Southwest LRT will take three extra years to finish, Met Council to pay up to $210 million settlement

MINNEAPOLIS (FOX 9) - The over-budget and behind-schedule Southwest Light Rail project will take an extra 34 months to finish, putting it on track to open sometime in 2026, according to a proposed settlement between the Metropolitan Council and its prime construction contractor.

Met Council is proposing to pay its contractor, Lunda McCrossan Joint Venture, $40 million immediately and up to $210 million to settle disputes that have emerged over the past year between the two sides. The council oversees construction and will operate the 14.5-mile line once finished.

Cost overruns and delays have pushed the most expensive public works project in state history well above its original $2 billion budget. Last year, Met Council tapped a $200 million contingency fund from Hennepin County taxpayers, which is now mostly committed. The council has been unable to give an updated cost estimate for months.

"These changes have impacted both the time required [for Lunda McCrossan] to complete its work and the costs under the civil construction contract," Metro Transit General Manager Wes Kooistra and project managers wrote in a memo to council members. "These changes will also delay the systems contractor, the start of revenue operations, and result in additional costs."

In the memo, Met Council officials said changes they have made account for 30 months of the 34-month delay. The half-mile Kenilworth Tunnel and a crash protection wall separating the new light rail from the BNSF freight line near Interstate 394 in Minneapolis are responsible for many of the overruns.

A spokeswoman for Met Council declined to address questions about the $210 million amount or new timeline. 

"The Council does not believe it is appropriate to comment on this matter until the Council members have an opportunity to consider and vote on this matter in an open meeting tomorrow," Terri Dresen, the council spokeswoman, said in an email.

The settlement may ultimately cost more than the proposed $210 million amount because Met Council and Lunda McCrossan dispute who is responsible for the other four months of delays. What's more, they have not agreed on the total costs impacts of labor and equipment overruns, change orders, and productivity of the work performed to date.

Met Council and Lunda McCrossan are trying to negotiate an agreement, but the dispute may ultimately require mediation, Kooistra and the project managers wrote.

Met Council has said little publicly about the behind-the-scenes dispute with its prime contractor. Many details spilled out last fall because of an inquiry from the Minnesota Office of Legislative Auditor into the project's issues.

Council members, who are appointed by Gov. Tim Walz, got their first look at the proposed settlement during a meeting that was closed to the public last week. Members are poised to vote on the deal Wednesday.

Meanwhile, public scrutiny of the project budget and timeline are increasing.

Wednesday morning, the Legislature's Commission on Metro Government is scheduled to hold a hearing about the issues facing Southwest Light Rail. Two influential Minneapolis Democrats, state Rep. Frank Hornstein and state Sen. Scott Dibble, plan to seek funding for an audit of the project.

The issues have also drawn renewed scrutiny of Met Council's governance structure. Hornstein and Dibble have said they will introduce legislation making council members elected instead of appointed. Republicans have raised similar accountability concerns in the past.