covering all but about $10 million of the gap, or less, according to several estimates.

“We’re passing the hat here,” joked Metropolitan Council Chair Adam Duinick.

Eden Prairie Mayor Nancy Tyra-Lukens said her city was prepared to give the project about 5.5 acres of land worth $3 million. Minnetonka Mayor Terry Schneider said his city had about $2 million to contribute, and Hopkins City Council Member Jason Gadd said his colleagues were “willing to look at” a contribution of $500,000.

Jake Spano, an at-large member of the St. Louis Park City Council, did not specify a figure but said his city would consider giving “a couple of million dollars.”

McLaughlin said Hennepin County would consider adding about $5 million from its Environmental Response Fund and $3 million from its Community Works community redevelopment program. That brings the county’s potential contribution to $38 million.

Peter Wagenius, who represents Mayor Betsy Hodges on the committee, said Minneapolis would not consider additional contributions to the project, arguing it had granted concessions worth tens of millions of dollars already.

Minneapolis reluctantly agreed to co-location of freight rail and light rail in the Kenilworth Corridor, then after negotiations with Met Council gave up the so-called “north tunnel,” one of two tunnel segments meant to bury light rail tracks in the corridor. On Wednesday, Wagenius said Hodges would give up a fight for a $12-million bicycle and pedestrian bridge meant to carry Cedar Lake Trail traffic over train tracks.

Minneapolis did not, however, have to give up any of the city’s five stations. Project staff proposed deferring construction of Penn Station but backed off that plan after several committee members, including Wagenius, expressed strong opposition to deleting a key transit connection.

The Metropolitan Council plans to discuss the committee’s recommendations Wednesday evening. A vote on the amended plan is scheduled for July 8.

State’s share a question

The city representatives on the Corridor Management Committee agreed to get firm funding commitments to the project office by July 31. That will give the project office a full weekend to assemble the final funding package and submit it to the FTA by the Monday, Aug. 3 deadline.

SWLRT is just one of a number of projects around the country competing for federal matching dollars in the FTA’s New Starts program. Even with the cuts, the line is expected to reach about 34,000 weekday boardings by 2040, enough to maintain a strong New Starts rating.

McLaughlin predicted the higher-than-expected budget figure wouldn’t hurt the project’s standing.

“Frankly, the price of the projects all over the country is going up, so this is nowhere near out of (the FTA’s) range of tolerance,” he said.

Still, significant questions remain about the state’s financial commitment to SWLRT. Its 10-percent contribution — about $165 million, based on the previous budget target — is a key component of the funding package, but the legislature has not yet pledged the full amount.

Before the end of last session, lawmakers even took back a $30 million appropriation for the project made in 2013, forcing Met Council to move around some of its funds in June to address immediate cash flow needs. On June 24, Met Council approved a transfer of $13 million from its Motor Vehicle Sales Tax reserve funds to temporarily close the gap.

Without a firm commitment from the state, Met Council could submit a funding package to FTA that includes “certificates of participation” in place of state funds. Duininck describing the certificates Wednesday as a way of bonding against future revenues.

“I think (FTA) has confidence in us because we’ve had these funding shortfalls in the past and been able to bridge them,” he said, referring to the Central Corridor light rail project.

Duininck said he was counting on Gov. Mark Dayton’s strong support of the project next legislative session. Even though Dayton expressed serious concerns about the project’s ballooning budget, Duininck expressed confidence the governor would support a $1.7 billion light rail line.

“I think he’ll see the reductions we’ve made as being responsible and making sense,” Duininck said.