Suburban cities left holding the bag for millions in light-rail funding

An abrupt change in federal funding policy for light rail has suburban cities crying foul.

Several cities along the Southwest Corridor light-rail line say that federal and county officials have left them holding the bag for potentially millions in local, transit-related improvements that they believed would be eligible for federal money in the $1.7 billion project.

"We gave approval to this project based on a series of understandings," said Jake Spano, a St. Louis Park City Council member. "But now small cities are confronted with a very different reality than the one they thought they were getting into six to nine months ago."

In what several local officials call a "clawback," the Federal Transit Administration recently ended its long-standing practice of allowing cities to seek grants from unused contingency money for local improvements related to light-rail projects. The locals first learned of the change in October, after giving their required municipal consent to the rail line over the summer.

Such grants in the past have been worth tens of millions of dollars to local governments for items like parking decks, road and safety improvements, pedestrian bridges and trails linking light-rail stations to the surrounding areas. The $1 billion budget for the recently completed Green Line provided about $23.5 million from unused contingency funds to local governments.

"It's kind of sad to see what some other communities have done with the monies they've gotten, largely from the federal government, and now there's not going to be enough money for us to do as attractive and workable a project as it could have possibly been," said Nancy Tyra-Lukens, mayor of Eden Prairie. "It leaves us having to make some pretty tough decisions as a city."

When the four suburban cities along the line — St. Louis Park, Hopkins, Minnetonka and Eden Prairie — gave consent to the Southwest Corridor project, it was made clear that there would be an opportunity to apply for federal money for improvements related to the line, several city officials said.

Hopkins agreed to be the site of a maintenance and operations facility for the light-rail line. The tax-exempt facility will be built on land that now houses an industrial park.

"As a concession for taking that fairly significant tax base hit on the city that's smallest and least able to make it up, the [light-rail] project agreed to certain things as high priorities as contingency dollars were released," Elverum said. "What we thought might be opportunities — no guarantees, but certainly opportunities — appear not to exist."

The reason for the change is simple, said Peter McLaughlin, a Hennepin County commissioner and chairman of the Hennepin County Regional Railroad Authority. The federal government's budget for light-rail projects has remained fairly flat for a decade.

Meanwhile, there's been a surge of light-rail projects nationwide. About two dozen light-rail lines are currently in some stage of planning or construction — and they're all competing for a stagnant pool of federal dollars.

McLaughlin, who is perhaps more immersed in Southwest Corridor planning than any other local elected official, said he's sensed a change in the federal attitude for some time.

The local governments face an immediate financial decision on transit-related projects. Sometime within the next two to three months, the locals must commit to paying the upfront costs of design and engineering studies for the projects they're seeking — plus an administrative fee to the Metropolitan Council of 3 to 6 percent of the project cost.

If they're unable to come up with the construction funds, they'll have spent engineering money for nothing. But skipping the engineering phase guarantees that the local projects will never be built.

Spano said his city's local projects would contribute to ridership, safety and economic development along the line.

"We're not asking for pretty benches or planters," he said. "We're asking for changes in traffic patterns, so we don't make congestion around the park-and-ride worse than it already is. We're focused on core infrastructure issues that, if you don't build them now, will be infinitely more expensive."

Spano questioned the fairness of asking local cities to bear additional burdens for a project that serves the entire metro area: "Why are the cities being asked to fund part of a regional transit project when we're already paying through our county taxes?"

"I've always been a little bit surprised when people say there's this free pot of money," she said. "These are projects we intend to do — common sense would tell you that these projects should happen. It's better coordination if it can happen with the light-rail project.

"Maybe we're the only ones who thought that way."