Why troubled Southwest light rail project may finally be out of the woods on budget, timeline

It is what passes for good news for a transportation construction project that is often prefaced with the word “troubled.”

The managers of the Southwest Light Rail Transit project now are saying that the latest cost estimates and latest timeline for completion come with a high degree of confidence. The 14.5-miles extension of the current Green Line to Eden Prairie will cost $2.86 billion and will be welcoming paying riders in 2027.

No, really.

“I don’t lose sleep over that anymore, and I did. I’ve moved on to other things,” joked Met Council Chair Charlie Zelle. The reason for his relative restfulness is that after a year of construction, especially in the project’s money pit and time suck known as the Kenilworth Tunnel, there are fewer underground surprises left. The tunnel won’t be completed until next year, but the progress made has given the project team more confidence.

Overall, the extension is 75% completed.

“They’ve had a good year with the construction process,” Zelle said last week. “We have to get through that tunnel to really get through the hardest part of that project. But I think they’re well on their way.”

Metropolitan Council

Charlie Zelle

Hennepin County, which is covering nearly 45% of the project costs at $1.28 billion, is close to sharing Zelle’s confidence level.

“Because I have to write the checks, I’m close to him but not quite where he is,” said Hennepin County Commissioner Marion Greene, the vice chair of the public works committee and the chair of the Hennepin County Regional Railroad Authority. “Because of the different role I have in relation to the project, I’m by definition going to be a little more nervous. But I do have confidence given all the signals and all of the (budget) rebaselining they’ve done.”

Changing budgets and timelines have been constant companions both before and after the project broke ground in 2019. At that time, the projected budget was a tad over $2 billion and the completion date was 2023. Poor soils discovered after Kenilworth Tunnel construction was underway led to a halt in construction, long delays, increased costs and a renegotiated contract with the builders. In addition, scathing reviews by the Office of the Legislative Auditor and an ongoing examination by a legislative task force for how the Met Council is governed have primed the public to expect bad news.

The current $2.86 billion budget for the Southwest Light Rail Transit project may or may not be an increase over the last publicly known figure. Legislative auditors listed the price tag as $2.74 billion in the spring, but project manager Jim Alexander said the $2.86 billion number has been used by the project at least since a funding agreement with Hennepin County was announced in August.

Hennepin County Commissioner Marion Greene

That deal, too, is a part of the positive news. When the Met Council announced two years ago that it had renegotiated the contract with the primary contractor for the tracks, bridges, stations and tunnel, it was short of money. A $500 million hole was partly filled by moving some money the Met Council had into the project, but the biggest amount would need to come from Hennepin County, which was reluctant to foot the entire bill. After months of negotiations, that August agreement gave the county responsibility for 55% of the remaining $340 million gap, and the Met Council must come up with 45%.

Hennepin County is in the midst of sending the first $100 million of what is expected to be an additional $190 million. The Hennepin County board and the Met Council are set to confirm the new allocation this week. Hennepin County, however, has not confirmed one aspect of the August framework — that any future budget increases would be shared 50-50 by the Met Council and the county.

In addition to the county’s $1.28 billion share, the federal government is paying $1.3 billion or 45.3% of the total. The rest is the $217 million contributed by the now-dissolved Counties Transit Improvement Board, $31 million from the state of Minnesota and $34 million from some of the cities along the route.

The transit improvement board was made up of the five central Twin Cities counties — Hennepin, Ramsey, Dakota, Anoka and Washington. Those five counties were authorized to collect a 0.25% sales tax for transit and much of that went for light rail, the NorthStar heavy rail line and some bus rapid transit. But when that organization dissolved over an urban-suburban dispute over how the money was spent, all five fell back under another state law that allowed a 0.5% sales tax for transportation. That increase in funding is being used by Hennepin to cover its share of construction of the Green Line extension and the Blue Line extension. It will also share operating costs.

“The Blue Line and the Green Line are priorities for Hennepin County,” Greene said. In addition to money from the transportation sales tax, the county has sent $200 million to the project from the regional railroad authority which has a separate property tax levy.   

The Met Council received a revenue boost in May when the Legislature approved a seven-county regional transportation sales tax of 0.75%  — the first dedicated and ongoing source of money for the Met Council’s transit program. One caveat in the state budget said none of those funds — nearly $500 million a year — could be spent on SWLRT until a special task force completes its work reviewing the governance structure of the Met Council. That task force’s report is due Feb. 1.

“The good news is we’ve gone through a lot of issues,” Zelle said. “We’ve restructured the contract with both the civil and systems contractors, and we have the funding identified to c0mplete the project.” The FTA requires the project to have a large enough contingency fund — money set aside for unexpected expenses — to earn the federal government’s approval of the new budget.

Metropolitan Council

Bus loop and parking ramp at SouthWest Station in Eden Prairie.

“They want to review ‘do we have enough contingency to finish the project,’ ” Zelle said. “We don’t expect it to be changed. It could, and so we never say it’s final until we have that in writing.

“Of course a project is never done until a project is done, but the project team has told me they’re pretty confident that there’s enough contingency to handle the issues we’ve all been working through, particularly going through the Kenilworth Tunnel. It’s still complicated.”

Added Greene: “There’s no doubt that this project has been very hard going. But I am optimistic. It’s 75% complete and I’m hearing from the Met Council that they have a high degree of confidence.”

The tunnel was needed once the region decided to colocate existing freight rail with the new light rail tracks rather than diverting the freight rail. But the difference between a tunnel and surface tracks has been blamed for most of the cost overruns and time delays.

Screen shot

Jim Alexander shown speaking during the Jan. 8 meeting of the Transportation Committee.

Alexander told the Met Council’s transportation committee earlier this month that tunnel construction is now adjacent to the 10-story Cedar Isle condominium building where owners have complained that construction is damaging the structure. He called it the most-difficult part of the project.

“It takes time to get through this,” Alexander said. About 18 of the 30 tunnel sections — called cells — are complete. He said he expects tunnel construction to be completed in 2025.

“I just want to be cautious,” he said. “I’ve got scars on my back from this tunnel specifically and the project overall. But where we’re sitting right now, we do feel comfortable where we’re at with our (budget) estimate and timeline.”