History: The budget for the Southwest Light Rail Transit (METRO Green Line Extension) Project (the “Project”) anticipates receiving a Full Funding Grant Agreement (an “FFGA”) from the Federal Transit Administration (the “FTA”), under which the FTA would contribute $928.8 million to the Project. In order to qualify for an FFGA, a project must undergo a Financial Capacity Assessment (“FCA”), in which a Financial Management Oversight Consultant (the “FMOC”) hired by the FTA evaluates the ability of the project funders to supply sufficient resources to complete the project. In June 2018, the FMOC for the Project explained that, in order to receive an FFGA, the Metropolitan Council would need to demonstrate its financial capability to address a cost increase or funding shortfall of 10% of the total Project budget, in addition to the contingency funds already included in the budget. The FTA has since made clear that a commitment to meet a 10% cost increase beyond budget will be required of all future projects in the New Starts program throughout the country prior to award of an FFGA.

Accordingly, on November 15, 2018, this Board passed Resolution 18-0500, making such a commitment for the Southwest Light Rail Transit (LRT) project and the Bottineau LRT project. The Resolution provided:

“BE IT RESOLVED that Hennepin County hereby commits to funding up to an additional $200.3 million to address the FTA’s requirement that the METRO Green Line Extension Project (Southwest LRT) evidence the availability of funding up to an additional 10 percent of the total project budget to cover potential cost increases or funding shortfalls, which amount is in addition to the County’s funding commitment for the capital costs contained in the Project Budget, approved in Resolution #18-0222; and

BE IT FURTHER RESOLVED, that Hennepin County similarly commits up to an additional 10 percent beyond the total project budget for the METRO Blue Line Extension Project (Bottineau LRT) at the budget levels approved in the County’s funding commitment resolutions for the Bottineau LRT project; and

BE IT FURTHER RESOLVED that this additional amount will be made available only upon exhaustion of all funding sources and contingency amounts identified in the project budgets.”

On April 4, 2019, the FMOC issued its revised draft FCA. In this document, the FMOC expresses concern regarding the language in the third resolving clause of Resolution 18-0500. It explains that “the Hennepin County resolution should be revised to remove the language requiring that the Project must first ‘exhaust’ all other sources of funds and contingency included in the Project budget.” The FTA has indicated that it will not invite the Project to apply for an FFGA until this concern is addressed.

This Resolution therefore deletes the third resolving clause of Resolution 18-0500. Previous New Starts projects in Minnesota have not exceeded the required base project contingency, and controls are in place by the County and the Metropolitan Council to seek to assure that the base project contingency will not be exceeded.

Current Request: This request seeks to revise adopted Resolution 18-0500, related to funding for the Southwest and Bottineau LRT projects.

Impact/Outcomes: The Resolution responds to a request from the Federal Transit Administration in regard to securing regulatory approvals for funding for the Southwest LRT Project.