An agreement to dissolve a five-county transit board means Hennepin County will be called on to contribute an additional $103.5 million toward construction of the $1.9 billion Southwest light-rail line.
The Hennepin County Regional Railroad Authority has already signed on to contribute about $186 million for Southwest. The new agreement brings the county’s total to about $289 million.
The pact also means that a controversial method of financing big public projects using “certificates of participation” will no longer be part of Southwest’s tenuous funding puzzle.
The proposed 14.5-mile line between downtown Minneapolis and Eden Prairie would operate entirely in Hennepin County, stopping in St. Louis Park, Hopkins and Minnetonka along the way. If built, the line is expected to open for passenger service in 2021.
The increased financial commitment from the state’s most-populous county is part of a deal struck in recent days that calls for the dissolution of the Counties Transit Improvement Board (CTIB), a key funding source for the Twin Cities’ transit network.
By breaking up, the five counties that make up CTIB — Hennepin, Ramsey, Dakota, Anoka and Washington — can raise a local sales tax to a half cent for transportation projects, up from a quarter cent. Only Hennepin and Ramsey counties are expected to increase the tax by that amount. Increased taxes in Ramsey County would go toward transit projects there.
CTIB’s demise removes the state from funding light rail projects like Southwest, where it was supposed to pay 10 percent of the cost. But Republican lawmakers at the Capitol have balked at doing so, leaving the funding blueprint for regional transit projects like the SWLRT uncertain.
Faced with a hole in the transit budget, the Metropolitan Council stepped in last year and grudgingly said it would issue $103.5 million in certificates of participation. The council would have assumed more debt at a time it was facing a $74 million hole in its own budget.
But now that CTIB is disbanding, and Southwest’s state share shifting to Hennepin County, the Met Council no longer needs to use the certificates. “We’re relieved and satisfied that we do not have to pursue them,” said Met Council Chairman Adam Duininck, who has called the certificates a distasteful option.
Cementing Southwest’s local funding means the line could qualify for $929 million in federal grant money. The Met Council will apply for federal funding this summer.
If CTIB dissolves, Hennepin County will no longer be on the hook to contribute to transit projects outside of its borders, such as the $485 million Gateway Gold Line bus-rapid transit between St. Paul and Woodbury, said Hennepin County Commissioner Peter McLaughlin, who also serves as CTIB’s chairman. Ramsey and Washington counties would be on the hook for that line.
Hennepin County will likely borrow money, backed by sales tax revenue, to pay the additional $103.5 million portion of the Southwest costs, taking advantage of its Triple-A bond rating and ultimately saving taxpayers money, McLaughlin said. The increased tax revenue will also help fund other projects in Hennepin County, including the $1.5 billion Bottineau Blue Line LRT.
All five CTIB counties must first approve the board’s dissolution. If that happens, the CTIB counties would avoid a forced breakup mandated by pending state legislation.
Another provision in the transportation bill would have required legislative approval before cities, counties and regional rail authorities spend money on light-rail projects.
On a voice vote Tuesday, the transportation conference committee deleted that proposal.