Changes that lead to new Hennepin County transportation tax affect light rail projects

A move to disband a transit improvement board has led to a delay in the Metropolitan Council’s application to receive federal funding for the proposed Southwest Light Rail Transit line, but will ultimately lead to more funding for future lines.

The Counties Transit Improvement Board, which represents five metro counties, has taken action to dissolve itself and end its quarter-cent sales tax.

The Hennepin County Board of Commissioners, in turn, voted 5-2 June 13 to terminate its part of the joint powers agreement for the five-county transit improvement board.

The Hennepin County Board majority agreed to create a half-cent sales tax in Hennepin County aimed at supporting county transit and transportation projects. The board also approved a $20 tax on new car sales to replace a similar Counties Transit Improvement Board tax.

The regional quarter-cent sales tax will end Sept. 30 while Hennepin County’s half-cent sales tax will begin the next day. The sales tax initially will raise an estimated $125 million annually.

During the 2017 legislative session, Minnesota lawmakers eliminated the possibility of spending any state money to fund the operations of the future Southwest Light Rail Transit line, which would extend the existing Green Line from downtown Minneapolis to Eden Prairie.

As a result, a Hennepin County transportation tax implementation plan anticipates that the county will cover the entire operating transit subsidy for the Southwest Light Rail Transit line. The plan estimates the operating subsidy for the line at $27.8 million beginning in 2022.

The Counties Transit Improvement Board had previously anticipated that the state would have covered half of the operating costs, as it does with existing transit lines.

The legislation did not preclude the possibility of the state covering half of the operating costs of future light rail lines, such as the Bottineau Light Rail Transit Line that would run extend the Blue Line from downtown Minneapolis to Brooklyn Park.

“The absolute bars (to adding light rail lines) were removed from the bonding and the transportation bills,” said Sen. Ron Latz, DFL-St. Louis Park. “There was some last-minute negotiations over the language relating to Met Council funding mechanisms, which we were successful in getting narrowed down to just Southwest Light Rail.”

Hennepin County plans to cover the Counties Transit Improvement Board’s share of the operations of the Bottineau line while the state would cover the other half, according to its transportation plan. The cost to Hennepin County for the Bottineau line, or Blue Line Extension, would be $14.8 million annually beginning in 2023.

Latz called the result of the legislation unfair to the taxpayers of Hennepin County who support transit funding throughout the state but will have to pay for the full costs of operating the Southwest Light Rail Transit line.

However, Latz said, “That was the only way to make it happen this year, and if we want to move forward that’s what we have to do.”

The new Hennepin County tax would cover the local share of capital and operating costs for existing and future transit lines through 2036, according to a county projection.

Application delay

Amid all the changes, the Metropolitan Council plans to delay its application to the Federal Transit Administration for a full-funding grant agreement that would commit the federal government to paying for half of the estimated $1.9 billion to build the Southwest Light Rail Transit line.

The Met Council had anticipated receiving the full-funding grant agreement from the federal government this summer, but the council now anticipates applying for the grant later this year and receiving it sometime next winter, said Kate Brickman, communications director for the Met Council.

“It was pushed back a little bit because of the dissolution of CTIB,” Brickman said.

The Met Council is waiting for the changes to be settled before the Met Council finishes the last piece of work with the Federal Transit Administration on the federal funding, Brickman said.

She expressed optimism about the project’s prospects at the federal level.

“I certainly want to respect the process the FTA has, but we continue to have a good relationship with the FTA on the strengths of our project,” Brickman said.

She pointed to a bill Congress approved in May that provides $10 million for the Southwest Light Rail Transit line in anticipation that the Federal Transit Administration would provide the project with a full-funding grant agreement.

“That was really good sign in terms of the partnership at the federal level,” Brickman said.

Delays for bid opening

However, the Met Council has repeatedly delayed the opening of bids for work on the Southwest Light Rail Transit line.

“Bid opening for the civil construction contract has been extended to Aug. 15 to allow additional time for bidders to prepare bids,” said Laura Baenen, communications manager for the project. “This is the third deadline extension. The Met Council plans to award the contract and the contractor is expected to begin construction activities later this fall.”

Baenen has indicated in the past that some construction activities can begin before the Met Council receives the full funding grant agreement from the federal government.

Regarding the rationale for the delays, Baenen said, “The project has received more than 670 technical questions to date from the contracting community and the additional time provides potential contractors the opportunity to incorporate responses to those questions into their bids. The SWLRT project is Minnesota’s largest public works project that includes construction of 29 new bridge structures, two cut-and-cover tunnels, six pedestrian tunnels, more than 100 retaining walls and modifications to seven existing bridges.”

Heavy construction on the line would occur 2018 through 2020.

“We don’t believe this will mean a major impact on the overall schedule,” Baenen said. “By allowing the contractors more time, it allows them to better refine their bids and cost estimates. Once the Council awards a contract, we’ll have more precise timelines and a better idea of any impact.”

Met Council approves of changes

Despite the delay to the Met Council’s federal application for Southwest Light Rail Transit, Brickman said the council is pleased with the moves relating to the Counties Transit Improvement Board.

“I think ultimately we are really pleased with the votes and the direction CTIB is headed and supportive of the action,” Brickman said. “CTIB has been a really great partner and really important to the funding and development of our regional transit system over the last few years. Unfortunately, because of the unwillingness of the state to pay its share, we had to look at a way to change the dynamics.”

The change will allow Hennepin County and Ramsey County, in particular, to provide more investment in transit infrastructure, Brickman said.

“We’re supportive of that, and particularly we’re appreciative of Hennepin County taking on so much funding responsibility going forward to be able to realize what our region needs for transit funding,” Brickman said.

Along with paying for all the operations costs of the Southwest Light Rail Transit line, she noted that Hennepin County plans to take over the amount the Counties Transit Improvement Board would have paid to build the line.

Brickman said, “I think while we were disappointed to not get a sustainable transit funding source from the legislative session, it’s clear we continue to have a lot of really strong partners across the region.”