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Fargo plans for diversion funding what-ifs

The idea that the federal government may never fund the flood diversion project has crossed the minds of city leaders, and they do have a strategy, acting Mayor Tim Mahoney and other officials said Friday.

FARGO - The idea that the federal government may never fund the flood diversion project has crossed the minds of city leaders, and they do have a strategy, acting Mayor Tim Mahoney and other officials said Friday.

"If nothing's going to happen then you go to the governor and the legislative body and say, 'We have a plan, and this is how we'd like to do it,' " Mahoney said.

One alternate source of funding could be the city's flood-protection sales tax, which sunsets in 2029 after 20 years but could be extended if voters agree.

"There's enough money if we were to go out and get another 20-year extension," City Administrator Pat Zavoral said. "There's close to $1 billion of horsepower in that."

The diversion project, meant to protect Fargo-Moorhead and several surrounding communities, has been estimated to cost $1.8 billion with $800 million coming from the federal government and the rest from state and local governments. Fargo and Cass County's current share of the diversion project is about $450 million. State lawmakers have promised $450 million but only if the federal government pays, too. City leaders would have to convince them to change that condition if there is no federal funding.

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Goal 2016

So far, Congress has authorized the diversion project but has not set aside any money to build it.

Zavoral said he's confident some federal funds will be available eventually because the project fits U.S. Army Corps of Engineers' priorities as defined by Congress, reflecting something Sen. John Hoeven, R-N.D., has said.

Recently, Mahoney was in Washington to meet with Hoeven and other members of the state's congressional delegation.

The acting mayor said everyone agreed for the first time that diversion construction should start in 2016 and they'll all push to make that happen. "It's so important for the city of Fargo to not be stymied in our ability to grow."

He and other city leaders have expressed worry that if the diversion is not built, the Federal Emergency Management Agency will remap the floodplain and dramatically increase the flood insurance rates for homeowners.

Private sector role

Whether federal funding materializes or not, the diversion project will very likely depend on the so-called P3 process. Short for public-private partnership, it promises to result in faster and cheaper construction. Proponents say federal funding is so slow in coming that it takes much longer to build and, therefore, costs more. Private firms can finance and build much faster and still make a profit from being repaid by the government over a longer period of time.

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P3 is already being used by the U.S. Department of Transportation but would be new to the Corps of Engineers. Congress has directed the corps to prioritize P3 projects.

Zavoral said that, on average, a typical 13- to 15-year federal project could be done within six to seven years using P3. That could trim $250 million to $300 million from the cost of the diversion project, he said.

Goldman Sachs has expressed interest in participating and so have other firms, he said.

City leaders are also seeking other federal funding sources besides the Corps of Engineers, he said, including U.S. Department of Transportation for road construction that's part of the diversion project, such as raising highways over dikes.

So far, Fargo and Cass County, the local governments paying for most of the local share of the project, have saved less than $20 million of revenue from their half-cent sales taxes dedicated to flood protection.

The city has $1.8 million set aside for the diversion and $48 million for other flood-control efforts, according to Finance Director Kent Costin.

The county has $18 million available for the diversion and $3 million for other flood-control efforts, according to County Auditor Mike Montplaisir.

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