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Potential Southwest rail cuts total $500M

Public officials along the Southwest Light Rail Transit line are considering a list of 50 potential cost-cutting measures to solve the project’s “$341 million problem.”

Project backers are attempting to shave $341 million from the project’s budget after the Metropolitan Council announced in late April that the estimated cost for the 16-mile line from Minneapolis to Eden Prairie had ballooned to nearly $2 billion.

The Southwest Project Office unveiled a list of $500 million in potential reductions at a meeting Wednesday with stakeholders on the Corridor Management Committee. The list includes limiting public art, scaling back park-and-rides and eliminating stations, but the most high-yield cuts would come from trimming up to three stations in Eden Prairie.

The committee will consider a series of scenarios to save $341 million and return the project to its approved $1.65 million budget.

The fastest way to hit that target? End the line at Golden Triangle Road in Eden Prairie to save $375 million, clipping three stations and several miles of track from the alignment which is currently planned to terminate at Mitchell Road. Other options to reduce the length of the line, including ending at Southwest Station and at Eden Prairie Town Center, would also produce big savings.

Eden Prairie Mayor Nancy Tyra-Lukens told reporters Wednesday that the city “could handle” losing a station at Mitchell Road for a savings of up to $120 million, but further reductions to the length of the line would hurt.

Ending the line at Golden Triangle would be “too devastating to the whole line,” Tyra-Lukens said, explaining it would limit access to 16,000 existing jobs at the other three stations and wouldn’t help the project meet its economic development and equity goals.

Mitchell Road is in the most residential area of the city’s stations and would affect how the city serves its own residents, but it has less of an impact on access to jobs, Tyra-Lukens said. Even if the city took that hit, other reductions would be needed throughout the line, which also stops in Minnetonka, Hopkins, St. Louis Park and Minneapolis.

“If you cut Mitchell Station, you’d still need to cut 75 percent of the other items on that list,” Tyra-Lukens said.

Initial work has been completed to estimate whether the cost-saving measures will have an impact on ridership, operational costs, environmental analysis and the project’s rating with the Federal Transit Administration.

Some changes may affect the overall development potential of the line. Not pursuing joint development with the private sector at the Blake Road station in Hopkins, where the station and parking could be wrapped by other uses, could save $15 million. Other stations on the potential chopping block are prime redevelopment sites or already under consideration for new multifamily housing and mixed-use projects.

“It’s going to be a challenge to figure out what to reduce that doesn’t hurt the project and make it less of a project,” said Metropolitan Council Chair Adam Duininck. He also noted it’s important not to make changes that damage the coalition of support already built for the project.

The Corridor Management Committee and the Met Council will likely consider scenarios that spread the reductions across the line.

At the next committee meeting, officials will start to pare down the list and identify reductions that are “off-limits,” Duininck said.

But it was immediately clear that some changes could face more opposition than others.

Removing two of the three Minneapolis stations that connect to north Minneapolis at Royalston Avenue and Penn Avenue is not going over well.

One of the major selling points of the alignment was that it would provide huge benefits for north Minneapolis through economic development at stations, bus connections from neighborhoods to light rail and job access in the southwest metro, said Peter Wagenius, policy aide to Minneapolis Mayor Betsy Hodges.

The community has high expectations for the line, Wagenius said. The predominant connection from the north side to the rail line would be at Royalston, but it’s currently on the list to be removed to save $7 million. Removing a station at Penn Avenue is also suggested to save up to $16 million.

“If the Royalston Station doesn’t exist … how are people in north Minneapolis on the 5, the 19 and the 22, let alone the future C Line and D Line, going to connect to Southwest LRT? How far are we going to make them walk?” Wagenius said.

He also noted that Royalston is the city’s most promising station from an economic development perspective. The station would serve a proposed professional soccer stadium.

Besides cutting project elements, officials could decide to scale back some items and pay the cost later. Some stations could be deferred and added later while park-and-rides can be converted to surface lots or be built for opening day capacity, rather than full build-out.

But deferring those elements means losing out on 50 percent of the funds from the FTA and paying the full capital cost with local money down the road.

Anoka County Commissioner Matt Look wondered whether it was futile to discuss deferring items when 100 percent of the cost would be borne locally at a later date. Since the FTA is paying for half of the $341 million cost increase, he suggested proceeding with the project as-is at the nearly $2 billion project cost.

“Wouldn’t it make sense then that we build it with the $341 [million] included, thereby taking advantage of the federal government’s $170 million match?” Look said.

About 27 percent of the current $2 billion estimate for the project is its contingency fund. It’s unlikely that money could be used to avoid removing elements of the project’s scope or that it would be available in the future to cover items that are eliminated. Since last fall, the FTA has told the Met Council that unused project contingency would not be available for items outside the approved project scope.

The contingency fund is also a little higher than necessary, said Mark Fuhrmann, who oversees rail projects for Metro Transit. After the project’s final risk assessment by the FTA, the overall contingency in the project budget will likely come down, but that won’t happen until the end of this year or early 2016.

“We cannot call upon any contingency savings to help us with our $341 million problem,” Fuhrmann said.

The Corridor Management Committee will continue to discuss potential reduction scenarios throughout June. On July 1, the committee is expected to recommend a new project scope and budget.

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