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Light rail's $625 million price excludes some key costs

The official cost of Minnesota's first light-rail line, which has grown $180 million in the past year and a half, is now $625 million.

But that still does not include at least $86 million in additional tax and private-sector money that will be spent on light-rail-related projects. Most of the additional money is vital to making the Hiawatha Corridor light-rail line a reality -- and it pushes the project's actual cost beyond $700 million.

For example, the official budget does not take into account $11.5 million for a bridge to take the rail line over Minneapolis' Lake Street. Instead, the bridge's cost is part of $43 million in light-rail-related items that are in the budget for the reconstruction of adjacent Hwy. 55.

Light-rail opponents say that the project's official price tag remains understated. And they claim that state officials have purposely not counted the price of key elements of the project to keep the official cost down and make the project more salable to the Legislature and the public.

But Ted Mondale, chairman of the Metropolitan Council, the regional planning agency that will operate the line connecting downtown Minneapolis, the airport and the Mall of America, disagrees. "I think we've been very straightforward," he said. "There's a whole bunch of things you could argue, 'Are they in or are they out?'" of the project's true cost.

"If you build a park-and-ride [lot] at Fort Snelling, is that part of the project or out?" he asked.

For the record, the $6.5 million for the 1,200-space lot to be built next to a light-rail station at Fort Snelling is part of the rail budget. But the cost of tearing down a nearby state transportation maintenance garage and moving that operation to Arden Hills to make room for the lot is not in the rail budget.

A project spokesman said the maintenance garage was excluded because state officials planned to move it anyway eventually, even without light rail.

Varying costs

While some items left out of the official light-rail budget are relatively inexpensive, others are important in terms of their price and significance.

One of those is the two-block segment of rail needed in downtown Minneapolis to connect the Hiawatha line to the Northstar Corridor, a proposed commuter-rail line that would bring passengers downtown daily from the St. Cloud area and points in between. Though connecting the two rail lines is a key part of the state's transit strategy, the $250,000 in preliminary engineering costs to extend light rail from 3rd Av. N. to 5th Av. N. is in the Northstar budget -- not the light-rail budget.

What's more, the estimated $10.7 million needed to build the two-block light-rail segment has not been budgeted at all. Officials, said Tim Yantos, project director for the Northstar Corridor Development Authority, do not know which project ultimately will pay for the construction.

In another case, light-rail officials have estimated that it will cost utility companies between $10 million and $12 million to move lines and cables in downtown Minneapolis for the project. But because rail officials think the cost should be paid by the utilities -- a point the companies are challenging -- the cost is not in the $625 million.

And in a few cases, light-rail-related items have literally been divided -- with some of the cost in the light-rail budget and some of it left out. For example, because light-rail cars will travel on 5th Street in downtown Minneapolis, a bus lane will be built on S. 4th Street to accommodate buses rerouted off 5th St.

The bus lane's cost is $800,000 -- $160,000 of which shows up in the light-rail budget. The city of Minneapolis will assemble the rest from city and federal funds, according to Metro Transit.

Light-rail officials said such decisions are often guided by limitations imposed on rail finances. State money for light-rail, for example, is capped by legislative action at $100 million.

How to track?

But opponents said the financing plans make it difficult and confusing to track light rail's true cost.

"This is so fudged it's unbelievable," said Lynn Woodward, a former campaign worker for Gov. Jesse Ventura and a key light-rail critic who has found allies among legislative rail opponents. Woodward thinks that light rail's cost ultimately could exceed $900 million.

David Strom, legislative director for the Taxpayers League of Minnesota, a nonprofit advocacy group that has criticized light rail, said project officials have not counted the cost of key items because of "political pressure" to keep the official budget as low as possible.

Even without the added costs, light-rail opponents add, the official budget has risen from $448 million to $625 million since February 1999.

"They have never told the truth on this project," Strom said. "They don't really care if it's a good project anymore. People's political fortunes are tied to it."

