- After years of delays, a $2.75 billion plan to build a channel for flood waters around Fargo, N.D., seems ready to move forward.
- The ambitious project requires the cooporation of local officials, state authorities from North Dakota and Minnesota, and the U.S. Army Corps of Engineers.
- It also relies heavily on public-private partnerships, and represents the first-ever P3 for the Army Corps.
It's one of the biggest and most ambitious infrastructure projects in America right now: a $2.75 billion plan to build a new channel to divert flood waters from the Red River for 30 miles around Fargo, N.D., in order to save the area from future floods.
And it's politically an extremely complicated plan, involving officials from several local cities, two state governments, the U.S. Army Corps of Engineers and multiple private-sector partners. Fargo lies just across the river from Minnesota, so the proposal to change the flow of the river required the agreement of officials from North Dakota, Minnesota and the Army Corps, which actually manages the waterway.
But after years of fits and starts -- along with a rising price tag and major revisions to the plan -- it seems that the Red River diversion project is finally poised to move forward.
After a two-year standoff, the state of Minnesota gave organizers permission to go ahead. Costs escalated from the delay and the changes to the plan, but the Army Corps agreed to pick up $300 million, or half, of the new costs. Fargo-area officials are trying to get North Dakota lawmakers to pay for the other half. The state Senate signed off on the idea, Gov. Doug Burgum called it a “no-brainer,” and the matter is now before the state House.
“We are protecting 235,000 people,” says Fargo Mayor Tim Mahoney, referring to the population of the metro area, the largest concentration of residents in the state. “Nobody has ever done this like we’re doing it, but it’s what the engineers came up with.”
Why North Dakota Is So Prone to Floods
Flooding is never far from the minds of people in the Fargo area. That's because the area’s geography makes it a constant threat. When the ground freezes during winter, it prevents snow or rain from seeping into the ground. So the water flows into nearby streams or rivers instead. But the Red River (often called the Red River of the North, to avoid confusion with the Red River of the South that separates Texas from Oklahoma) cannot whisk that water away quickly enough. The land, after all, is extremely flat; it decreases in elevation by just one foot per mile around Fargo. And the river actually flows north into Canada, so water from melting snow in the south runs into ice further downstream, which can block the river’s flow. All of that makes conditions ripe for flooding.
In 1997, devastating floods in Grand Forks, 80 miles north of Fargo, underscored that point. Some 70,000 people were forced to leave their homes in Grand Forks and East Grand Forks, across the river. Eleven buildings burned in the flood -- firefighters couldn’t get to them -- and, on the Minnesota side, only eight homes in a town of 9,000 people made it through without any damage. All told, the floods covered an area the size of Delaware and caused $4 billion of damage. President Bill Clinton visited the site of the disaster, and soon Congress agreed to pay $409 million to build new levees to protect the area.
That new flood protection has fortified Grand Forks against similar floods, but flooding on the Red River Valley has become commonplace in the two decades since.
Fargo and Moorhead, on the Minnesota side of the river, have been hit repeatedly by floods since then.
The worst came in 2009. The town shut down and hundreds of people gathered at the Fargodome, home of North Dakota State University’s football team, to fill sandbags. Volunteers raced to fill 7.5 million sandbags -- enough to fill the Empire State Building -- trying amid snowstorms to build dikes higher and faster than the river could climb them. And climb it did. The Red River, which normally has a flood level of 18 feet, climbed to a record of more than 40 feet that year. It was flooded for a record 61 days. But Fargo’s efforts paid off; the area avoided major damage in those floods.
Still, it was a wake-up call. “We had more water than we’ve ever had in the city,” says Mahoney. “That set us off on this journey. We said, let’s see if we can do it in eight years, because that’s what Grand Forks did.”
But Fargo decided not to copy Grand Forks' plan of building levees or earthen dikes. For one thing, no one was keen on surrounding Fargo with tall earthworks. And even with such a system in place, one breach of the dikes could flood the entire urban area. So engineers came up with the idea of a 30-mile channel to siphon off some of the water from the Red River in the case of heavy flooding. The town has also built up some of its dikes to handle higher river levels. That way, when major floods occur, more water could safely flow through the city, but, if the river gets too high, engineers could divert the extra water around the city.
Money for the project didn’t flow as freely as it did to Grand Forks. Because the Fargo area had not flooded in 2009, it had to go through the regular process for applying for Army Corps of Engineers funding. The Fargo plan, as it was initially presented, did not meet the Corps’ threshold for cost-benefit ratios. So local officials had to go back to the drawing board, and come up with a new plan.
Enlisting the Private Sector
The plan that local officials settled on divides the major components into two parts. The U.S. Army Corps of Engineers will assume responsibility for building a dam upstream from Fargo on the Red River, a dam on a nearby river and a line of levees that would create a temporary reservoir on farmland in case of major floods. The dam would limit how much water could flow downstream during a flood.
