Over the past week, transit planners in the Twin Cities have cobbled together $145 million to salvage the Southwest light-rail line, providing a level of certainty to a project that has long been fraught with controversy.We will have a project, peasants. Oh yes, we will. Read on:
“We will have a project,” declared Adam Duininck, chairman of the Metropolitan Council, which is spearheading the $1.9 billion light-rail line from downtown Minneapolis to Eden Prairie.
After the project failed to win financial support from a bitterly divided Legislature, the 14.5-mile line was fast running out of cash, facing staff layoffs, possible shutdown and a flagging reputation with the federal government, which is expected to pay half its cost.So what are "certificates of participation," anyway? It's the new way of getting your toys:
On Wednesday, the Met Council threw the project a critical lifeline — approving a new funding plan that deploys an obscure financial tool called “certificates of participation” to raise $103.5 million. The Counties Transit Improvement Board (CTIB), which consists largely of elected officials from metro-area counties, and the Hennepin County Regional Railroad Authority each agreed this week to kick in an additional $20.5 million, as well.
The council will try one more time to win state funding support for the Southwest LRT during the 2017 legislative session. If that fails, then the certificates will be issued the following July bearing an interest rate of about 3.25 percent — slightly higher than general-obligation bonds. If the legislative attempt is successful, both Hennepin County and CTIB’s most recent contributions would be repaid.If you don't recall voting for Adam Duininck, you aren't alone, but don't worry about it. He knows what's best.
The use of the certificates, which the council says is not debt, is rare, but not unheard of — about $13.5 million in certificates was issued to update the council’s office building in downtown St. Paul. About $81 million of certificate financing was also used for the controversial $90 million Senate office building at the Capitol.
The Met Council will finance about $92 million of the certificates, which amounts to $4 million to $5 million a year to pay down principal and interest, while CTIB will finance $11.75 million, about $600,000 in principal and interest annually. The certificates are likely to carry a term of 30 years.