Strom and other critics also said that leaving key project features out of the $625 million budget is a way to conceal the fact that officials cannot deliver the light-rail system they originally promised without going over the advertised budget.

"It's pretty much the same story everywhere," said John Kain, a University of Texas at Dallas social sciences professor. Kain, who previously taught in Harvard University's economics department, has studied rail in Dallas, Atlanta and San Diego. "It turns out you can't build as much as you promised you were going to," he said.

Project officials said there are legitimate reasons why some costs have not been included in the rail line's budget.

Including $43 million of light-rail-related costs in the Hwy. 55 budget, they said, stemmed from a decision several years ago not to build a six-lane freeway on Hwy. 55. Heavy public opposition to the freeway led to the current plan for a four-lane highway with adjacent light-rail transit. Because there was money to build the road but not the rail line, the Federal Highway Administration between 1985 and 1990 agreed that some of the freeway funds could be spent for the transit improvements -- either light rail or a busway -- that would make up the difference in people-moving capacity.

As a result, officials said, the money was included in the Hwy. 55 budget for road-related improvements that will benefit the light-rail line. The $43 million will be used to build bridges to take light-rail trains over E. Lake Street and Hwy. 62, and to pay for the remodeling of four bridges along Hiawatha Avenue, repaving Minnehaha Avenue and reworking the 3rd Street ramp.

But state officials, even as the light-rail line gained its current momentum, have never counted the $43 million as a light-rail cost.

As for the other costs that opponents claim should be part of the rail line's true cost, light-rail officials say that they are too indirect to be considered part of the cost of the project.

One example, they said, is the public money being set aside to help fuel future private development surrounding light-rail stations. Rail supporters have long said that one of its major benefits will be the future building -- namely high-density, less car-dependent development -- that is expected to occur near the light-rail stations.

The Met Council has set aside $5 million -- not included in the $625 million -- to buy land and otherwise foster transit-oriented development after light rail is built. But a Met Council official said the money is not -- and should not -- be considered a light-rail-related cost.

"It really has nothing to do with the rail line itself," said Connie Kozlak, the Met Council's transportation planning manager. "It's a development thing." Though the money is being eyed for the Hiawatha Corridor, she added, some of it might eventually be spent on transit-oriented development elsewhere.

The same philosophy, Kozlak said, should apply to a pending request by the Minneapolis Community Development Agency (MCDA) for $1.6 million from the Met Council to help bring about transit-oriented development at Lake Street. The point, she said, is to goad private developers to take advantage of light rail once it is built. For that reason, she added, it is not a direct light-rail expense.

"Let's say somebody builds a 20-story skyscraper [with public assistance] next to a light-rail station -- is that a cost of light rail or a benefit of light rail?" asked Art Leahy, Metro Transit general manager and the chief staff person for light rail. "If you build a highway and a city builds a City Hall by the freeway off-ramp, no one says the cost of the highway has gone up."

City officials have used similar reasoning to explain a complex $21.7 million land swap and tax abatement proposal involving a parcel near the Metrodome. According to the plan, the Star Tribune would trade the so-called Downtown East block to the MCDA in exchange for another block nearby. A light-rail station, an underground parking garage and, in the future, a privately developed commercial and retail building would then go up on the Downtown East block.

Of the proposal's $21.7 million cost, only $5.5 million is in the $625 million light-rail budget. The bulk of the $21.7 million is coming from city, Hennepin County and Met Council budgets.

Supporters of the proposal said the plan will likely be less expensive than obtaining the land -- which is critical to light rail -- from the Star Tribune through condemnation.

"I think it's important to address ... the false perception that Minneapolis is proposing [this] as a way to come up with additional public money to relieve budget pressures on the Hiawatha LRT project," Steve Cramer, the MCDA's executive director, told legislators last month.

"Building the LRT station and tracks is the role of the Hiawatha LRT project," said Cramer. "But making additional public infrastructure investments ... is the role of the MCDA."

Mike Kaszuba can be contacted at mkaszuba@startribune.com

Laurie Blake can be contacted at lblake@startribune.com

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