A specially created local government entity, called the Diversion Authority, would then be primarily responsible for building the channel between the reservoir and a point downstream on the Red River from Fargo. The diversion agency, though, plans to hire a private consortium to build the 30-mile channel and maintain it for 30 years. It already has three contracting groups that have indicated they would be interested in undertaking the project.
Turning to the private sector offers several benefits to local authorities, says Rocky Schneider, a spokesman for the Diversion Authority. First, local officials get an up-front price for the project, which becomes part of the contract. Without the P3, local officials might have to wait until the project is finished to know its final cost. Second, maintenance costs are built in, and the maintenance has to continue even in economically tough times, which is not always the case with government budgets.
Of course, the Diversion Authority also hopes that putting one entity in charge of construction and maintenance for the whole project could help bring costs down. It will also shield the local governments from cost overruns. That’s important for a complex project like the channel, which will flow underneath two interstates, several bridges and two aqueducts carrying other rivers. “We’re hopeful that there will be some innovation that can save some money,” Schneider says.
Unlike most P3s, though, the river diversion project doesn’t have a natural stream of revenue -- like highway tolls or airport concession sales -- to help pay for it. So area officials asked local voters to approve sales tax hikes that last until 2084. The local taxes are expected to bring in more than $1 billion to pay for the project.
On top of that, the state of North Dakota has committed $570 million to the project, and Fargo officials are hoping it will pick up another $300 million. Organizers plan to ask Minnesota to cover $43 million. The federal government so far has agreed to pay for $750 million.
That means the federal government would pay for less than a third of the cost of the project, even though it typically pays 65 percent of the costs for similar projects.
The big local contribution is one reason that the Fargo project is so appealing to the Army Corps of Engineers, says Aaron Snyder, the head of the Corps’ infrastructure team who previously worked on the Fargo diversion project. So, too, is the fact that, by using the P3, local officials are limiting the risks and oversight responsibilities for the Corps. “The local sponsors have really stepped up in this case to take the lead,” he says.
The Fargo project represents the first time the Corps will utilize a P3, and it could lay the groundwork for similar approaches in the future. Snyder says the experience in the Fargo area has already helped Corps officials learn about how better to divide responsibilities between the Corps and non-federal entities, like states and local governments.
The Corps plans to use more P3s. It currently is looking for more potential P3 projects with requests for information due April 2, and it plans on asking for more ideas every year, Snyder says.
The Corps is also looking for ways to help local governments finance water infrastructure projects with low-interest loans, although Congress has not appropriated enough money for the Corps to begin making those loans.
The different models could help the Corps address a huge backlog of approved but unfinished water projects. The agency recently estimated that backlog stood at $96 billion worth of construction.
Further Obstacles to the Red River Plan
Construction started on the Fargo project in 2017, but then quickly stopped a few months later because of a court order in a case where the state of Minnesota and other opponents tried to block the project. A judge ruled that the project had to wait, because the state of Minnesota denied it the necessary permits. That led to a two-year delay, as officials in North Dakota and Minnesota tried to work out their differences.
The Minnesota regulators had several concerns, but they generally worried that Minnesota residents would be disproportionately affected by the plan. The Minnesota side of the river is slightly higher, and fewer people live there, than on the North Dakota side. So they were looking for a plan where North Dakota bore more of the effects, like flooded farm fields.
Eventually, officials from both states agreed to changes, which they informally called Plan B. It calls for running more water through Fargo and for shifting the areas where the water is held upstream before it enters the channel. Officials say the new plan means the diversion channel would only have to be used once every 20 years, instead of once every 10 years under the original plan. The Minnesota Department of Natural Resources granted a work permit for the dams in December, although the approval came with 50 conditions governing the project.
Schneider, from the Diversion Authority, says the key to getting the agreement was having the governors of both states intervene by creating a joint task force.
“The governors’ task force was historic for us,” he says, noting that the governors had not been very involved with the project until a meeting in 2017. “Fargo is the biggest driver of the project, but the project is being built almost entirely outside of city limits. That’s been the crux of all the issues. It took governors to sit down at the same table to get that done.”
Gov. Burgum of North Dakota touted the breakthrough when talking with lawmakers recently. “Reviving the stalled project was an exercise in the art of the possible,” he told them. It led to the issuance of the Minnesota permit, he said. “The most significant regulatory hurdle facing the project has been cleared.”
But the project does still have to qualify for further permits, and the ongoing lawsuit from Minnesota residents could hold up construction as well.
Right now, though, the most immediate question is whether North Dakota lawmakers will pay a portion of the higher costs for the project that came with the delay and design changes. Mahoney, the Fargo mayor, anticipates that legislators will eventually agree, but thinks they will not do so until late April. If funding is approved this year, construction can start in 2020. It is scheduled to take six and a half years.
Burgum, the North Dakota governor, pushed his state lawmakers not to wait.
“This is the state’s opportunity to be proactive and preventative. This is an opportunity to support a deeply vetted plan and to protect our state’s most populous area from catastrophic flooding. The Fargo metro area narrowly averted disaster in 1997, 2009 and 2011,” Burgum said. “The need is clear. The plan is sound. The time to act is now.”
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