Warning from Minneapolis
- This is an article about the new light rail line in Minneapolis that is about 2/3 built. It is already producing major budgeting problems. There are so many lessons here, I decided to include my comments within the text.There is a little known proviso attached to federal funding that all citizens should be apprised of. This is referred to in the 5th paragaraph of the present article. --Jerry BridgmanThe headline refers to the only bright spot in this article.Light-rail line is still on schedule
Laurie Blake Star Tribune Published 03/01/2003
Even as construction of the Hiawatha Avenue light-rail line continues on schedule, state and local officials have begun grappling over how to pay for service once it begins.
[As will become apparent, know your funding sources before you start- before the project gets approved!]
The legislative auditor reported Friday that, at the end of 2002, the project was 67 percent complete and had spent $409 million of its $675 million budget.
[2/3 billion dollars for one express route!]
But operating subsidies of $7 million a year will be needed in addition to fare revenues when service begins in 2004. Gov. Tim Pawlenty has proposed that the state pay 40 percent of that, with the cities and counties that benefit from the line picking up the rest.
Metropolitan Council Chairman Peter Bell said Friday that the administration has asked Hennepin County, Minneapolis and Bloomington to come up with a plan for providing their share. He said that they are "frustrated and resistant" to the idea but that "we would like them to come up with a strategy."
[Lesson: Get the affected parties on board before approving the project!]
Failure to operate the line as promised could lead the Federal Transit Administration (FTA) to demand the return of the $334.3 million it contributed to the project.
[Key point, little known hooker in the deal: The Feds collect your taxes, force you to get their approval. Then if it doesn't work out they blame you and require you to pay "back" the money they took off you in the first place!]
The Met Council promised the FTA it would have "stable and dependable funding sources," not just for light rail but for the area's bus system as well.
Other metropolitan areas, counties and cities that benefit from transit systems pay some or all of the operating subsidies, Bell said.
[The sources should be set up before local approval. The FTA should not OK projects that don't have the funding in place. Why do they? Could it be corruption?]
Hennepin County Commissioner Peter McLaughlin has told Pawlenty that in those cases, the cities or counties draw transit funds from a sales tax. In the Dallas area, for example, 13 cities collect a 1 percent sales tax to pay for bus and rail service. They had individual elections to approve the tax and have the option to withdraw every six years.
[If anyone withdraws, who would pay then? This is an unethical way to get local governments on board.]
Lacking a sales tax and the authority to levy one, Hennepin County would have to collect the operating subsidies from property taxes.
Hennepin already has a levy of about $4 million a year for rail transit development activities. If it were to add light-rail operating subsidies, that levy would roughly double, according to county officials.
[I don't understand this. There is only the one rail line. What do they spend $4mil/year on?]
For the owner of a $146,000 house in Minneapolis, the extra county levy would cost $4 in 2004 and $6 in 2005. For the owner of a suburban home valued at $187,900, it would cost $7 in 2005 and $10 in 2005, according to the county.
[Gee, when you put it that way it sounds like so little.]
Rep. Ron Abrams, a Republican from Minnetonka who chairs the House Taxes Committee, said he is not enthusiastic about Pawlenty's proposal. "Property taxes are not the right way to pay for transit, by and large."
[Au contraire, almost the only argument for these expensive transit projects is that they increase property values around the stations. Why not fund them from the increase in property tax collections? -Same principle as TIF funding.]
Abrams said that legislators raised questions in 1999 about how operating subsidies would be paid, but that in their hurry to get federal funding, "the proponents were basically saying, 'Don't worry.' "
[So "the proponents" lied. Why not fine them or throw them in jail? Reminds me of WorldCom or Enron- or Amtrak for that matter.]
Now it is a worry and reflects the fact that neither light-rail in general nor the Hiawatha project in particular ever had broad legislative support, he said.
He suggested that the statewide motor-vehicle sales tax might be the best source of funding for rail service. "Asking property taxpayers to pay for this is going to be difficult," he said.
Charles Honchell, public-works director for Bloomington, said his city is not in favor of the governor's proposal.
"We weren't advocates for light-rail transit, nor were we opponents," he said. "We were going along to help the region, but we did not want to invest any city monies in the project.
[Lesson: You can't be neutral on these things. It is possible to get projects through without approval of affected people and governments. But you will still be expected to pay. In sum: Bloomington didn't support it. The state legislature didn't support it. The article doesn't mention it but the state DOT was opposed to it. But still it went through.]
"We don't think it's correct that a particular transit line is charged any more than every bus line gets charged when it goes by somewhere."
[But rail projects seldom cost less than 3 times as much as equivalent bus service. Someone has to pay the difference!]
Sen. Dean Johnson, DFL-Willmar and chairman of the Senate's Transportation Policy and Budget Division, said the governor's proposal seems to represent another roadblock for the project. "We bought the farm, and now we might as well operate it. Let's fund it and make the best possible use of it for the public," he said.
[See what marvelous sentiments rail projects inspire- once they're approved?]
Two other recent developments pose challenges for the project as well:
The Federal Transit Administration has asked project officials to move the station at the south end of the line closer to the Mall of America. One objective is to create more park-and-ride space, said Bell.
[You'd almost think the FTA has forgotten that this thing will do nothing to improve congestion.]
A revised design and cost estimates will be made public soon, said Mark Fuhrmann, the project's chief financial officer. The matter has not been aired yet because the Met Council, which is pending reorganization under the Pawlenty administration, has held no oversight meetings on the project this year.
[The public signs contracts for these things without fixed price tags. I wish I could get contracts like that.]
Meanwhile, this month, Xcel Energy Co. appealed a U.S. District Court ruling directing the company to pay its own costs for moving underground utilities out of the path of the rail line in downtown Minneapolis. The bill comes to about $20 million. Xcel has appealed to the Eighth U.S. Circuit Court of Appeals.
[This has been going on for years- another thing that should have been settled before approval. How fair is it to force one company to pay $20mil extra for something they don't support? And if the company wins, who will pay?] --JB
-- Laurie Blake is at lblake@....© Copyright 2003 Star Tribune. All rights reserved.