Final report into delayed Southwest light rail’s finances faces its own delays

The fifth and final report from a state watchdog agency detailing cost overruns and delays related to construction of the $2.9 billion Southwest light-rail line will likely be released this spring, an effort taking far longer than expected.

The report will include a financial audit of the controversial project by the state’s Office of the Legislative Auditor, which launched its probe in the summer of 2021. More than 80% of the line between Minneapolis and Eden Prairie has been built, with passenger service expected to begin in 2027.

“The delay is due to overly optimistic initial estimates of how long the audit would take to complete,“ Legislative Auditor Judy Randall wrote in an email last month.

The Legislative Auditor’s office never gave a specific date for the final report, but there was talk that it would be released during this past year’s legislative session.

The investigation of the biggest public works project in state history, an extension of the existing Green Line, was pushed more than three years ago by Sen. Scott Dibble and former Rep. Frank Hornstein, both DFLers from Minneapolis.

Their request came after a contingency fund to cover unexpected construction costs was nearly depleted even though only half the project had been built. Hennepin County stepped in at the time with $200 million to cover unanticipated budget items, but the seed had been planted for further investigation.

Dibble said last week he hasn’t heard any updates regarding the financial audits. (Hornstein has since retired.)

The Legislative Auditor’s first report in 2021, technically a memorandum, highlighted a fractured relationship between the Metropolitan Council, the regional planning body in charge of building Southwest, and its main architectural and engineering contractor, AECOM Technical Services (ATS).

The difference of opinion between the two was described as “prolonged and significant.”

ATS alleged that the council lacked expertise in building big construction projects and was significantly overcharged for change orders that cropped up by the line’s general contractor, a theme that emerged in subsequent reports as well.

Over the years, the Met Council and Southwest’s general contractor, Lunda/McCrossan Joint Venture, have disagreed with many of the Legislative Auditor’s findings.

But one thing was made clear early on: The project’s major budget busters were a half-mile tunnel in Minneapolis' Kenilworth corridor and a crash-protection wall to separate light-rail and freight trains west of Target Field, a late add that ended up costing $93 million.

Subsequent audit releases from the legislative uditor prompted legislative hearings and cries of outrage from both DFL and Republican lawmakers at the Capitol.

A September 2022 report highlighted what was then a $500 million shortfall to fund the project, a gap since remedied, and the fact that the line was nine years behind schedule.

A report the following March called out the Met Council for a lack of transparency communicating the project’s woes to the public, among other issues.

The findings prompted the general contractor, Lunda/McCrossan Joint Venture, to blame the project’s issues on a “deficient design” and characterize the Legislative Auditor’s reports as “inaccurately reported or incorrectly interpreted” and “lacking any apparent experience or expertise.”

In June 2023, the Legislative Auditor released another report claiming the Met Council failed to effectively enforce the contract overseeing construction of the line, and the report recommended that the Met Council improve the way it manages big transportation projects.

Among the suggestions: The Met Council should toughen construction contract language to hold contractors accountable for change orders, improve the way these changes are managed, and ensure that future transportation construction contracts have sufficient enforcement mechanisms to stem costs and delays.

The findings were “jaw dropping,” Dibble said at the time. Sen. Steve Drazkowski, R-Mazeppa, suggested corrupt practices were involved. “We have an agency that has gone rogue,” he said during a public hearing.

Met Council Chair Charlie Zelle said the council was working through its difficulties.

Since then, the Legislative Auditor’s website has listed the final report, a financial audit, as a “work in progress.”

The Southwest project is being funded with a mix of federal, state and local money.

When asked to comment on the final report, Met Council Spokesperson Terri Dresen said, “since this is the OLA’s report, there’s nothing we could add at this time.”