$2B Minneapolis light rail project clears last legal hurdle

UPDATE: July 18, 2018: The Metropolitan Council, operating agency and authority behind the $2 billion Minneapolis-area Southwest Light Rail Transit (LRT) project, has reached an agreement with freight rail operator Twin Cities & Western Railroad (TC&W) to share part of the 15-mile line, the StarTribune reports. Pending approval from county officials and the federal Surface Transportation Board, the agreement calls for TC&W to drop a federal lawsuit alleging contract violations, reportedly the last roadblock to beginning construction.

The dispute pushes the construction start date to this fall but will not add to the project's $2 billion price tag, according to Metropolitan Council Chairwoman Alene Tchourumoff. The council extended the Aug. 1 bid deadline for up to 60 days. The lowest bid for the project is $799 million from a joint venture between Tutor Perini subsidiary Lunda Construction and C.S. McCrossan, the StarTribune reports, while Ames Kraemer bid $812 million.

UPDATE: June 4, 2018: County officials last week authorized an additional $204 million in funding for the 14.5-mile Minneapolis-area Southwest Light Rail Transit project. The county is expected to contribute a total of $801 million, as long as key project milestones are reached this summer, the StarTribune reports.

Dive Brief:

Increasing costs for material, land, labor and fuel, topped off by continuing delays, have added $145 million to the price tag of the 14.5-mile Minneapolis-area Southwest Light Rail Transit (LRT) project, pushing its estimated total past $2 billion, according to the Star Tribune.
The Southwest LRT's operating agency and authority, the Metropolitan Council, said the labor shortage, a 17% increase in diesel fuel prices, a 40% rise in steel prices, higher cost of land and an additional $12 million to $16 million in delays due to additional environmental reviews for a $20 million crash protection wall all contributed to the higher projected price. No stations have been cut from the budget in order to compensate for rising costs, but the council did reduce the scope of an operations and maintenance facility for the line.
Local officials called the cost increases "bumps in the road" and said their other lines have exceeded ridership expectations. The additional $204 million in funding, which brings the council's total contributions to $801 million, will cover land acquisitions and a project funding gap. Officials plan to break ground on the project this year – in advance of receiving almost $930 million in anticipated federal funding – and expect the line to be complete in 2023.

Dive Insight:

The Metropolitan Council has not disclosed the total cost of the project nor announced an award for the contract. However, earlier this month, general contractor Tutor Perini announced that it was the low bidder for the Southwest LRT project with a price of $800 million. Tutor Perini said it expected to have an executed agreement in hand within 60 days. The company's wholly-owned subsidiary, Lunda Construction, Tutor Perini said, will carry out the work as part of a joint venture.

This is the second round of bidding for the LRT. In a controversial move, the council rejected the first bidders' proposals last September as being too high. Those bids reportedly ranged from $797 million to $1 billion. This latest round of bids, according to the Star Tribune, ranged from $800 million to $812 million.

According to the council, work on the Southwest LRT is expected to generate about 7,500 temporary construction jobs, worth an estimated payroll of $350 million. However, all of the council's lines are helping to create construction jobs through almost $8.5 billion of nearby residential and commercial developments that are either in the planning stages, under construction or already built along existing or planned light-rail lines. Included in that figure is an estimated $1.6 billion worth of projects entering some stage of development this year alone. Announced projects near the future Southwest LRT stations saw an increase of about $500 million since January 2017.