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Transit Showdown In The Southwest Metro

Can SouthWest Transit’s express bus system survive Southwest LRT? Should it?

Transit Showdown In The Southwest Metro

“The only leverage we have is this plot of land,” Len Simich says, pointing from his second-floor window to a campus that holds a park-and-ride ramp, bus terminus and retail hub that make up SouthWest Station in Eden Prairie. It’s the base of operations for SouthWest Transit (SWT), which he leads as CEO.

Simich and his board have agreed to hand over title to the land to the Metropolitan Council, which will use it as its Eden Prairie hub for Southwest LRT (SWLRT). In return he got a memorandum of understanding (MOU) that the council will not use LRT as a pretext for destroying the crown jewel of SWT’s operations—its express bus service from the station to downtown Minneapolis and the U of M.

For 29 years, SWT has served Eden Prairie, Carver, Chanhassen and Chaska commuters with comfortable coach-style express bus service. In 2020, SWLRT is slated to arrive. The newest light-rail line out of Minneapolis will not terminate at Mitchell Road, a mile away from Simich’s station, as originally planned, but right here.

“Down the road, if rail is as successful as they envision it,” says Simich, “this will all be a park-and-ride lot.” And when LRT arrives, it will render redundant the roughly 70 percent of SWT’s operations at the station. Transit professionals expect bus service to be the less popular of what will be the two taxpayer-funded options to go downtown via mass transit. “When we evaluated modes,” says Met Council chairman Adam Duininck, “we found three to four times the interest in LRT than bus rapid transit.”

Simich isn’t so sure. SWT partisans believe its service will be faster, nicer and more amenity-rich than LRT. Problem is, bus service has not fared well locally or nationally in competition with trains, except when it maintains a price advantage (which SWT won’t).

Eden Prairie has been promised that SWT is not in the gunsights. “Our understanding is [LRT] isn’t being built to serve an Eden Prairie commuter headed downtown,” says Mayor Nancy Tyra-Lukens.

But that doesn’t mean SWT won’t end up as collateral damage. With most of its express bus operations duplicated by SWLRT, the bulk of what SouthWest Transit does is theoretically superfluous. “I’m cognizant,” the mayor notes, “that there’s a risk of having funding snatched from SouthWest Transit.”

The Solid Southwest

Today SWT generates 3,500 rides each weekday from SouthWest Station (which is also home to a 1,000-space park-and-ride ramp). SWT served 1.1 million riders in 2014, with roughly $8.7 million of Minnesota taxpayer subsidy, which roughly correlates $6 million of that subsidy with Southwest’s express bus service from Eden Prairie.

For the identical fare of a Metro Transit express bus ride from downtown to Richfield, SWT’s long-haul coach-style buses offer an undeniably excellent experience. “We provide comfort. We provide Wi-Fi. A nice facility [SouthWest Station]. A no-cellphone policy at our customers’ request,” says Tyra-Lukens. “These are riders of choice.”

Yet Southwest LRT was designed to serve Eden Prairie because the southwest suburban region is a primary growth area for jobs and population. The common wisdom in transit circles is that by population, the southwest quadrant is the most transit-deficient portion of the region.

Though Eden Prairie’s city council and residents remain wary of LRT (a resident accused city officials of “ruining our city” in a recent municipal consent hearing), there’s anecdotal evidence that shows millennials want to live in places like Uptown and the North Loop, along with the growing desire of employers to cater to them; that means Eden Prairie’s economic growth depends on the access SWLRT will create.

Inside the Opt-Outs: Why does the Twin Cities have so many transit agencies?

In most parts of the country, when a new rail line opens, overlapping bus service goes away; that’s what happened when Metro Transit’s Green and Blue lines opened. That’s not a given in Eden Prairie, due to a historical quirk of local transit planning—a legacy of the many different funding hands and rule-making bodies involved in Twin Cities transit. And more often than not, those quirks trace back to the Minnesota Legislature, long a skeptic of transit and the core cities themselves.

The Twin Cities was one of the last metro areas to convert from private to public ownership of its transit system. When it took place in 1970 (Carl Pohlad owned the lines at the time), it came with the promise of a regional monopoly, but its buses only served Minneapolis and St. Paul, not the suburbs.

The Twin Cities has less bus service than many regions because of a legislative mandate that public transit generate at least 30 percent of its costs from passenger fares, a rather higher bar than in many regions. As a result, in the early years of public ownership, the formula the then-Metropolitan Transit Commission used to calculate expected subsidy caused it to consistently refuse to serve distant suburbs.

Those ’burbs brought complaints to elected officials, who brought them to the Capitol. In 1984 the Legislature passed a bill allowing suburbs not served by MTC to “opt out” and retain property tax revenues to fund transit operations—express bus, dial-a-ride, suburb to suburb, whatever. Through trial and error, what proved viable was rush-hour express bus service to the two downtowns.

