Area taxpayers may get $150 million break for costs of F-M Diversion, water supply project

FARGO — The U.S. Senate approved funding for two Red River Valley-area water infrastructure projects on Thursday.

The Senate voted to apply between $100 million and $120 million in federal savings to offset the local costs of the Fargo-Moorhead Area Diversion project. It approved another $50 million for the Eastern North Dakota Alternate Water Supply project, which will supply water to central and eastern North Dakota.

Sen. John Hoeven, R-North Dakota, sponsored the bill to apply the $100 million-plus in federal savings to the diversion, a $3.2 billion Red River flood control project. That sum is not new funding, but rather a portion of money originally set aside for the $750 million federal portion of the diversion project.

Hoeven helped pass legislation to fund the $750 million federal portion of the diversion project in 2022. Any leftover funding would be transferred to the local sponsors of the project, but not until the project’s end.

According to a press release from Hoeven’s office announcing the funding, the U.S. Army Corps of Engineers, tasked with building the federal portions of the project, now expects the project to cost less than $750 million. The bill passed Thursday allows that excess funding to go to the Metro Flood Diversion Authority sooner. The goal is for the funding to reach the Diversion Authority this year to reduce the cost to build the local portions of the project, the release said.

“By passing legislation to create the first-in-the-nation public-private partnership (P3) and providing the federal funding upfront, the federal portion of flood protection for the Red River Valley is ahead of schedule and under budget,” Hoeven said in a statement. “With this legislation in place, those savings will go to the diversion authority, providing $100-120 million that North Dakota taxpayers won’t have to pay.”

Other than the federal funding, the diversion project is paid for by $850 million from the state of North Dakota, $86 million from Minnesota and $1.5 billion from local sales taxes.

Diversion Authority Executive Director Jason Benson said the federal funding could reduce the amount of money the Diversion Authority has to borrow this year. The Diversion Authority has a $1 billion budget in 2026, paid for by a federal loan, sales tax and temporary sales tax bonds.

“If that reduces the amount that we need to borrow, that will be a big benefit to the overall project and our overall financial plan in reducing the amount of our borrowing costs,” Benson said.

The timing of when the Diversion Authority can access the funding may affect how it can be used, Benson said.

The Eastern North Dakota Alternate Water Supply project is expected to see $50 million in area taxpayer savings. That project is part of the $1.2 billion Red River Valley Water Supply Project. Once completed, the pipeline will bring water from central North Dakota to the Red River Valley.

Duane DeKrey, general manager of the Garrison Diversion Conservancy District, said the western 32 miles of the project are eligible for federal funding, which Hoeven has been working to secure.

“That will relieve the state and the local users of that $50 million,” DeKrey said. “Otherwise, they would have to pay it.”

Along with appropriating money for the water supply project, the legislation passed allows North Dakota to use existing infrastructure for the project, reducing project costs by $200 million, Hoeven’s press release said.

While the diversion funding helps a project nearing its end, the water supply funding helps the Eastern North Dakota Alternate Water Supply project start, Hoeven said in the press release.

“We are effectively bringing one historic effort, the Fargo-Moorhead Diversion, to a close while getting rolling on another project critical to the future of the region, and importantly with the legislation we secured today, we will save North Dakota taxpayer dollars on these projects without increasing federal costs,” Hoeven said. “We look forward to reviewing these important provisions next week in Fargo with the Fargo Moorhead Diversion Authority and Garrison Diversion Conservancy District.”

Ingrid Harbo joined The Forum in March 2024.

Harbo reports on Moorhead and Clay County news.

Readers can reach Harbo at 701-241-5526 or iharbo@forumcomm.com. Follow her on Twitter @ingridaharbo.