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Summary

We publicly released our review of the status, cost, and completion schedule of the Hiawatha Corridor Light Rail Transit Project in Minneapolis, MN. We found that:

• The scheduled completion date of December 2004 and cost estimate of $675.5 million are reasonable. However, tunnel construction, relocation of private utilities, and post-September 11 concerns about security could affect the project’s schedule and costs.
• The project may encounter temporary cash flow shortfalls because costs are expected to exceed reimbursements during construction. In response to a recommendation in our June 2001 draft report, the sponsor’s governing board adopted a cash flow management plan for the project.
• While having secured funding commitments to construct the project at the current cost estimates, the project sponsor does not have specific plans and agreements to obtain additional funds if costs exceed $675.5 million. This is of particular concern for work on airport property since airport officials advised they do not intend to pay out more than the $87 million they committed to the project.

In response to our June 2001 draft report, the sponsor is taking action to ensure that sufficient funds will be available to operate and maintain light rail transit after the Hiawatha Project is completed in December 2004 and provided a written commitment in October 2001 to aggressively monitor the costs and revenues of the existing bus system as light rail is phased in.