What’s New – and Not New – in the Southwest Light Rail Auditor’s Report

The Southwest Light Rail Project is rarely talked about without the “troubled” forerunner. As such, a report from the Legislative Auditor’s Office commissioned by a rare bipartisan agreement between the House of Representatives and the Senate must carry the “long-awaited” precursor.

Released last week and discussed Thursday by the House and Senate Legislative Audit Committee, the special examination was something of a disappointment. Rather than following the normal pattern of findings and recommendations, the review was more of an explanation of many things already known about how the project’s budget and timeline expanded.

Judy Randall, the legislative auditor (a different office from state auditor Julie Blaha), told the commission that the limited scope was intentional and that there is more to come.

“We have a team still working on a program evaluation and it’s still ongoing. But we decided to do a special review to try to get information out to members and the public as quickly as possible,” Randall said.

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From close 20 questions asked by the legislator, “we decided to remove the ones we could respond to the fastest,” Randall said. “What is the budget? How has he changed? Who pays for the Southwest? What is the timeline and how has it changed?

In the cover letter to the report, the Office of the Legislative Auditor admitted to other limitations. “We did not assess whether cost overruns or cost delays were justified. We also did not assess the quality of the project’s designs or engineering; the adequacy of the route selection process; or whether different designs, engineering, or routes could have resulted in reduced costs or delays.

Source: Office of the Legislative Auditor, analysis of Metropolitan Council data

Southwest LRT Project Budget Sources, March 2022

The project will connect Target Field Station to Eden Prairie. The 14.5-mile line will include 16 new stations, two rail tunnels and six pedestrian tunnels. The Met Council estimates it to be 62% complete with an expected opening date of 2027.

Given the somewhat limited scope of this report, here’s a look at some of the things readers of the report didn’t learn, what they did, and what’s yet to come.

Four things we doesn’t learn:

1. Any evidence of fraud or wrongdoing. Those who expected the Met Council to be lambasted, or hoped to see clear evidence of wrongdoing or fraud that could lead to the project being scrapped, were likely disappointed. That doesn’t mean such evidence doesn’t exist in the history of the project first approved in 2011 by the Federal Transit Administration. It’s just that listeners haven’t been there — at least not yet.

2. Lots of new information. Given the scope of the special examination (it is NOT specifically an audit that is a broader examination of a program), there is not much new. This report is the Legislative Auditor’s attempt to understand the long history of this project, including how the price doubled and the planned opening was extended for nine years.

3. How the project budget has increased and how the project has been delayed. We already knew from the Met Council in January that the budget for the project had grown to $2.74 billion. It was then that the Met Council also revealed that there was no identified funding source for the $534 million gap between the new budget and the money available. When announcing the new budget and timetable, the Met Council also predicted that the first paying passengers would not board the trains until 2027. In fact, it was these admissions by Met Council management that lit fire under council and draft and led to the request for a special report from the Legislative Auditor.

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4. Why the budget has increased and the project schedule has been delayed. The Met Council had previously explained the main causes of the time and budget delays which the report describes in detail:

  • The long back and forth over whether the freight lines crossing the corridor would be moved, giving all the space to light rail or co-locating light rail and freight in the same narrow corridor.
  • The construction of light rail tunnels in the Kenilworth Corridor, tunnels necessitated by the decision to co-locate freight and passengers.
  • The BNSF’s demand that if light rail were to share the right-of-way owned by the railroad, it would have to build a long and expensive wall to prevent collisions between light rail and freight trains if either another train is derailed.

Cumulative cost of change orders by month, March 2019 to April 2022

Source: Office of the Legislative Auditor, analysis of Metropolitan Council data

Cumulative cost of change orders by month, March 2019 to April 2022

Four things we did learn:

1. The funding gap still exists. The report showed that what the Met Council highlighted in January is still a problem. In other words, no progress has been made to close the gap from earlier this year, when council staff pointed to a few sources for the first $80 million. Met Council chairman Charlie Zelle said he was working on the issue. “I am confident that we will have an answer and that we will have it by the end of the year,” he said on Thursday.

2. Met Council staff decisions have contributed to the increased costs. When the giant building contract went up for auction, two expensive pieces weren’t included: the perimeter wall and a station in downtown Eden Prairie that had been removed as part of a cost-cutting , then put back in place after this city had received federal authorization. transportation subsidy and covered the difference with city funds.

The interior of the Gare du Sud-Ouest.

metropolitan council

The interior of the Gare du Sud-Ouest.

Staff told the Legislative Auditor that neither had been fully designed when the civil construction contract was put out to tender. Waiting for the design work to be complete would have delayed the bidding process, and delays have always cost the project money. Costs for both were added later as change orders. Lawmakers like Sen. Scott Dibble, DFL-Minneapolis, have called it misleading. Paying known costs from contingency funds — funds meant to cover unforeseen costs — kept the budget artificially low, Dibble said.

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3. The relationship between the Met Council and Hennepin County is sour. This is not a positive development, as Hennepin County and the Hennepin County Regional Rail Authority (both of which have revenue authority and are governed by the same seven commissioners) are the only sources of additional funds for the project. This is because generally the federal contribution is frozen when the funding agreements are signed.

When the Countys Transit Improvement Board, the five counties’ funder of regional transit projects, was disbanded, Hennepin County assumed the obligations within the largest county in the state. The situation improved with the doubling of the county’s transportation sales tax. But this funding source covers the county’s contribution not only to SWLRT, but also to blue line expansion, county light rail operating costs, bus rapid transit projects and to the Northstar commuter train.

Contingency funds available, July 2019 to February 2022

Source: Office of the Legislative Auditor, analysis of Metropolitan Council data

Contingency funds available, July 2019 to February 2022

When the Met Council this spring asked for a transfer of some pandemic-related federal funds from the county to the project, the County Board of Commissioners said no thanks.

“According to a Hennepin County official, the county would not be able to provide additional funding to the Southwest LRT if doing so would compromise the county’s ability to meet any of these other commitments,” the auditor’s report said. legislative.

4. The Met Council stays on full blast. Zelle said council remained confident that the South West LRT would benefit the region both as transport infrastructure and as an engine of economic growth. Killing it now would cost more than finishing it, he said on Thursday.

Two things we could still learn when another report comes out next year.

1. An assessment of the actions of Met Council staff. After discussing the decision not to include Eden Prairie Station and the Corridor Wall in the major bidding process, “OLA’s upcoming program evaluation plans to examine whether the Council has correctly accounted for these expected change orders in the project budget, contingency fund, and/or timeline.”

More answers to the 20 questions posed by the legislator. Lawmakers want the Office of the Legislative Auditor to make recommendations on how the Met Board can avoid future problems and increase transparency. They also want the legislative auditor to do a cost-benefit analysis.

Jose P. Rogers