Published April 10 2012
Earliest diversion could be paid off is 2048FARGO – Diversion Authority consultants have a year-by-year budget model mapped out for the proposed Red River diversion, a tentative plan that calls for the project to be paid off in 2048 at the earliest.
A mixture of local, state and federal aid will help pay for the $1.8 billion project, which could cost upward of $2 billion when all is said and done.
A new financial model produced by the Diversion Authority’s project management firm is helping local leaders plan their available dollars, the expenses throughout the life of the project and how they’ll fund those costs over the next few decades.
Based on a timeline where construction on the diversion channel begins in spring 2013 and ends in 2020, officials expect 2016 and 2017 could be their most expensive years.
The Diversion Authority could shell out more than $350 million each of those years to cover costs at the height of construction for the 35-mile long channel, based on the model.
The federal government is expected to cover nearly half of the project costs, with a maximum contribution of $801 million.
The rest of the expenses will be shared among the states and local entities.
The diversion expenses would be spread over a few decades. Officials plan to meet with the Bank of North Dakota in the coming months to discuss how to finance the project with bonds with the state’s help.
Under the best-case scenario – where the federal and state dollars come through in the ideal amounts – the diversion project could be fully paid off by 2048, Fargo Administrator Pat Zavoral said.
But if there’s any shortfall in the non-local aid, it could take up to 2068 to pay off the project, he said.
Either way, that’s still faster than officials initially predicted, Zavoral said.
The Diversion Authority’s model is flexible, with the ability to predict different scenarios given the uncertainty of the project’s future and the various funding sources, he added.
The state of North Dakota has pledged at least
$350 million toward the project, but diversion officials hope to convince state leaders to increase their share to $450 million, Zavoral said.
Fargo and Cass County would each contribute
$225 million to split the local cost that matches North Dakota’s share.
Diversion officials want Minnesota to cover nearly $100 million, or at least 10 percent of the non-federal share. However, state leaders there have been noncommittal.
Fargo and Cass County each collect a half-cent sales tax that generates at least $10 million a year to help pay for permanent flood protection.
Fargo city officials have so far used much of their revenue from an existing sales tax to pay for inner-city flood protection projects, as opposed to initial diversion expenses.
Zavoral said Monday that city leaders could eventually seek to extend Fargo’s existing 20-year, half-cent tax that expires in 2028. That would give the city more revenue for its share of the diversion, he said.
Cass County Auditor Mike Montplaisir said the county may use special assessments to pay for what sales tax proceeds won’t.
Annual predictions of Red River diversion expenses
• 2013: $35 million
• 2014: $100 million
• 2015: $200 million or more
• 2016: $350 million or more
• 2017: $350 million or more
• 2018: $300 million or more
• 2019: $300 million or more
• 2020: $75 million or more
TODAY’S COST: $1.8 billion total
• U.S. government: $801.5 million
• Minnesota*: $99.8 million
• North Dakota: $449.3 million
• Cass County: $224 million
• Fargo: $224 million
*assuming at least a 10-percent cost share of the non-federal portion.
Source: F-M Diversion Authority
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