Legislative Auditor report identifies "deficiencies" in Met Council's management of contractors on troubled Southwest Light Rail project
MINNEAPOLIS -- A new report from the Office of the Legislative Auditor published Wednesday found the Metropolitan Council has "deficiencies" in its management of the troubled Southwest Light Rail project, plagued by cost overruns and delays.
The probe, the second part of two program evaluations, determined the regional planning agency in the Twin Cities metro did not adequately enforce the terms of its contracts with an outside firm for construction of the 14.5-mile extension of the Metro Green Line from downtown Minneapolis to Eden Prairie.
The transit project has faced more than 650 construction change orders impacting the scope, cost and timeline. The legislative auditor's report said the Met Council at times "agreed to pay the civil construction contractor what it requested with little or no explanation for the Council's conclusion that the proposed costs were reasonable."
In some cases, the Met Council paid the contractor for change orders without validating that it actually incurred the costs it claimed, the auditor found.
"Now is the time to think hard about who should be the responsible authority for those projects," said Legislative Auditor Judy Randall told a panel of state lawmakers on the Legislative Audit Commission Wednesday. "Based on what we've seen and based on the structure we have for funding and building, I'm not convinced the Met Council is the right entity to be the responsible authority for those projects."
The initial cost estimate for the project back in 2011 was $1.25 billion and the planned opening was set for 2018. The budget at the start of construction four years ago was $2 billion, but last year the Met Council estimated it would actually cost $2.77 billion by its completion -- an increase of 38%. Right now, it's not scheduled to open for service until 2027.
As of June 2023, the council had not yet determined a source for all of the funds it needed to complete the project, the report said.
The evaluation included several recommendations for the Met Council to improve its management of this project and others in the future. But the agency pushed back.
In a letter responding to the findings, Met Council Chair Charlie Zelle said the suggestions from the legislative auditor's office "do not align" federal guidance or construction law and are "not appropriate for a project of this size and complexity, and in some instances could have contributed to additional delay."
"I wish the Met Council was perfect. Sadly, we are not," Zelle told the commission. "We are learning every day and certainly we have learned a lot through the course of this project and the course of the reviews by the legislative auditor."
In one example highlighted in the report, the Met Council accepted a change order that the contractor originally proposed $350,000 to add the Eden Prairie Town Center Station to the project, assuming that the contractor's own crews would perform the work.
But the contractor later proposed that the council pay more than three times this amount in order to secure a special subcontractor for the same work, the report detailed. The council accepted those higher costs, but the contractor did not submit any documentation to explain the increase.
Sen. Scott Dibble and Rep. Frank Hornstein, chairs of the Minnesota House and Senate transportation committees, said the report underscored their deep concerns about the Met Council's lack of accountability and transparency to taxpayers.
"It's jaw-dropping," Hornstein said. "This lack of enforcement of their own contracts is really very, very problematic and did contribute to the delays and cost overruns. That is very clear in the report today."
The pair want the Met Council's governance structure to get an overhaul. Right now, the 17 members of the planning agency are appointed by the governor and they work with local governments in the region on transit and infrastructure, like parks and wastewater treatment.
This year's state transportation budget includes a new task force to contemplate a different way forward. It instructs the panel to study the impacts of making the Met Council a directly elected body, replacing the Met Council, or shifting its responsibilities to local governments.
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"We hope that we can be standing here a year from now with a completely restructured Metropolitan Council that will be accountable to the region," Hornstein said.
The law requires the Metropolitan Governance Task Force, whose membership will be decided by July 15, to submit a report to the legislature next year. Hornstein and Dibble think the members of the Met Council should be elected.
"This is public money, this is taxpayer money. Now we have a project that overall has inflated to almost three times the original cost," Dibble said. "There's no mystery here."
Criticism of the Met Council and its decisions crosses the political divide. Sen. Mark Koran, R-North Branch, vice chair of Legislative Audit Commission, has suggested outright eliminating the Met Council. He urged Gov. Tim Walz to "instill leadership and accountability in this body" by appointing new members this year.