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Southwest LRT Summer Newsletter: spending, delays continue while total costs rise

Despite years of the Met Council and media cheerleaders saying it was a done deal, Southwest LRT has still NOT left the funding station at the Federal Transit Administration (FTA). The Met Council’s pet project has been de-railed year after year. This year is no exception.

SWLRT will not relieve congestion. That is good because this is Minnesota’s biggest proposed boondoggle; as we have documented in our MNCongestion.com project, SWLRT will do NOTHING to ease congestion. So, for all the commuters who believe it will make your drive in your car less congested, or bring new economic growth, think again. It won’t even lower green-house gases. So, just what is the point of spending over $2 billion just to build it and tens of millions a year to operate SWLRT? To look more like Europe?

(We need more highway lanes and a nimble bus transit system but that is another subject for another sunny day.)

I wanted to give you an update without going too far into the weeds. There are enough of those in the lake.

Let’s start with the bad news: the Met Council is continuing to spend money on SWLRT as if it will win a full funding agreement from the FTA. It is permitted to do so under federal rules but if the Council does not win what is called a Letter of No Prejudice (LONP), and the project fails, Minnesota taxpayers will have to absorb those costs without being able to reclaim the federal transportation dollars we send to DC. The sunk costs far exceed $200 million.

More specifically, the costs will fall largely on Hennepin County taxpayers. Which leads me to remind you that Hennepin County, led by Chair Jan Callison and the LRT Pied Piper Peter McLaughlin, has taken on the cost of the project. The county is the only funder of the project until the FTA gets on board. The county already raised taxes to do so (a half-cent sales tax estimated to take an additional $125 million a year from residents), and the county plans to go into debt to bond for SWLRT in partnership with the Met Council.

The FTA will limit its contribution, if at all, to $929 million; all the overruns and costs of delay, which could be substantial, will be on Hennepin County. How many Hennepin County residents know or understand that?

Now for the good news. The state legislature has never embraced SWLRT or the Council’s transportation plan for the metro area; in addition, most of the suburban counties have explicitly rejected the Council’s “vision” for their communities. (Not that it matters because the Council is so powerful.) Thanks to bill authored in the House by Rep. Jim Nash (GOP-Waconia), state taxpayers are NOT on the hook for building or operating SWLRT; aside from the capital costs saved, tens of millions of dollars a year in operating costs can go instead to transit and road projects that actually relieve congestion. (Unless the legislature flips; then it could open the cash drawer again. The Met Council even assumed it would get state funding when it submitted its financial projections to the FTA even though the state rejected the project. This got the Council into trouble with the state auditor and legislators who care about public integrity.)

Another deft move by former mayor of Waconia. The legislature also passed another bill authored by Rep. Jim Nash that brought the Met Council into compliance with a 2006 eminent domain reform; this long-overlooked update is projected to add a whopping $25 million or more to the cost of building SWLRT. This was bad news for SWLRT; the project’s costs are already under the microscope at the FTA. Every added dollar makes it less likely the FTA will issue a full funding grant to SWLRT.

Another added cost, and reason to doubt the planners at the Met Council? A $20 million dollar “crash” wall in Minneapolis between the BNSF freight line and vulnerable commuters. Why would they put commuters right next to freight lines carrying ethanol—or corn syrup for that matter.

Delays, delays and more delays. The old saying that “time is money” applies here. For example, TC&W railroad brings in grain and other ag products from across the state into Minneapolis. Like the BNSF, it has been in a tussle with the Council on how it will safely co-locate with commuter rail. TC&W announced today that it has reached a settlement with the Council but the agreement must be approved by federal safety officials.

As a result, the Met Council has pulled the application for SWLRT and asked the civil construction firms (second round of bids but that is another story) to extend the bids for 60 days so the Council can re-apply to FTA. I am told by an official in D.C. that this could mean further delays if the FTA decides to re-review the application.

And then the litigation. Finally, a neighborhood coalition in Minneapolis that says the Council violated the law when it set the route for SLWRT is on appeal. (Even if the neighborhood does not ultimately win, the suit is a distraction and one more reason FTA could reject the project. If the neighbors win, all bets are off.) And if I am not mistaken, the Council is still in negotiations with a condo association that says the LRT vibrations will damage their building (the LRT is designed to run so close to the condos that you could hop on the train without leaving home).

Then there is this odd development. The Met Council Chair, recently hired by Gov. Dayton to get SWLRT funded and under construction, recently applied to be the new Ramsey County manager. She did not get the job but what does her willingness to exit say about her opinion on the chances for SWLRT?

What about federal funds? Congress is still stuck in spending-as-usual mode. The House appropriations bill, despite the best efforts by Rep. Jason Lewis (who sits on transportation and is trying to bring the Met Council’s governance structure into compliance with federal law) contains plenty of cash for “New Starts” projects like SWLRT and Bottineau in Minneapolis and the northern suburbs (even though BNSF has refused to even talk about co-location on that northern route). And the bill contained very strong language directing the FTA to spend the money on pending projects. The Senate version also has plenty of cash. Neither bill, however, has passed the House or Senate, and may not this year. That may mean another continuing resolution (CR) on spending. Impressive, I know! But it could delay a full grant for SWLRT, too.

The FTA does not have to spend the money; and Congress is not allowed by law to “earmark” projects like SWLRT. The FTA under Sec. Elaine Chao, moreover, has made it clear: President Trump wants to take a fresh look at all transportation spending. The FTA’s position not changed since it made this announcement: any project that did not have full funding as of 2017, would not get a federal matching grant. SWLRT did not have a full funding grant agreement in 2017.

Unfortunately, the FTA has not formally denied funding to SWLRT or any other “old” project so far. Why burn bridges with powerful lawmakers if you can just string them along? Who cares that it is costing Minnesotans money, and distracting our leaders from actual solutions to congestion.

So, the SWLRT saga continues, and the Met Council and Hennepin County continue to spend precious dollars with no apparent accountability.

OK,  we went into the weeds a bit but only at the high level, just enough to tickle your feet.

 

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