Fargo-Moorhead diversion project construction picks up pace
After more than a decade of planning and legal challenges, the pace of construction on the $3 billion Red River flood diversion is picking up.
It will take six more years of work to complete the massive project, which will divert water around the Fargo-Moorhead area when the river floods. And soon, a key contract will be awarded for building a key piece of the project’s construction.
The Red River flows north through the heart of Fargo and Moorhead and routinely overflows its banks as winter snow melts, prompting some iconic battles as volunteers stacked millions of sandbags to hold back the rising water.
Organizers hope those epic flood fights will be history when the $3 billion Red River diversion is complete.
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"Our goal is to have an operational project ready for a potential flood in 2027," said U.S. Army Corps of Engineers Terry Williams, project manager.
Work is now underway on two of three gated control structures required to manage the floodwaters.
"This is the largest project that the [U.S. Army Corps of Engineers’] St. Paul district has undertaken,” said Williams. “And one of the largest in the nation for the Corps of Engineers, as well."
The Army Corps of Engineers is overseeing design and construction of a 12-mile dam, as well as the control structures, which will manage the flow of water.
When the project is operational, three 50-foot-wide gates will close during floods to limit how much water can flow into the Red River and through Fargo-Moorhead.
The dam will hold back that water, and another gated structure will funnel water into a 30-mile channel, where it will flow around the west side of Fargo and back in to the Red River.
Construction could start as early as this fall on the channel, which will be 30 miles long and will be crossed by 19 road bridges, four rail bridges and two aqueducts to allow tributary rivers to pass over it.
Public-private partnership
The diversion project can save money and expedite construction by using a public-private partnership, said Joel Paulsen, executive director for the Fargo Moorhead Diversion Authority.
The contract for the estimated $1 billion in channel and bridge work is expected to be awarded by early June. While the Army Corps of Engineers oversees the dam portion of the build, the private contractor will be responsible for all work on the channel.
"You know, we're certainly going to realize an immense amount of cost savings by implementing it under a public-private partnership, under one contract, versus partitioning this out into 100 individual contracts," said Paulsen.
The contractor awarded the channel construction bid will need to bring significant capital to the project — Paulsen estimates $400 to $700 million to pay construction costs up front. The company is reimbursed only after each piece of infrastructure is completed.
The contractor will also receive a contract to maintain and oversee operation of the diversion for 30 years after it’s built.
The Corps of Engineers is watching the public-private venture closely as a possible model for future projects.
Officials have a funding plan in place, but the final cost of the project is still uncertain. It’s officially a $2.75 billion project, but cost estimates were last updated in December 2018.
“When we talk about a $2.75 billion project, that's what we were talking about in 2018, and obviously it's going to be more in today's dollars because of inflation. But that might be adjusted significantly, determining where those bids come in,” said Paulsen, who expects the final cost to be at least $3 billion.
Here’s how the cost breaks down: The federal government will contribute $750 million to fund the Army Corps of Engineers portion of the project. The state of North Dakota has allocated $850 million to the project. A local sales tax approved by voters in Cass County, N.D., and the city of Fargo will also be used to pay long-term debt service.
Because most of the benefit from the project is in North Dakota, Minnesota’s contribution is only $86 million. The Diversion Authority recently landed a key piece of funding: a $569 million low-interest loan from the Environmental Protection Agency.
“And what that loan does for us is, it's a federally-subsidized loan, and so we get a much lower interest rate than we could ever get if we went to the open market for that $569 million,” said Paulsen. “We've estimated a cost savings long term for the payback of that loan of anywhere between $500 to $600 million.”
The loan is payable over 40 years.
Paulsen said that if bids for the project come in much higher than expected, there’s a plan for cost-saving measures to reduce overall cost.
Long and contentious history
The Fargo-Moorhead diversion project has a long and contentious history. Conversations about a large flood control project began after a major flood in 1997. The U.S. Army Corps of Engineers began a feasibility study for a diversion in 2008.
The effort was given new urgency after a record 2009 flood when more than seven million sandbags were laid by volunteers to keep the floodwaters at bay.
But upstream communities sued to stop the project, contending water held back by the dam would cause new flooding that would harm them.
In 2016, the Minnesota Department of Natural Resources (DNR) denied a key permit for the project, saying it shifted too much flooding from North Dakota to land in Minnesota that had never flooded before.
The project was revised, and in late 2018, the DNR approved the permit.
Last year, the Diversion Authority agreed to compensation for upstream residents, ending a federal lawsuit.
Since 2009, more than 500 homes have been purchased and removed along the Red River in Fargo and Moorhead, making way for larger levees and floodwalls.
The diversion construction requires buying about 1,300 parcels of land, including homes and multi-generational farms. Paulsen said land needed for the channel has been acquired, but negotiations continue in other areas of the project.
“We know we can never repay somebody for that loss of family history. However, it is a requirement to do a project like this that we have to take that footprint out, and that's probably the toughest part of all of our jobs, to deal with those situations,” he said.
While the pace of construction is picking up this year, "certainly 2022 is going to bring full-scale construction on all of those elements," said Paulsen.
“We're estimating 7,500 full-time equivalent positions will be created as a result of the construction. And then of course our hope is that these folks stay here through the duration of construction, which is six years, and maybe relocate their families.”
The private contractor that will be building the diversion channel will be required to have apprentices as 15 percent of its workforce, and Paulsen said university systems in North Dakota and Minnesota are creating tailored apprentice programs to help provide the needed workers.
When it’s complete, the diversion will protect more than 230,000 people from flood risk, and local officials are betting it will set the stage for significant economic growth.
"There's major international and national corporations that have looked at Fargo-Moorhead and passed us up because of the flood risk, because they didn't feel comfortable investing their capital here," said Paulsen.
The diversion also means an end to that rite of spring for local residents: filling and stacking hundreds of thousands of sandbags to hold back the flooding Red River.