As costs rise for Southwest light rail, so does risk of ‘fatal’ delay

Challenges mount for the Met Council-led project

File photo

As costs continued to rise for Southwest Light Rail Transit, the Metropolitan Council sounded a warning in a federal filing this week that its ongoing dispute with a regional railroad could cause a “potentially fatal” delay for the $1.9 billion project.

The agency is now battling on multiple fronts to keep the state’s largest-ever public works project viable: in federal court, where it faces two SWLRT-related lawsuits; before the federal Surface Transportation Board, which is currently weighing Met Council’s plan to acquire two critical sections of future light-rail corridor; in Washington, D.C., where Congressman Jason Lewis is pushing a measure that could endanger Met Council’s ability to access federal transportation funds; and at its headquarters in St. Paul, where on May 2 it announced the latest bids for the project’s massive civil construction contract.

The $799.5 million low bid from the team of Lunda Construction Co. and C.S. McCrossan was roughly $3 million higher than the lowest of four construction bids submitted last summer — all four of which were rejected because they were too high and included disqualified contractors. Bids in that round ranged from $796.5 million to nearly $1.1 billion.

This second round of bidding attracted just one other offer, from the team of Ames Construction and Kraemer North America, for $812.1 million.

In an email, a Met Council spokesperson said the agency “anticipated that the bids would be more than the lowest bids in August 2017 for several reasons,” including delays to the schedule, inflation, a tightening labor market and rising diesel fuel and steel costs. The spokesperson also relayed a statement from Metro Transit Deputy General Manager Mark Fuhrmann, who said SWLRT leaders would soon “review and refresh its overall budget with Hennepin County.”

After the federal government, the county is the largest funder of the project, a 14.5-mile extension of the Metro Green Line into the southwestern suburbs. A report on the budget is expected later this month, the email added.

Met Council is seeking what’s called a letter of no prejudice from the Federal Transit Administration that would allow it to award a civil construction contract and break ground on SWLRT this summer, even before the FTA awards the project a full-funding grant agreement. That FTA grant is expected to cover roughly half the cost of SWLRT.

In a letter to council members, Met Council Chair Alene Tchourumoff noted the agency followed a similar process for the first segment of the Metro Green Line. Nine letters of no prejudice were issued for the Central Corridor LRT Project, and heavy construction began in 2010, nearly eight months before the FTA grant was awarded, she said.

Still, at least one more barrier stands in the way of Met Council’s plan to start SWLRT work this construction season: an intensifying legal fight with Twin Cities & Western Railroad.

Time and money

In March, Met Council and Hennepin County Regional Railroad Authority announced a joint plan to reorganize ownership and control of two segments of the future SWLRT corridor, the 6.7-mile Bass Lake Spur and 2.6-mile Kenilworth Corridor. Both submitted the required filings with the Surface Transportation Board — which soon also heard from TC&W and more than 30 of its shippers.

The regional shortline alleged SWLRT construction would “substantially and unreasonably” interfere with its right to operate on those tracks. TC&W moves $1.5 billion in freight through the Bass Lake Spur and Kenilworth Corridor each year, mainly agricultural products from southwestern Minnesota and eastern South Dakota.

Met Council and TC&W already had conducted lengthy negotiations over SWLRT construction agreements in 2017. Met Council maintains they were close to a deal late last summer when TC&W added unreasonable last-minute demands; TC&W contends that several issues were unsettled when Met Council walked away from the negotiating table and went silent for months.

Met Council officials said the impasse forced their hand. They struck the deal with Hennepin County, then asked the Surface Transportation Board to quickly review and OK the plan so that SWLRT would remain on schedule.

TC&W’s shippers, meanwhile, asked the board to take its time and open a public comment period. In late April, TC&W filed a lawsuit against Met Council in U.S. District Court — which it cited in a letter to the Surface Transportation Board as yet another reason for the board to delay its decision.

In a May 2 filing with the Surface Transportation Board, Met Council stated a delay “could cost tens of millions of dollars” and “jeopardize” the project.

“Unless the Council is able to establish site control of the Kenilworth Corridor and Bass Lake Spur by the middle of July, 2018, it will be impossible to award civil construction contracts in August, 2018,” the Met Council stated in its filing. “If the project does not begin construction during the 2018 season, the unnecessary delay will significantly impact project costs and delay revenue service. This type of delay cannot be corrected later.”

The board has not yet issued a decision on Met Council’s request. On May 3, the board announced it would postpone the date Hennepin County’s portion of the deal takes effect, but it did not signal whether the plan could face a more significant delay.

“It seems reasonable that the STB would want to take time to review the materials it has received on this matter,” Kate Brickman, the council’s communications director said. “We remain confident in our STB filing and await the STB’s decision.”

On the defensive

Even as Met Council labored to push SWLRT closer to a full-funding grant agreement with the FTA, the agency found itself defending its role in planning and funding regional transportation projects.

The measure authored by 2nd District GOP Rep. Lewis, an amendment to a bill reauthorizing the Federal Aviation Administration, would require the Met Council to come into compliance with a federal statute requiring it and other municipal planning organizations to include elected officials on their boards. The Met Council board has been appointed by the governor since the 1960s, and was grandfathered-in when the current federal law took effect.

Lewis said his amendment would “give citizens power over their regional government.” The House adopted it on a voice vote April 26.

State and local officials opposed to the measure warned its passage could threaten Met Council’s ability to apply for and use federal transportation funds, including the nearly $930 million the agency anticipates winning for SWLRT. In a letter dated April 30, Gov. Mark Dayton urged Senate Majority Leader Mitch McConnell to leave the amendment out of the Senate version of the FAA authorization bill.

Dayton pointed out that the state’s Transportation Advisory Board guides Met Council’s transportation planning. The 34-member TAB includes 18 elected officials, he said, adding that “the Metropolitan Council’s powers are limited to either concurrence or returning the decisions to TAB for reconsideration.”