Asking the Experts: FM Diversion Update
Asking the Experts: FM Diversion Update
The Chamber holds permanent flood protection as one of its highest priorities to help protect the economic vitality of our region and remain dedicated in both support and advocacy for the FM Area Diversion project. This month, we had the opportunity to virtually discuss the status of the project with Joel Paulsen (pictured) of the FM Diversion for an update and what we can expect in the future.
Please provide us with a brief history of the project, current status and expected completion.
A 2011 Federal Feasibility Study, commissioned by the cities of Fargo and Moorhead in conjunction with the U.S. Army Corps of Engineers, signaled the beginning of the project. The study results provided momentum to develop the Diversion Authority, which has representatives from Cass and Clay counties, Moorhead, Fargo, West Fargo, and the Cass County Joint Water Resource District to determine how best to protect our metro. A successful intervention by ND Governor Doug Burgum and then-MN Governor Mark Dayton resulted in the creation of the project as it’s known today when the MN DNR awarded the key Project Dam Safety and Public Waters Work Permit. This set the stage for the project to proceed forward with the construction and implementation phases.
Currently, roughly $100 million in construction is underway on two separate contracts awarded by the Army Corps of Engineers for the diversion channel inlet control structure and the Wild Rice River control structure. Many projects are also being completed within Fargo and Moorhead, which will serve as necessary complements to the larger diversion project as the flow of water will continue during a major flooding event. It is anticipated there will be an agreement with a P3 contractor in 2021, which will begin the construction phase on the 30-mile diversion channel. All construction is expected to be completed by 2026 with the project becoming operational in 2027.
How much funding has been secured, what are the sources of it, and how much remains?
With a project of this magnitude, it is not feasible nor practical to acquire the entire amount of funding upfront and place it in a bank account for us to draw off as needed. Instead, we have focused on creating agreements with federal, state and local governments for the intent of funds.
Through a project partnership agreement with the federal government, we have secured $750 million. These committed funds do escalate over time so we anticipate the total federal government contribution to be around $900 million when the project is completed.
North Dakota has committed all but $120 million of the $870 million requested, Minnesota has committed $7 million of the $86 million requested, and through voter-approved existing sales taxes in Fargo and Cass County, $1.044 billion has been secured to fund the local share.
What does it mean for the FM Diversion to be a P3 project?
Public-private partnership (P3) contracts are long-term agreements with a private sector entity for the design, construction, financing, operations and maintenance of the project over an extended period. The term of the contract for the FM Diversion channel will be 30 years. This contract differs from a traditional infrastructure project where a public agency bids out the design and construction for the project to be turned over to the public for ownership and all maintenance.
The contractor who constructed the diversion channel will then assume responsibility for all maintenance for the following 30 years, thus shifting the long-term risk away from the public. P3 contracts also provide certainty of cost as once the agreement is signed, the cost is locked in for the duration of the contract at an annual repayment amount agreed upon at the inception of the agreement. P3 contracts also ensure certainty in the schedule, promote innovative design, enhance efficiency, foster collaboration between contractor and engineer, and increase investment of private equity.
Three development teams are currently bidding on the project, and we anticipate awarding the contract to the winning P3 contractor within the next six months.
What obstacles has the project overcome already, and what else is anticipated?
The biggest obstacle we constantly face is the annual flood threat, so the project must remain on schedule and budget to ensure it is completed, hopefully, before the next major flood event. Much like other major infrastructure projects, both financial and regulatory hurdles exist, but we have remained diligent in both our work and communication and are confident we will be able to progress forward and stay on schedule.
Unfortunately, flood projects do affect both people and property, but we have remained committed to regular communication with those impacted and have worked diligently to go above and beyond what is required, both at the state and federal levels, to address their concerns. In early June, the very detailed, 187 pages, property rights acquisition and mitigation plan was approved by the North Dakota Office of State Engineer. The plan outlines mitigation programs, such as a crop loss program that covers the risks for farmers in the event the project is required to operate during the crop growing season, which may cause impacts on growing crops.
The project has also achieved numerous milestones that were said to be unreachable:
- Congressional approval of the U.S. Army Core of Engineers Report and federal authorization of the project,
- The Project Partnership Agreement with the U.S. government for $750 million,
- Three locally voter-approved sales taxes,
- Permit approval from the MN DNR and ND Office of the State Engineer,
- Private-public partnership (P3) contract status, and
- The U.S. Water Infrastructure Finance and Innovation Act (WIFIA) approval.
As we continue with the construction phase, there currently is a contested case hearing in which the Minnesota DNR is defending its award of a permit to the Diversion Project. The hearing began the week of June 8, 2020. Following litigation, an administrative law judge will render a recommendation, after 30 to 90 days, to the MN DNR commissioner who, after an additional 10 to 90 days, will provide a final ruling regarding the status of the previously awarded Project Dam Safety and Public Waters Work Permit. We are hopeful for a positive outcome which would also pave the way for resolutions to the remaining litigation.
NDSU recently published a study examining the agriculture impacts of the Diversion. What were the key findings?
The study found that most flood events occur before the spring planting season and much of the agriculture acreage within the upstream mitigation area would not be adversely affected by the project during a flooding event. The study also noted that most of the land negatively impacted would have minor planting delays of one to five days, however a longer or late spring flood event could pose an increased risk of prolonged planting delays. The risk of wide-scale prevent plant conditions caused by the project is very low.
To view the full report and additional key findings, visit fmdiversion.gov/news.
As it relates to property acquisitions, how much has been acquired thus far? How much remains?
As of June 2, over 4,000 acres (370 parcels) of the 9,000 acres required had been acquired. To remain on schedule, all remaining land for the diversion channel must be acquired by this upcoming fall and we do anticipate needing to engage in quick-take actions over the next few months to meet this deadline. The acquisition schedule follows the federal construction schedule as money is appropriated on an annual basis.
For further project details and information, visit the Diversion website at fmdiversion.gov.
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