“On paper it doesn’t make a lot of sense,” says Edina Mayor James Hovland, “but the opt-outs have proved their value from an efficiency standpoint.”

The result was 13 Twin Cities opt-out communities, organized among five different suburban transit agencies—and a schism that lingers to this day. “There’s always been tension between urbanites and the opt-outs,” says Scott County commissioner Mike Beard, a state legislator during the opt-out debates.

Initially, transit funding came from local property tax revenues. But during the massive property tax reform of 2001, funding of transit operations was switched to a system known as MVST, which generates subsidies from an excise tax on car sales. Three years later, a constitutional amendment dedicated 21.5 percent of the tax to metro-area transit.

At the time, MVST revenues were growing at twice the rate of the property tax, but since the 2006 amendment, they have declined every year, until rising slightly in 2014. The result has been that there is no means to fund growth, creating tension between the opt-outs and the Met Council, which administers the tax proceeds and supervises the opt-outs. It has also forced the council to engineer ways to supplement existing MVST revenues as costs rise every year.

“Unfortunately,” says a Met Council executive not authorized to speak for attribution, “what’s guaranteed to the opt-outs from MVST doesn’t cover the level of service that existed at the time of the constitutional dedication.”

Because auto sales fall in poor economic times, and more and more millennials rely on transit and car sharing, motor vehicle sales taxes have performed poorly in recent bad economies, as well as in better ones. “It was far better under property tax,” says Eden Prairie Mayor Nancy Tyra-Lukens. Today, “the more successful transit is at getting people out of cars, the less money is available to operate it.”

“Shakopee has seen huge increases in employment and population,” says SouthWest Transit CEO Len Simich, “but little funding has come of it. When we were on property tax, as your community grew your funding grew.”

(There are also arguments against property tax-based transit funding, because poor communities without mobility options lack the tax revenue to serve an immense mobility need.)

Legislative auditor Jim Nobles took a look at the structure of local transit operations in 2011. His report found they are financially efficient, but the structure by which they are managed is not. But he called for reform of the Met Council before a necessary streamlining of transit planning and operations.

Opt-out relations with the council have waxed and waned, bottoming out during the recent reign of chair Sue Haigh. “We were close during the Ted Mondale era. But there’s been a lot of tension in some periods,” says Simich. “Under [Met Council chairman Adam] Duininck it’s closer again. They are listening and open.”

Mayor Tyra-Lukens credits Gov. Mark Dayton’s decision to make the chairmanship a full-time job under Duininck, which has improved communication, she says. —A.P.

Early Southwest LRT plans had the train remaining to the north on the existing railroad right-of-way it will use for most of its route from Minneapolis. “We pushed hard to get it down into our core jobs and commercial districts,” says Tyra-Lukens. “Our employers tell us the young engineers and chemists don’t want to live in the suburbs and commute 45 minutes in their car.

“One of the largest software companies in the Twin Cities, HelpSystems, just told me it can’t fill jobs out here,” she continues. “We don’t want these businesses moving. It’s a competitiveness issue for us.”

The Coming Conflict

Sources within local transit operations say the Met Council expects 40 to 60 percent of SWT express bus riders to switch to LRT. Because successful transit service is rooted in frequency, if SWT bleeds that many riders to LRT, that would destabilize the SWT Eden Prairie hub.

“We considered not co-locating with [LRT] and relocating our operations up to the Crosstown corridor or Highway 169,” says Simich. “But our board and the Met Council like the synergies.” In exchange for that cooperation, the Met Council signed the MOU with SWT and Eden Prairie. Executed to “maintain a cooperative environment,” says Duininck, it affirms the mission of SWLRT is to co-exist with SWT.

“If we can get more cars off the road with two modes, it may be worth considering,” says Edina Mayor James Hovland, a member of the Met Council’s Corridor Management Committee that set SWLRT’s parameters.

Still, given SWLRT’s controversial nature and the cost overruns that have dogged it, it is curious that elected officials of both parties and many regions say they are prepared to spend several million dollars a year subsidizing overlapping services.

Or it may be rhetoric designed to smooth SWLRT’s path to reality.

Best-laid plans aside, there are two end-game scenarios. In one, if the Wi-Fi and quiet isn’t as compelling as SWT believes, “I think Eden Prairie will approach it pragmatically,” says Hovland. “After all, that’s a rather tax-sensitive community.”

In the other scenario, SWT competes too effectively with LRT.

“We’re not naïve,” says Tyra-Lukens. “The [draft environmental impact statement] is really clear that they can kill the express bus if they need to get LRT ridership up.”

To tell the truth, there’s a third scenario, the one that Eden Prairie hopes for—one where both modes thrive. But that’s no panacea either.

