Golden Hydrant Goes to $79 Million Interchange Project

Written by Jeff Johnson on June 29, 2012. Posted in Golden Hydrant

“Signature” project and “iconic” public space = Bad news for taxpayers

This week, the county board voted to move forward with the $79.3 million Interchange project in Minneapolis – advancing an additional $22 million in property taxes to the project (on top of the $10.8 that HennCo property taxpayers have already spent), along with another $6.3 million from the county’s Solid Waste Enterprise Fund (fees assessed on property owners’  waste hauling bills) which, while not a property tax, is still taxpayer money.  I was the only “no” vote.  In my frustrated mind, this project deserves something even more special than a Golden Fire Hydrant – but I don’t have a platinum-plated or diamond-encrusted version of the Hydrant, so we’ll stick with the original.

This project is particularly frustrating to me because: 1. We are clearly spending much more than necessary on the project; 2. The cost skyrocketed over 30% overnight just a few weeks ago; and 3. County taxpayers are going to end up paying a much larger percentage of the overall cost than we originally promised.  AND, most importantly, we could see all of these things coming for at least the past year and just kept moving full speed ahead.

The Interchange (which has its own website and county staff) “will serve as a unique, multi-modal transportation hub and community gathering space in downtown Minneapolis.”  Here’s what it will look like:

I first learned about the Interchange two or three years ago when it became apparent that we had not planned for the difficulties of several trains converging on the area next to Target Field.  I was skeptical from the start.  Even the early concept of the Interchange was grandiose – what I’ve heard referred to many times as a “signature” project and an “iconic” public space.  I had two key initial questions:  1) How much will it cost? and 2) What percentage of that cost will fall to Hennepin County taxpayers?

The very rough cost estimate at that early stage was $65 – $75 million, and the plan was for Hennepin County taxpayers to cover 10% of that total cost.  The budget was based upon receiving most of the money from the state and federal governments, along with some other entities.  I left that initial meeting assuming an approximately $7 million contribution from the county taxpayers for the project.

So what has happened since then?

1. We’re spending much more than necessary on the project.  Despite my opposition to our massive light rail and commuter rail spending spree, that spree is moving forward without my support and I do realize that we need to do something to deal with the train convergence downtown.  I just don’t believe we need to do something signature and iconic – which really means ridiculously expensive.  Let’s do what needs to be done to make the trains run on time and keep passengers safe.

The fact that we’re overspending on this project was confirmed last year when we decided as a county board to solicit public ideas on the design and amenities of the Interchange.  I was concerned that the result of this would be many new ideas increasing the cost of the project (which had a budget at the time lower than the $79 million we ended up at this week).  Staff assured me that we had an ample cushion in the budget then to provide for many “high-end add-ons.”  One only need to look at the picture above (and read the description of the promenade, the campanile, the Great Lawn and even the ice sculptures and skating rink) to see that this project isn’t about making the trains run on time.

2. The cost skyrocketed by over 30% overnight a few weeks ago.  Our request for “best and final offers” in early May included a “hard-cap budget” of $55 million.  When we did not like the two proposals we received at that budget, a new request for best and final offers was issued – this time with a budget of $72 million.  That’s a budget increase of 31%.  Not an eyebrow was raised.

3. County taxpayers are going to be responsible for a much larger proportion of this project than promised.  Since Day One, I was told county taxpayers would be covering about 10% of the costs (or around $7 million based on the original rough estimate).  When we allocated $10.8 million of property tax money to the project early on (which was already well over the 10% threshold), the official line was that county taxpayers would not be on the hook for any larger portion of the budget.  I heard that in meeting after meeting for well over a year: “We will find the money to pay for the remainder of this project from other sources – at $10.8 million, county taxpayers have done all they will need to do.”

At some point earlier this year, however, it became apparent that there was less interest in this project at the state and federal level than had been anticipated.  At that point, there was discussion that county taxpayers might need to “front” some of the remaining amounts in the budget.  Rest assured, so it went, that the county coffers would be replenished eventually from other sources.

As of our vote this week, county taxpayers are on the hook for $39.1 million of this project.  That’s just over 49% of the total cost.  There is no question that we will recoup some of that extra $22 million we added this week – maybe even a majority of it.  In fact, I’m willing to be wildly optimistic and assume we’ll recover 75% of that additional $22 million.  In that event, county taxpayers will have contributed $22.6 million to the project – about 28.5%.  In that optimistic scenario, we’re more than a bit off from the $7 million/10% contribution of days past.

For a taxpayer, there’s a lot to be frustrated about with this project, especially since we could see these problems coming but didn’t seem to care.  To me, it’s one of the best examples of my time on the board of government being rather cavalier with our constituents’ money.

 

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