History: Resolution 17-0207, adopted on June 13, 2017, approved the assumption of certain unpaid funding commitments for the Southwest Light Rail Transit (METRO Green Line Extension) Project (CP 1005876) (the “Project”), the assumption of the 2017 Capital Grant Agreement (Counties Transit Improvement Board #01-2017-01/Met Council #17I007) (the “CTIB Grant Agreement”) with the Metropolitan Council (the “Council”) for the Project, and the imposition of the 0.5% sales and use tax and $20 motor vehicle excise tax that are the primary sources of funds for Hennepin County contributions to the Project. Through these and other actions, Hennepin County agreed to take responsibility for the remainder of the 30% share of project funding formerly committed by the Counties Transit Improvement Board and the remainder of the 10% share formerly anticipated from the State of Minnesota. The CTIB Grant Agreement was subsequently amended various times -- to increase the not-to-exceed amount, to extend the expiration date, and to attach other conditions -- by the following resolutions: Resolution 17-0436 (October 24, 2017); Resolution 18-0091 (March 13, 2018); Resolution 18-0221 (May 31, 2018); Resolution 18-0344 (August 21, 2018); and Resolution 18-0439 (October 25, 2018).

The Hennepin County Regional Railroad Authority (“HCRRA”) provided funding for the Project, as well, under a separate grant agreement. This agreement was first authorized by Resolution 16-HCRRA-0037 and subsequently amended by Resolutions 17-HCRRA-0029, 18-HCRRA-0012, 18-HCRRA-0026, 18-HCRRA-0039, and 18-HCRRA-0054 R1.

During this time, the Council was seeking a Letter of No Prejudice (“LONP”) from the Federal Transit Administration (“FTA”) related to the Project. An LONP was needed to allow the Council to begin construction activities prior to the execution of a Full Funding Grant Agreement (“FFGA”) with the FTA, with the potential for those construction expenditures to be treated as part of the local match required for future federal funding. On November 14, 2018, the FTA provided the LONP (“LONP1”), authorizing the Council to award its civil construction contract and to begin work under that contract, pursuant to a defined scope of work. This scope of work was expected to allow the Project to proceed with civil construction under a Limited Notice to Proceed (“LNTP”) to the contractor through the end of August 2019, by which time the Council expected that the Project would have received an FFGA. This LNTP authorized the contractor to perform work costing $216,000,000.

Resolution 18-0499, adopted on November 15, 2018, gave Hennepin County approval for the work and expenditure of the amounts authorized under LONP1. It also authorized negotiation of a new grant agreement (“the LNTP Grant Agreement”) to replace the amended CTIB Grant Agreement and to be the sole funding source for all Project activities through the end of August 2019. On the same day, HCRRA adopted Resolution 18-HCRRA-0056, likewise approving the work under LONP1, and likewise authorizing the negotiation of the LNTP Grant Agreement to replace the existing HCRRA grant agreement.

The LNTP Grant Agreement was then negotiated and executed, with a not to exceed amount of $434,901,943 in total funds from the County and HCRRA. The funded activities included the civil construction work authorized under LONP1, any pre-award activities requiring and receiving prior approval by the County and HCRRA Boards, and ongoing overhead expenses and other professional services related to the Project.

The LNTP Grant Agreement established a number of conditions on this funding. One such condition related to any future requests for Letters of No Prejudice from the FTA. Specifically, the LNTP Grant Agreement provides that “Grantor will only authorize Grant funds to be expended on LONP activities if Grantor has provided its prior approval for the submission of a request for a LONP to the FTA.”

Following the adoption of Resolutions 18-0499 and 18-HCRRA-0056, the Council awarded the civil construction contract to Lunda-McCrossan Joint Venture (“LMJV”). The Council provided LMJV the expected LNTP to perform work through August 29, 2019, and LMJV began work on the Project. As of the end of May 2019, the County and HCRRA have paid $16,658,389 for work performed by LMJV, out of a total contract amount of $799,514,338.22.

The Council now wishes to request another LONP (“LONP2”) from the FTA. The Council has determined that an FFGA will not be forthcoming prior to the end of August 2019, at which point the LNTP to the civil construction contractor will expire. The civil construction contractor is expected, by that point, to have completed the work authorized by LONP1. The Council wishes to give the civil construction contractor a second LNTP, so that it can continue working past August 2019, thereby avoiding a project shutdown and significant delays and cost increases. Receipt of LONP2 would ensure that the work under the second LNTP is eligible for federal match at such time as the FFGA is received. The additional work by the civil construction contractor to be authorized under LONP2 is further detailed in Exhibit A.

The Council also wishes to request a Letter of No Prejudice authorizing award of another major Project contract – the “systems” contract – and the commencement of work on that contract under an LNTP. A delay in proceeding with this contract would likewise lead to project delays and cost increases. The bids for the systems contract will be opened on June 6. If the Council receives a valid bid on that date, the Council would intend that LONP2 include the required authorizations for work under the systems contract, further detailed in Exhibit B.

This Resolution provides the County’s prior approval, as required by the LNTP Grant Agreement, for the Council’s submission of this request to the FTA. The first resolving clause authorizes the Council to request a Letter of No Prejudice for the civil construction contract. The second resolving clause authorizes the Council to request a Letter of No Prejudice for the systems contract. This Resolution provides authorization related to both contracts, regardless whether the requests are combined into a single submission to the FTA or submitted separately. The Council believes that the work proposed to be authorized for these two contracts will be completed by the end of March 2020.

Current Request: Approval of the submission to the Federal Transit Administration of a request for a Letter of No Prejudice for the Southwest LRT Project.

Impact/Outcomes: This Resolution will allow the Council to request a Letter of No Prejudice for the Southwest LRT Project from the Federal Transit Administration, which is required to ensure that Project expenditures past August 31, 2019, qualify for federal matching funds.