Funding feud could derail Blue Line light-rail extension as key decision nears

By Nathaniel Minor | Minnesota Star Tribune (TNS)

The story of the proposed Blue Line extension is one of survival.

Planners and supporters of the $3.58 billion light rail project that would connect downtown Minneapolis to the city’s North Side and suburbs beyond have weathered hostility from state lawmakers and members of Congress, a costly route change, and opposition from some along the route.

Now, the project is facing another crisis.

Its two most vital backers — Hennepin County, which is providing the lion’s share of the project’s funding, and the Metropolitan Council, which would operate the line — are publicly battling over how to cover a $224 million local funding shortfall that must be resolved before project sponsors can apply for a $752 million federal grant.

The clock is ticking. Costs for the project, which has been in the works for decades, continue to rise as the years drag on. Local officials are also worried that a transit-averse Trump administration will tighten grant rules soon that could make it even harder to land needed federal dollars. There’s $30 million in state funding on the line as well.

“This is the moment,” said Hennepin County Commissioner Jeffrey Lunde of Brooklyn Park, who referenced mega projects like Target Field and the Green Line extension that had their own hours of truth when proposals teetered.

“All these things have the moment where stuff gets real,” he said in an interview. “People argue loud, but it’s when stuff gets done.”

Dueling public meetings last week held by the county and the council did little to resolve the beef that first became public earlier this summer. Accusations of racism and favoritism have only heightened the tensions.

Planners hope to submit their federal funding application by the end of October so, if all goes to plan, construction can begin next year and trains can roll by 2033.

“These communities deserve high-quality transit,” Met Council Chair Robin Hutcheson told the Minnesota Star Tribune. “They deserve it. We are not giving up hope. We are committed to the Blue Line.”

But if the stalemate persists, the project could at the very least be delayed. At worst, local supporters fear, planners will miss the boat on federal funds and face the prospect of pursuing a significantly scaled back project alone or abandoning the rail plan altogether.

That would delight Republicans and some community members who’ve been pushing for a much cheaper bus rapid transit line instead. But the project’s demise would also mean the Twin Cities would lose, after the Green Line extension opens next year, its last best hope for a new light rail line for the foreseeable future.

Hennepin County and Met Council staff and policymakers have been turning over proverbial couch cushions and making trims to the project since the Blue Line’s cost estimate jumped by $336 million this summer to $3.58 billion.

They agreed on axing a parking ramp and pedestrian bridge, tentatively bringing the price tag down to about $3.4 billion pending federal approval.

Hennepin County leaders also recently upped their financial commitment to $2.254 billion — funded mostly through cash raised by the county’s .5% transit sales tax and bonds backed by that revenue.

But county officials say they don’t have another dollar to spare. Their recent commitment would max out the county’s transit sales tax revenue until construction ends, a spokesperson said in an email.

In a 12-page memo and at a public meeting last week, county leaders argued the Met Council is flush with cash after DFL lawmakers in 2023 established a .75% metro-wide transit sales tax that brings in hundreds of millions of dollars.

State law prevents that sales tax from funding light rail construction. So the county is proposing a sidestep where the council would cut the number of train cars and pay for them with federal dollars that flow to the council every year.

But that suggestion is running into a legal hurdle state legislators built just a few years ago — specifically because they were unhappy that the Met Council had used a similar shift to cover a gap on the beleaguered and increasingly expensive Green Line extension project.

DFL Rep. Brad Tabke of Shakopee called the Green Line funding maneuver a “shell game” by the council and county, and a key reason legislators passed the 2024 law explicitly saying the council must “only use direct appropriations in law or federal sources” to pay for light rail construction costs.

The county argues that the 2024 law’s wording still allows the council to fund light-rail construction with those federal dollars, but Tabke said that is not what lawmakers intended.

“It has to be either a direct appropriation from the state or a direct appropriation from the federal government in order to go toward these types of projects,” he said.

The council says the 2024 law, its own policies, and an agreement between it and the county prevent it from paying for light rail construction.

Some Met Council members defended the Green Line spending, with one saying it was a “different beast and a different time.” They also supported senior staff’s conclusion that the council cannot afford to fund Blue Line construction without cuts to existing service and planned bus network expansions.

“That’s not going to happen,” Council Member Judy Johnson said.

That the council stepped up for the Green Line project but is resisting doing so for the Blue Line has struck project supporters in the northwest suburbs, like Brooklyn Park Mayor Hollies Winston and Lunde, as contradictory.

Lunde accused the council of discriminating against the economically and racially diverse suburbs the Blue Line extension would serve.

“At the end of the day, I believe it’s about race because it sure the hell smells like it,” Lunde told the Star Tribune. “It sure feels like it.”

A council spokeswoman declined to comment on Lunde’s statement and reiterated the council’s proposed solution: that the county use some of a $358 million contingency fund to close the gap for now.

County officials have rejected that, saying they believe the federal government will require that contingency fund and shuffling it could jeopardize the grant application.

A flurry of open letters from groups repping neighborhoods, housing, environmental, business, and organized labor interests all pressed leaders, including Gov. Tim Walz, to keep the project alive.

The Federal Transit Administration and the Walz administration did not respond to requests for comment.

And there isn’t unified support for the project along its route, either. At the county’s recent meeting, Minneapolis City Council Member Pearll Warren, who represents the North Side, criticized the planned train for a variety of reasons, including her prediction that it would drive up already increasing property tax bills and would hurt small businesses.

“The whole North Side needs a facelift,” she said, adding: “But it can’t start, I’m sorry, with the investment of the train.”

Meanwhile, a Washington, D.C.-based transit expert who’s monitored the landscape in Minnesota said the metro area’s rail struggles could hurt its chances the land the $752 million in federal money that the council and county are scrambling for.

Jeff Davis, senior fellow at the Eno Center for Transportation, said the Met Council’s recent decision to kill the Northstar Commuter Rail, which had hundreds of millions of dollars in federal support, has been noticed in Washington.

“There is a lot of ‘fool me once, shame on you, but fool me twice, shame on me’ sentiment in DC transit circles regarding the Northstar failure,” he said.

Tim Harlow of the Minnesota Star Tribune contributed to this report.

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