“Running parallel services is ridiculous. It’s outrageous, actually,” says Anoka County commissioner Matt Look, a member of the Counties Transit Improvement Board (CTIB) that will pay for much of SWLRT. “Those funds could be reallocated across operating budgets across the region.”

The Case for Co-existence

Southwest LRT’s arrival is a given, assuming the state ponies up the $138 million it remains obligated for. The four years until it starts operating are a comfortable window for Simich to evaluate contingencies. None of the available options provides an assured glide path for the agency.

A move to an alternate southwest suburban hub might have done more to preserve SWT’s regional empire, but stakeholders resisted it. “It was important to us that they remained in the same hub,” says Hovland. “It makes sense.”

Simich says Met Council planners told him they expect the bulk of LRT’s downtown-bound commuters to board in Minnetonka, Hopkins, St. Louis Park and even Minneapolis, while Eden Prairie’s contribution will consist of reverse commuters arriving from Minneapolis—folks who don’t currently even work in Eden Prairie.

Many of them will need connecting transport to corporate campuses. “We’ve told Len and his staff to prepare,” says Tyra-Lukens. “Who will provide the connectivity is in question. SouthWest Transit wants to do it. We don’t want Metro Transit providing that service.

“The Met Council says there is no money for new connectivity,” she continues, “so we’re worried. Typically they’ve funded it by eliminating [overlapping bus] services. [Otherwise] creating that connectivity will raise our subsidy per passenger and drop our farebox recovery, and it will look like we’re failing.”

The wait for LRT also allows SWT to consider how it can serve the more diffuse base of potential customers outside Eden Prairie’s core. “We have to pursue new markets,” says Simich. “There’s a lot of opportunity to the west and up on Highway 62. I feel a lot of what we do can be shifted.”

The Opt-Outs: Efficient or Empire Building?

 

The suburban transit “opt-outs” (see “Inside the Opt-Outs,”) are not without critics. Local transit insiders who lacked authority to speak on the record point to a duplication of facilities and services in a universe of numerous transit operators. They suggested the opt-outs could work more closely with Metro Transit on purchasing and resource utilization.

Opt-out proponents instead prefer a future further unshackled from the regional yoke of the Met Council. “The opt-outs have built a service that’s responsive because they are closer to their residents,” says Scott County commissioner Mike Beard. “It’s a great experiment that’s worked well.”

According to Met Council data (see “Twin Cities Transit Metrics,”), LRT is the most efficient transit mode from an operating subsidy standpoint, but the costliest from a capital expense standpoint, while express bus and urban local bus service are close in subsidy per passenger. In a comparison of the various opt-outs, SouthWest Transit has the highest subsidy per passenger, twice that of Metro Transit. SWT’s farebox recovery rate is also worst among the locals, which should not endear it to conservatives such as Beard.

Beard will have none of it, arguing that SWT needs to be freed to optimize its revenue base, questioning the wisdom of charging the same fare for a utilitarian express ride from downtown to 46th and Nicollet or a serene coach trip to Chaska.

“Suburban express pricing doesn’t approach value, but suburban communities are powerless to set fares,” Beard notes. “Regional planners don’t pay attention to things like customer service and amenities.” —A.P.

 

Though SWT may lose its critical mass, it is still constitutionally guaranteed funding, insists Eden Prairie’s Met Council rep, Jennifer Munt. “If SWT customers are displaced by LRT, it will not lose its share of [state transit dollars] that fund its service,” she assures. Munt suggests the cutbacks resulting from LRT cost overruns may even benefit SWT. “Remember, we’ve cut 1,300 park-and-ride spots in the suburbs to reduce the budget. So express buses may be necessary as well because suburban customers depend on automobiles to get to transit.”

The upshot seems to be that the Met Council will be hard-pressed to defend duplicate services unless they are both well-utilized. Or perhaps not even then, if officials like Matt Look have any say.

Still, all politics is local. Thus even a conservative like Scott County commissioner Mike Beard—a longtime booster of suburban transit self-determination—is content with some public sector profligacy. “I have no problem with operating duplicative service [to Eden Prairie],” he says. “The cost is relatively modest.”

Simich can’t count on such flexibility from the Met Council or CTIB. “That’s one of the reasons we’re concerned,” he notes. “To them it just looks like duplicate service. It’s going to be an easy target in tough times.”

For now, uncertainty reigns. “Too much is unknown,” says Met Council chairman Duininck. “After a year or two, if there’s duplicative service we’ll have to reconsider what we’re subsidizing.”

But as long as the Met Council depends on Eden Prairie’s and SouthWest Transit’s cooperation and consent in building SWLRT, there’s no harm in chasing rainbows. TCB

Adam Platt is TCB’s executive editor.

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