Item Description:
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Neg Amd 2 to Agmt PR00005488 with Met Council and Hennepin County for Blue Line Extension Project, extend to 06/30/27; no increase to the NTE
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WHEREAS:
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WHEREAS, there exists a Capital Grant Agreement for the METRO Blue Line Extension Light Rail Transit Project (Capital Project 1000941) with the Metropolitan Council and Hennepin County; and
WHEREAS, Resolution 24-HCRRA-0028 authorized an increase of the combined HCRRA and County maximum grant amount to $248,905,000, and subsequently a combined grant amount of $208,100,000 was memorialized in Amendment One to Agreement PR00005488; and
WHEREAS, an extension of the grant activity period and a combined amount of $40,805,000 in previously authorized HCRRA and County funds will be memorialized in Amendment Two to Agreement PR00005488.
Resolution:
BE IT RESOLVED, that the Hennepin County Regional Railroad Authority authorizes the Executive Director to negotiate Amendment Two to Agreement PR00005488, Capital Grant Agreement for the METRO Blue Line Extension Light Rail Transit Project with the Metropolitan Council and Hennepin County, memorializing a maximum grant amount of $248,905,000 and extending the grant activity period to June 30, 2027; and
BE IT FURTHER RESOLVED, that the Authority authorizes the Chair to execute Amendment Two to Agreement PR00005488 on behalf of the Authority, after review and approval by the County Attorney’s Office; and
BE IT FURTHER RESOLVED, that the Authority authorizes the Controller to transfer and disburse funds as necessary to carry out the intent of this Resolution.
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Background:
From 2014 to 2023, the Hennepin County Regional Railroad Authority (the Authority or HCRRA) entered into three separate Cooperative Funding Agreements with the Metropolitan Council for METRO Blue Line Extension project (Project) development and engineering activities:
• A131493 from March 1, 2014, through March 31, 2016 (Resolution 13-HCRRA-0062), in an amount not to exceed $18.4 million; and
• A165878 from September 1, 2016, through March 31, 2017 (Resolution 16-HCRRA-0027), in an amount not to exceed $10.34 million; and
• A176897, as amended 11 times from April 1, 2017, through August 31, 2023 (Resolutions 17-HCRRA-0007; 18-HCRRA-0019; 18-HCRRA-0043; 18-HCRRA-0059; 19-HCRRA-0027; 20-HCRRA-0006; 20-HCRRA-0046; 21-HCRRA-0023; 22-HRRA-0009; 22-HCRRA-0042; 23-HCRRA-0009; 23-HCRRA-0016), in an amount not to exceed $50.89 million
On August 22, 2023, the Authority adopted Resolution 23-HCRRA-0021, which authorized execution of a new grant agreement, Agreement PR00005488, with the Metropolitan Council and Hennepin County to supersede prior agreements and become the vehicle for all future County and HCRRA contributions to the Project (the Capital Grant Agreement). The Capital Grant Agreement initially provided for a maximum grant amount of $75,305,000, of which the County contributed $60,244,000 and HCRRA contributed $15,061,000. The Capital Grant Agreement also put in place several important project governance requirements, including the creation of a Project Decisions Board, which is empowered to make a range of critical decisions related to the Project. The Project Decisions Board consists of two Metropolitan Council members, two Hennepin County commissioners, and one HCRRA commissioner. The Capital Grant Agreement’s initial end date was December 31, 2024.
The Capital Grant Agreement has been amended once by Hennepin County, Metropolitan Council and Authority. The amendment was as follows:
• Amendment One extended the term through June 30, 2026, and despite an HCRRA authorized increase to $248,905,000, Amendment One increased the maximum grant amount to $208,100,000
• Amendment One further authorized the Project Decisions Board, subject to certain requirements, to utilize grant funds for project expenditures that could not be paid with use of federal funds (Resolution 24-HCRRA-0028).
Upon approval of Amendment Two to the Capital Grant Agreement PR00005488, approximately $398.6 million of CTIB, County, and HCRRA funds will be committed to the Project. This amount includes $248.9 million committed by the Capital Grant Agreement PR00005488; $82.8 million in CTIB funding through earlier agreements, nearly $18.1 million provided by the County and CTIB pursuant to Agreement A177882A; and $48.8 million in HCRRA funding through three separate agreements, most recently Agreement A176897.
The Project is currently in the engineering phase, at approximately 90% design. Primary activities during the grant activity period under the proposed Amendment would include final route design and engineering. Also included in the grant activity period would be the acquisition of project right of way and early construction work in the North Loop neighborhood.
The official budget for the Project has not been updated in agreements among Metropolitan Council, Hennepin County and Authority since 2016. At that time, the total Project budget was $1.536 billion, including a commitment of $530.1 million from the County and $149.6 million from HCRRA. These numbers do not reflect the current alignment, nor the cost escalation that has occurred over the past ten years.
Project staff estimate that the current Project budget, after accounting for price escalation and the new alignment, will be approximately $3.2 billion, including a Project contingency factor of 37.5%. New funding commitments, including from Hennepin County and HCRRA, will thus be required to complete the Project. County and HCRRA staff expect to seek updated commitments from the County and HCRRA after a Project budget is finalized and prior to applying for a federal Full Funding Grant Agreement.
Current Request: Authorization to negotiate and execute Amendment Two to Agreement PR00005488 with the Metropolitan Council and Hennepin County for the METRO Blue Line Extension Project (CP 1000941), extending the grant activity period from June 30, 2026, to June 30, 2027, with no newly approved funding. The agreement will allow for continued work on the METRO Blue Line Extension Project.
Impact/Outcomes: This action supports the county’s disparity elimination and climate action efforts by investing in clean-energy transit infrastructure that expands transportation options and strengthens regional connections to housing, jobs, education, healthcare, and other essential destinations.
This request funds services that are: core services
recommendation
Recommendation from County Administrator: Recommend Approval