Met Council has not been transparent about Southwest Light Rail cost overruns and delays, says Legislative Reviewer

The Metropolitan Council continued to spend millions on the $2.7 billion Southwest Light Rail despite not having enough money to complete a project already marred by delays and cost overruns, according to an Office of the Wednesday report Statutory Auditor.

The 42-page report, the second of four expected on the difficult project, questions the way the contract was tendered, the council’s seemingly strained relationship with its prime contractor and a lack of transparency in communicating the project’s many issues the public.

Southwest — the state’s most expensive public works project ever at more than $1 billion under budget — is more than 70% complete but is still on budget at $272 million, according to the report. Operations on the line between downtown Minneapolis and Eden Prairie are expected to begin in 2027, almost a decade behind schedule.

The report, submitted to the Legislative Audit Commission Wednesday, “reiterated our concerns about the mismanagement of this project” by the Met Council, Sen. Scott Dibble and Rep. Frank Hornstein, both DFLers from Minneapolis, said in a joint statement. The duo, the driving force behind the lawmakers’ inquiry, are pushing for Met Council members to be elected, not appointed.

“The lack of prior planning, an enforceable timeline, a competitive bidding process, and a peer review process resulted in increased costs and lengthy delays,” Dibble and Hornstein said in their statement. They added that the Met Council “knew there were problems but only shared these concerns much later.”

The report’s conclusion that the council was not “fully transparent” to the public and lawmakers about the project’s rising costs and delays proved irresistible to the agency’s many critics.

“The Southwest Light Rail is a treat of historic proportions,” said Senator John Jasinski of Faribault, the senior Republican on the Senate Transportation Committee, in a statement. “The Metropolitan Council has failed utterly in managing the project.”

Legislative examiner Judy Randall said Wednesday that the Met Council is not “as cooperative as most state agencies when we call.” Requests for information were often “numerous” and while she said most documents were eventually provided, there was “a lot of back-and-forth and follow-up”.

In his formal response to the review, Met Council Chairman Charlie Zelle said the report does not give the council enough credit for transparency and accountability to its funding partners, the federal government and Hennepin County. He added, “While project funding is shared among multiple parties, risk and accountability rests with the Met Council.”

Zelle informed the Legislative Audit Commission that the Council has adopted a new policy on “approaching and managing risks” in the advancement of transit projects, clarifying their risks, roles and responsibilities.

According to the report, the project’s delays — which inevitably resulted in higher costs — are due in large part to the difficulty of constructing a tunnel for light rail in Minneapolis’ narrow and rocky Kenilworth Corridor, just inches from the Cedar Isles condominiums.

The crushing of light rail and freight trains and a popular bicycle and pedestrian path in the isthmus between Lake of the Isles and Cedar Lake, amid poor ground conditions, led to a series of costly changes in the way the tunnel was built.

By October 2020, construction company Lunda-McCrossan Joint Venture (LMJV) predicted a completion delay of 759 days – just over two years – mostly due to the tunnel difficulties, according to the report.

“The long delay has serious financial implications,” the report said.

While critics have accused the Met Council of knowing ahead of time that tunneling in the Kenilworth corridor would unearth a wet, rocky mess, the examiner’s report says engineering reports prepared before construction began predicted no significant problems.

Other significant cost drivers included the late addition of a $93 million 1-mile crashwall west of Target Field to separate freight and light rail trains, and the re-erection of a station at Eden Prairie that had been eliminated in 2015 due to cost concerns . Cut.

When the council advertised the project in 2018, it didn’t include the crash wall or the Eden Prairie station in the package. The fact that the work on the crash wall was not competitively tendered raised concerns among the examiners. Met Council officials claimed that bidding for the work would have added more than $200 million to the project’s cost and a three-year delay, but auditors called that analysis “incomplete.”

One of the recommendations in the report calls on the legislature to create a framework for future light rail projects in which the lead agency has some financial responsibility. The report finds that the Met Council has no incentive to “effectively manage spending” on a project in which it has invested little itself.

Much of the report examines the seemingly strained relationship between the Met Council and LMJV, Southwest’s prime contractor. It concludes that the council has not held LMJV responsible for “repeated failures to provide an acceptable project plan”.

In some cases where LMJV presented a construction plan, the report reported that the council simply refused to accept it. On another occasion, the council identified more than 1,000 separate items that required corrections.

The contract with LMJV gave the council an opportunity to suspend payments until it received an acceptable schedule, the report said. But the Council “hasn’t used its influence to the fullest… simple [allowing] the contractor to move forward for years without an accepted schedule.”

In March 2022, the Met Council agreed to pay LMJV $210 million in a settlement that included a mutually agreed timeline for the line’s completion. The Council acknowledged that the delay of at least 30 months was not the contractor’s fault. But LMJV “has not committed to capping its fees to that amount,” the report said, noting the council could end up paying more.

The report notes that the council delayed providing detailed information about changes that would adversely affect the project. Met Council officials, for example, knew that there were problems with tunneling in the Kenilworth corridor at least in early 2020. But it wasn’t until January 2021 that they announced a “potential delay” — without saying how long the delay would be or the costs involved.

“The Council does not have any mechanisms to feel accountable to the public in any way,” Dibble and Hornstein said in their statement.

Two additional reports examining the Council’s oversight of contractors and a financial audit will be forthcoming from the Legislative Auditor. No release dates have been announced.

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