Rochester, MN (KROC-AM News) - The cost of building the LINK Bus Rapid Transit system through downtown Rochester continues to climb, and city documents now indicate the budget could exceed $200 million.

The city recently opened the only bid submitted for the portion of the project referred to as Volume C, and the cost was significantly higher than the original estimates for the work covered by the bid package. According to city documents, Elcor Construction put the price tag at just over $71 million.

Elcor's bid covers the construction of seven transit stations along the 2.8-mile route of the public transit system, including a pedestrian tunnel under 2nd Street Southwest next to St. Marys Hospital, which is the single most costly item listed in the bid tabulations.

This is the second time the city has sought bids for the project. The Rochester City Council decided in March to seek another round of bids after the original submissions came in well over budget, with the last bid estimate for Volume C pegged at $57 million.

READ MORE: Rochester City Council to Reject Low Bid For DMC Transit System

City officials now say that estimate was probably too low and should have been around $66 million, which is still approximately $8 million below the bid submitted by Elcor. A city analysis of the bid blames the higher-than-estimated cost on inflationary pressures, the impact of tariffs, the tight project schedule, labor shortages, and limited contractor competition.

City officials say the analysis also suggests the trend toward higher costs will continue, and they do not believe rebidding would result in a lower price. It would also affect the project timeline, which currently indicates the new public transit system will be operational in 2027.

A Federal Government Contingency Requirement Could Inflate the Overall Project Budget to About $207 million

A city document concerning the higher-than-expected bid indicates that the Federal Transit Administration, which is providing about $84 million in funding for the project, will require a 20% contingency. It's estimated that would boost the overall project cost from the current $173 million to more than $207 million, requiring an additional $31.7 million in funding to meet the federal government's contingency requirement.

The city document indicates that this is a "worst-case scenario." It states that city officials are working on a request to the FTA to reduce the contingency requirement to around 13%, which would lower the overall budget from $207 million to an estimated $197 million. That would still leave the project with a funding gap of about $21 million.

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The City Council is being asked tonight to approve an agreement with Elcor Construction that would extend the expiration date for its bid to the end of July. City officials say the extra time would allow them to work with the FTA on the contingency requirement and approach the Destination Medical Center Corporation Board with a request for additional funding.

The city has requested that the DMC Board hold a special meeting before July 16 to consider appropriating additional DMC Transit Aid funding to cover the higher contingency requirement. If that is approved, city staff is recommending that the City Council then approve the Elcor bid and additional DMC funding at its meeting on July 21.

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