Met Council signs $118 million contract to design 27 SWLRT trains despite ongoing uncertainty over funding

The Met Council just approved a $118 million contract to design 27 new trains for the proposed Southwest Light Rail Transit (SWLRT) project.

This hefty contract shows the Met Council is truly going full steam ahead with the project even after the 2016 Legislature refused to authorize the final $144.5 million in state funding required to complete the project.

Last year Met Council Chair Adam Duininck pledged that the SWLRT project would not proceed without legislative approval.  In a July 2015 letter to Rep. Tim Kelly, chair of the House Transportation Committee, Duininck offered this assurance, “Should the Legislature ultimately choose not to fund the Southwest LRT project in a future legislative session, the project will not go forward.”

But last August, acting on orders from Gov. Mark Dayton, Duininck reneged on his pledge and outlined a plan to secure the remaining funding from the Met Council ($103.5 million), Hennepin County Regional Railroad Authority ($20.5 million) and the Counties Transit Improvement Board ($20.5 million).

The legality of the scheme to fully fund SWLRT is not at all clear. The Met Council’s share will be funded by selling “certificates of participation,” which are basically bonds sold to investors and repaid from the Met Council’s future revenue streams.  Technically, investors will own SWLRT until the certificates are paid off.

The legal problem is that there is no clear authorization in state statute for the Met Council to fund a project in this manner.  State law allows certain state agencies and local governments to use certificates of participation and lease purchases in specific situations, but makes no specific provision for the Met Council to use certificates of participation to fund new projects.

Being governed by unelected members appointed by the governor, the Met Council is among the least accountable government entities in Minnesota.  Given this lack of accountability, the Met Council should be held to a tight leash and not allowed it to expand its powers without clear authority from the Legislature.  Of course, it’s not clear whether a court would actually reign in the Met Council if someone stepped up to challenge their authority.

These legal uncertainties over certificates of participation continue to put the whole project at risk.

Hopefully, the Met Council factored that ongoing risk into their new $118 million contract.