Rochester’s bus line project expands budget by another $21 million

ROCHESTER – Earlier this year, local officials held off awarding bids for an upcoming bus rapid transit line because it would have put the project more than $30 million over budget.

This week, they’ll settle for only about $21 million over.

Rochester officials are working with Destination Medical Center to come up with the extra cash after the Rochester City Council on Monday approved a bid for the last major leg of the project, which is set to wrap up in 2027.

DMC’s board signed off on the extra funding Tuesday morning. The latest bid brings the project’s total estimate cost to about $197 million.

Rochester has steadily grown over the decades into Minnesota’s third-largest city. Its population of about 130,000 is expected to further increase over the next decade in part because of Mayo’s expansion, which will likely bringing thousands of additional employees to the area.

The rapid transit line has already garnered interest from commercial and residential developers interested in a planned transit village on the western edge of the line, close to Hwy. 52, where DMC officials plan mixed-use projects that could see shopping stops next to apartments and day care centers, among other ideas.

While staff and council members didn’t appear pleased with another price hike for the bus line, they reasoned it was better to accept the latest round of bidding rather than rebid the project.

Sampson Brown also pointed out the tight labor market in the area and across southeast Minnesota as contractors work on other major projects like Mayo Clinic’s $5 billion downtown expansion.

The city tried to reach companies within a three-hour drive of Rochester, including contractors in Iowa and Wisconsin, to fuel competition and decrease costs. Few companies submitted bids.

Moving forward on the project is the cheapest option, according to city officials.

“The alternative is to go back and totally redesign the project, which at this rate pushes costs well beyond anything that we can even imagine,” Council Member Nick Miller said.

This is the third time Rochester has sought bids for key aspects of the proposed bus transit line, which includes street reconstruction, an underground tunnel and six bus-station shelters along the 2nd Street corridor west of downtown.

The 2.8-mile stretch of bus line has been in the works for the better part of a decade; the project’s budget has increased during that time as well — it was estimated at about $115 million in early 2022.

Workers started construction last month on the line, which is expected to run buses every five to 15 minutes seven days a week.

The rapid transit line is expected to help ease car congestion downtown, which local officials say must happen if Rochester expects to grow over the next few decades.

The latest round of bids eats up the city’s project contingency fund. That fund is required as part of an $85 million federal grant, which is why Rochester sought more DMC funding to restore the fund.

That doesn’t mean all (or any) of the contingency fund will be spent after this, according to city officials.

Steinhauser said the contingency money is meant only to be used in emergency situations if issues come up during construction. DMC officials urged staff in response to provide quarterly budget reports to oversee spending.

“We don’t want to wait to find out if there’s going to be some emergency need for contingency,” DMC Board Chair Pam Wheelock said.

Wheelock said she was pleased to see the funding come before the board so quickly to keep the project on schedule.