Auditor's report finds Southwest Light Rail project has governance issues

A new report on the Southwest Light Rail project has identified a host of governance issues, and suggests that the Minnesota Legislature fundamentally reorganize how such major transit projects are planned, paid for and built.

“The Metropolitan Council obligated funds it did not have, did not develop a contingency plan if the funds did not materialize, and was not fully transparent about project costs and delays” in connection with the Southwest Light Rail project, the Minnesota Office of the Legislative Auditor wrote in the report released Wednesday.

The report is part of series examining various aspects of the project to build a 14.5-mile light rail line linking downtown Minneapolis with Eden Prairie, Minn.

A report issued last fall found that since 2011, the cost to build the extension of the Metro Green Line had more than doubled to $2.74 billion. Wednesday’s auditor’s report put the figure at $2.767 billion, with the project also running far behind schedule. It's now slated to open in 2027.

The report cited a “mismatch between the entities that fund the construction of transit projects and the entities that are responsible for constructing them” in Minnesota's framework for developing light rail projects.

Most of the funding for the project is coming from the federal government and Hennepin County, with additional funds from the Hennepin County Regional Railroad Authority, the state of Minnesota and cities along the route.

The auditor’s report stated that the Met Council committed to spending more money than the project had; solicited bids with incomplete project plans; added “substantial new or changed work” after bidding was complete; and didn't provide enough accountability for cost and schedule changes.

The report found that even with the cost increases, Southwest Light Rail “is still comparable to other light rail projects nationally on a cost-per-mile basis. However, its cost increases since starting construction are far greater than those experienced by most other projects.”

Among recommended remedies, the auditor’s report suggests that “the Legislature should create a framework in which the government entity responsible for light rail transit construction also bears some financial responsibility for construction costs and any potential cost increases.”

In an initial response included with the auditor’s report, Metropolitan Council Chair Charles Zelle disputed some of the findings. He wrote the report “minimized” the Met Council's transparency and accountability. Zelle also wrote negotiations with the contractor on schedule adjustments “followed industry best practices” and “mitigated the overall delay to the project by at least two years.”

But Zelle also wrote that the Met Council agreed with the recommendation to “align funding responsibility with the government entity responsible for light rail transit construction.”

The report released Wednesday will be followed at a later date by another report examining the Met Council’s oversight of contractors working on the project, as well as a financial audit.