Is anyone keeping track of the financial math of Fargo’s proposed diversion project? There’s regular news of permits and plans for construction starts, but few announcements of how they will pay for it. The last mention was when North Dakota’s legislature didn’t fund Fargo’s full request.
Significant funding comes from three sources — federal, state, and local. The state legislature says they will kick in $750 million. Senator John Hoeven says the feds have promised $750 million, but no one knows who made the promise. The Army Corps signed an agreement saying local lawmakers can ask Congress for $750 million, but they’ve got to get it themselves.
Hoeven says Trump put $150 million in his budget for P3 projects, but Democrats say Trump’s budget is dead in the water when it gets to the House side. The Democrats also seem to have a problem with P3 projects. They call them “pay to play,” and would prefer to direct federal funds to projects that have a dire need. But the elephant in the room for federal funding, is the backlog of authorized, but unfunded plans. When the diversion was authorized, the amount of unfunded projects totaled $60 billion. In 2019, there are $96 billion of unfunded projects.
The third source of funding is local. Fargo and Cass County must pick up the tab for whatever the state and federal government don’t cover. The current fully funded cost estimate for the diversion, which is what must be paid to contractors, engineers and property owners when the bills are due, is $3.1 billion. No interest is included in the estimate.
Some say that with this project, and Army Corps’ track record, a final cost of $3.5 billion would be conservative. The math is simple. Fargo and Cass County must come up with at least $2 billion in local funding to complete construction if the state and feds put in their entire share. The only local source of revenue is the sales tax. It currently generates about $43 million a year. Call your banker and ask how much debt $43 million can service over the next 60 years.
The story doesn’t end there. The average annual maintenance cost for Army Corps flood control projects is 1 percent of construction costs. Even if it were a third of that, or $10 million, it would doom any chance the sales tax could even cover interest on the plan.
Who is keeping track of the math? It’s time for Fargo and Cass County leaders to tell us how they are going to pay for this project. There have been many promises made for what their grand plan will do, let’s hear how it will be paid for.