The proposed Central Corridor light-rail line between Minneapolis and St. Paul took a key step Thursday toward possible federal approval, but project costs must be cut for it to compete favorably for federal transit money.

The Federal Transit Administration allowed the project to begin preliminary design, a process that will take about two years. If the schedule is followed, the trains would start running in 2014.

"This announcement means it is no longer a matter of if, but rather when LRT will be coming to the Central Corridor," St. Paul Mayor Chris Coleman said in a statement Thursday.

Metropolitan Council Chairman Peter Bell said the Transit Administration asked hundreds of questions about financial and management plans before moving the project forward. "In the eyes of the FTA, we clearly have a very viable project," he said.

But to receive final federal approval and funding, the estimated project cost of $930 million must be trimmed to meet the agency's cost-efficiency guidelines.

Over the next six months, officials will discuss how to do that. That could mean running the rail line at street level through the University of Minnesota instead of building a tunnel preferred by the university; shortening the line on the St. Paul end, or forgoing some of the street improvements desired along University Avenue.

Preliminary design and engineering will result in 60 percent of the line design. That will give the Transit Administration more details on station plans, project costs and funding sources and allow the agency to decide whether to approve the Central Corridor for final design and 50 percent federal financing.

A line following University Avenue between the Twin Cities would be expected to have higher ridership than the Hiawatha Line, which carries an average of 28,750 riders on weekdays between downtown Minneapolis and Bloomington. Projected weekday ridership on the Central Corridor is 38,100 by 2020 and 43,300 by 2030.

Because the line would run past the university, businesses in the Midway district of St. Paul and the State Capitol, "LRT along the Central Corridor has the potential to be an even bigger success than our Hiawatha Line," Bell said. "It also will support and encourage the revitalization already taking place all along University Avenue."

If the line is ultimately approved, officials hope to begin construction in 2010 and have the line operating four years later. It would have 16 stations, 31 trains and a trip time of 35 minutes between the two downtowns.

Laurie Blake • 612-673-1711 • lblake@startribune.com