Item Description:
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Neg Amd 1 to Agmt PR00005488 with Met Council and HCRRA for Blue Line Extension Project, extend to 06/30/26, incr NTE to $248,905,000
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Resolution:
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BE IT RESOLVED, that the Hennepin County Board of Commissioners authorizes the County Administrator to negotiate Amendment 1 to Agreement PR00005488, Capital Grant Agreement for the METRO Blue Line Extension Light Rail Transit Project with the Metropolitan Council and the Hennepin County Regional Railroad Authority (HCRRA), extending the grant activity period to June 30, 2026 and increasing the Maximum Grant Amount by $173,600,000, for a new total Maximum Grant Amount of $248,905,000, of which the County will contribute up to $198,244,000 (CP1005877) and HCRRA will contribute up to $50,661,000 (CP 1000941); and allowing the Project Decisions Board to authorize use of grant funds for project expenditures that cannot be paid with federal funds; and
BE IT FURTHER RESOLVED, that the Board authorizes the Chair to execute Amendment 1 to Agreement PR00005488 on behalf of the County, after review and approval by the County Attorney’s Office; and
BE IT FURTHER RESOLVED, that the Board authorizes the Controller to transfer and disburse funds as necessary to carry out the intent of this Resolution.
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Background:
Resolution 17-0207, on June 13, 2017, approved the assumption of certain not-yet paid funding commitments for the METRO Blue Line Extension Light Rail Transit Project (Capital Project 1005877) (“Project”), the assumption of the 2017 Counties Transit Improvement Board (CTIB) Capital Grant Agreement (CTIB 02201701/Met Council 174I001/County A177882A) with the Metropolitan Council for the Project, and the imposition of the 0.5% Transportation 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 project funding formerly committed by CTIB and the remainder of funding formerly anticipated from the State of Minnesota.
Agreement A177882A set the maximum grant amount at $66 million, to be paid with a mixture of CTIB and County funds. The parties subsequently amended Agreement A177882A twelve times to extend the agreement’s end date, as well as to authorize the expenditure of $11,087,084 in county funds in addition to the maximum grant amount. The most recent amendment, approved by Resolution 23-0188 R1, extended the end date of Agreement A177882A to August 31, 2023, with no increase to the maximum grant amount.
On August 22, 2023, the County adopted Resolution 23-0323, which authorized execution of a new grant agreement, Agreement PR00005488, with the Metropolitan Council and HCRRA to take the place of prior agreements and become the vehicle for all future County and HCRRA contributions to the Project. This Agreement 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 Agreement also put in place a number of 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 Agreement’s end date is December 31, 2024.
To date, approximately $225 million has been obligated to the Project. This amount includes $75 million from the current Capital Grant Agreement PR00005488; nearly $18.1 million provided by Hennepin County and CTIB pursuant to Agreement A177882A (nearly $17 million in Hennepin County funds and nearly $47 million in CTIB funds); $82.8 million in CTIB funding through earlier agreements; and $48.8 million in HCRRA funding through three separate agreements, most recently Agreement A176897.
This Resolution would authorize negotiation of Amendment One to Agreement PR00005488. This Amendment would extend the grant activity period to June 30, 2026, and increase the maximum grant amount by $173,600,000, for a new maximum grant amount of $248,905,000. Of this amount, Hennepin County would contribute $198,244,000 and HCRRA would contribute $50,661,000. Finally, the Amendment would also authorize the Project Decisions Board, subject to certain requirements, to approve use of grant funds for project expenditures that could not be paid for with federal funds.
The Blue Line Extension Project is currently in the engineering phase and published a Supplemental Draft Environmental Impact Statement on June 14, 2024. Primary activities during the grant activity period under the proposed Amendment would include preparation of final environmental documentation and final design and engineering of the new route. Also included in the grant activity period would be the acquisition of project right of way. These activities would support the application for a Full Funding Grant Agreement (FFGA) to the Federal Transit Administration.
The official budget for the Project has not been updated 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 eight years.
Project staff roughly 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. Staff expect to seek updated commitments from the County and HCRRA after a project budget is finalized and prior to applying for an FFGA.
Current Request: Authorization to negotiate and execute Amendment 1 to Agreement PR00005488 with the Metropolitan Council and Hennepin County Regional Railroad Authority for the METRO Blue Line Extension Project (CP 1005877), extending the grant activity period to June 30, 2026, and increasing the maximum grant amount to $248,905,000. The agreement will allow for continued work on the METRO Blue Line Extension Project.
Impact/Outcomes: This action supports the county’s disparity reduction efforts by investing in transportation infrastructure that reduces climate impacts and gives people transportation choices and access to housing, jobs, schools, medical facilities, and other destinations of choice.
recommendation
Recommendation from County Administrator: Recommend Approval