New audit, renewed criticism of Met Council's oversight of Southwest Light Rail project

The release of a new audit of the Southwest Light Rail Transit project in the Twin Cities prompted sharp questions and bipartisan criticism from Minnesota lawmakers on Monday.

But officials with the Metropolitan Council, which is overseeing the nearly $3 billion project to extend light rail service from Minneapolis to Eden Prairie, said the line is on track to begin service in 2027.

That’s after the project, an extension of the existing Green Line, has been plagued by delays and major cost overruns going back years.

The report released Monday — the latest in a series of audits conducted by the state Office of the Legislative Auditor — focused on construction of the light rail line. That includes the work of the contractor, Lunda/C.S. McCrossan Joint Venture, and the Met Council's oversight of that contract.

Among the findings, the audit said the Met Council “did not apply a consistent variance threshold, or establish guidance that includes the factors and conditions to consider, when comparing its change order cost estimates against Lunda/C.S. McCrossan Joint Venture’s estimates.”

The audit noted several change orders where the Met Council approved contractor estimates that were multiple times what the Met Council initially estimated for the work.

“Without an established threshold or guidance for variances when comparing estimates, it is difficult to determine if the Council received fair and reasonable costs for project change orders,” the audit reported.

The audit also found:

• Shortcomings in how the Met Council and the contractor monitored and reported the work of subcontractors and suppliers classified as “disadvantaged business enterprises.”

• The Met Council did not adequately monitor, and ended up overpaying for, disposal of contaminated soil along the route. That included leaving signed, blank manifests for the contractor at the start of each day — and not reconciling to ensure that what was reported was accurate.

• The contractor did not always have required security measures and safeguards in place.

The audit examined work from January 2019 through March 2023.

“We have learned a lot from all of the OLA reviews, and I’m pleased to report that we have actually instituted a number of reforms and processes,” Met Council Chair Charlie Zelle told lawmakers Monday at a hearing where the audit was presented. “This report identifies a number of areas where we could improve, and in fact, we have revised and augmented a number of our procedures.”

Regarding the variances between Met Council and contractor estimates, Zelle said those change orders had “significant scrutiny and analysis.” He said the Met Council has improved its estimating process, including hiring a new cost estimating consultant.

As for monitoring of contaminated soil, Zelle disputed the finding that the Met Council overpaid its contractor. But he said the agency is looking at other improvements, including electronic manifests.

At Monday’s hearing, lawmakers from both sides of the aisle were critical of the Met Council’s handling of the Southwest Light Rail Transit project.

Speaking to increased costs due to change orders, Democratic state Sen. Scott Dibble of Minneapolis — a longtime critic of the Met Council’s structure and its oversight of the project — said “it’s exactly what happens when an organization feels no pressure to be transparent, to be accountable to the public that it serves.”

“Until we do major reform in the Met Council, and how it does its business, and what business it actually does and is responsible for ... I don’t believe this will change,” said Republican state Sen. Cal Bahr of East Bethel.

Republican state Sen. Steve Drazkowski of Mazeppa took issue with Zelle’s response to the audit’s finding that the Met Council did not properly monitor disposal of contaminated soil. He questioned how Zelle could be certain there were no overpayments.

“You admit that you didn’t keep track of, and reconcile properly, the loads — but we paid the right amount. You can’t have both there,” Drazkowski said. “You can’t have your cake and eat it, too. So don’t be giving us that.”

Zelle stressed to legislators the complexities of the project.

“This is by far the largest and most complicated infrastructure megaproject ever undertaken in the state of Minnesota. Twenty-nine new bridges, two LRT tunnels, six pedestrian tunnels, and over 120 retaining walls,” he said.

While costs and delays ballooned for much of the project’s history, Zelle said it has remained on budget for the past several years. He told lawmakers Monday that testing of train cars on the line could begin by the end of this year, with scheduled service set to begin in 2027.

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