Downtown bus Circulator hits skids

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June 7, 2004 // UPDATED 1:52 pm - April 25, 2007
By: Scott Russell
Scott Russell

North-south link to east-west LRT casualty of governor's veto, state regs

The light rail transit (LRT) line will open June 26 without a critical element in place: The Nicollet Mall Circulator to take people to and from LRT along the mall and, at night, Hennepin Avenue.

On May 29, Gov. Tim Pawlenty vetoed a bill critical to Circulator funding that would have eased the sale and development of the city-owned Nicollet Hotel block.

The city planned to earmark part of the Nicollet Hotel block land sale -- $2.2 million of $6 million -- to the Circulator. That would have paid approximately 20 percent of the Circulator's five-year budget.

Pawlenty's act was the second in a one-two punch. Metro Transit had initially planned to contribute $7.5 million of the Circulator's $10.9 million five-year budget. However, an anti-LRT state legislator unearthed an existing state law late last year that caps Metro Transit's contribution at 50 percent, creating a $2.5 million gap. Even without the veto, the Circulator faced greatly reduced service, if it ran at all.

Still, Klara Fabry, Minneapolis Public Works director, called the veto's impact on Circulator funding "a huge loss. All of us have to go back to the drawing board to see how the Circulator could be funded."

The Circulator was supposed to provide free bus service from the LRT's Nicollet Mall station and make LRT a more attractive transportation alternative. Anyone could ride the Circulator, but its schedule synched with LRT trains.

LRT runs east-west along 5th Street. The Circulator would take people north-south through Downtown, to work and shopping destinations, to the Convention Center and, at night, to the Hennepin Avenue Entertainment District.

The Greater Minneapolis Convention and Visitors Association (GMCVA) thought the Circulator critical enough to convention-goers that it offered to contribute $100,000 a year for five years.

Greg Ortale, GMCVA's president and CEO, called the Circulator "absolutely essential to maintain the vitality of Downtown Minneapolis. It is also an essential component of the LRT."

It is unclear if and when the Circulator will begin. City leaders are assessing their next moves, and eyeing a special session -- or the 2005 session.

City Councilmember Scott Benson (11th Ward), the Council's Intergovernmental Relations Committee chairman, said the legislation easing the Nicollet Hotel Block sale was one of the city's few victories last session -- only to be vetoed.

Charlie Ferrell, a Faegre and Benson lawyer who chaired the Downtown Circulator Task Force, said people were exploring every possible avenue to find money for the Circulator.

"No one has a solution right now," Ferrell said. "It is a sad commentary on the ability of the public sector collectively to provide basic infrastructure to our economy," he said.

Nicollet Hotel block

The former Nicollet Hotel block is a surface parking lot bounded by the Nicollet Mall, Hennepin and Washington avenues and 3rd Street South, just north of the city's new Central Library.

Councilmember Lisa Goodman (7th Ward) represents Downtown and said the city has tried to redevelop the Nicollet Hotel site for nearly a decade. The city bought the land with federal money to use as a transit facility.

The city would like to sell the land to a private developer who would build housing atop of a subterranean Metro Transit bus garage, said Bob Morgan, a Public Works project manager.

With some of the proceeds, the city would use $539,000 a year for four years for the Circulator.

State bidding requirements created a snag. They required separate requests for proposals for the Metro Transit's publicly funded bus garage and the privately developed housing, Morgan said.

Such rules made the project very unattractive to prospective developers. Developers saw big risks if they codeveloped the block with another firm over whom they had no choice and no control, he said.

City leaders got the Legislature to allow the project to be bid as a single project. Pawlenty said the project had promise but vetoed the bill, calling the legislation "overbroad" and "drafted poorly."

Lee Sheehy, director of the Department of Community Planning and Economic Development, said he first learned about the "overbroad" concerns in the veto letter. He still hoped to persuade the governor and his staff the legislation was narrowly enough written and to get it passed in the special session or in 2005.

Goodman said called the veto "frustrating" and inconsistent with state goals.

"We have been challenged in a tough time to do more with less," she said. "This is a great example of doing more with less -- and working in a public-private partnership."

The governor's veto means "yet another surface parking lot in the Downtown core for yet another year," she said.

Problems mounting

The Governor's veto is the latest in a string of Circulator setbacks.

In November, the City Council approved a five-year Circulator budget and was making cuts even then. Initial plans had the Circulator starting at 5 a.m. To make the budget work, the start time got moved to 6:30 a.m. on weekdays and 9 a.m. on weekends.

To limit the service cuts, the GMCVA upped its initial contribution offer from $100,000 a year for three years to $100,000 a year for five years.

The Council-approved budget envisioned Metro Transit providing $1.5 million a year.

That was until State Rep. Phil Krinke, a long-time LRT opponent, put the Met Council on notice last fall that the plan appeared to violate a state law that limited the Council's contribution to Downtown circulators to 50 percent of the budget.

Ferrell said he and others have tried unsuccessfully to convince the Met Council that it is interpreting state law too cautiously and it legally could contribute more than 50 percent of the Circulator's budget.

With restrictions on Met Council funding, Morgan said the city needed to raise an added $2.5 million in non Metro Transit money over five years to maintain the proposed Circulator service level -- or once again make cuts.

The Circulator would have had 45 percent fewer runs under a revised budget, Morgan said.

The latest veto-related Circulator budget cuts make a bad situation worse. The Nicollet Hotel block sale was to provide the largest single non-Met Council contribution.

The Circulator's loss would be a blow to business. Morgan said in LRT's early planning stages, leaders considered both a north-south and east-west route through Downtown. A number of business people preferred the north-south route, particularly those along the Nicollet Mall, he said.

"When it was decided there would be an east-west route, they said, 'Then how do we serve up and down the mall?'" Morgan recalled. "[Business leaders said], 'We will agree to this east-west route provided there is a north-south Circulator that would do some of the functions that LRT was going to do in that north-south direction.'"

Even with the Nicollet Hotel block money, the Circulator's long-term future is not bright. The block sale's -- whenever it happens -- provides one-time money, spread over four years. When it is gone, it will leave a large hole in future budgets and virtually no local match for the Met Council money.

Councilmember Barret Lane (13th Ward) opposed the original Circulator budget, saying it dumped a significant long-term problem on a future Council.

Mike Setzer, general manager of Metro Transit, referred Circulator questions back to the city. A Metro Transit spokesperson did not return calls.