The infrastructure will divert storm water from the Red River away from nearby residential areas, which are regularly affected by flooding. The flood protection canal has been designed to mitigate the impact of climate change, particularly the threat of flooding. Once completed, it will protect more than 235,000 people in the primary population areas between Fargo and Moorhead.
(Courtesy of U.S. Army Corps of Engineers)
||Fargo-Moorhead River Flood Diversion P3 Project/ Fargo-Moorhead Metropolitan Area Flood Risk Management Project
|Project Borrower / Sponsor
- US Army Corps of Engineers (USACE),
- Red River Valley Alliance,
- Metro Flood Diversion Authority (a permanent North Dakota political subdivision and joint power entity formed through the Joint Powers Agreement, dated June1, 2016, by and among the City of Moorhead, the City of Fargo, Clay County, Cass County, and the Cas County Joint Water Resource District). The Authority's stated mission is to build a flood diversion project to protect approximately 235,000 residents in the greater Fargo-Moorhead Area.
- Red River Valley Alliance, LLC, a Delaware limited liability company, has entered into the Project Agreement with Metro Flood Diversion Authority for the purposes of undertaking the project.
|Value Capture Techniques
||Special Assessment: Sales Tax Districts & Special Assessment Districts Transportation Corporations
||Other: Flood Diversion 20-mile-long southern embankment, 19 highway bridges, three railroad bridges, three gated structures, and two aqueduct structures
The Fargo-Moorhead Metropolitan Area Stormwater Diversion Channel Project includes two components to manage uncontrolled stormwater that threatens the metropolitan area. The stormwater diversion channel component includes the construction of a 30-mile channel to redirect surplus stormwater flows safely north around the metropolitan area and temporarily store it on vacant land. The in-town levee project includes modifications to 13 levees and 27 stormwater lift stations in the Cities of Fargo and Moorhead. By managing spring snow melt and summer stormwater, the project will protect 245,000 residents from excess stormwater flows.
The project is being implemented using a public private partnership (P3) with split delivery. This allows two simultaneous construction schedules to complete the Comprehensive Project faster and for less expense. The P3 project consists of the design, construction, financing, operation, and maintenance of the Diversion Channel and Associated Infrastructure Work the design, construction, financing, operation and maintenance of the Diversion Channel and Associated Infrastructure Work.
This is a first and innovative approach for the Corps of Engineers and is already applying best practices to improve the delivery of other federal projects. The project is distinctive in numerous ways, ranging from alternative financing to split delivery implementation across multiple states, counties, and cities. Not only is it the first P3 civil works project in the Corps of Engineers' history but it is also the inaugural pilot project for the innovative funding concept.
The communities of Fargo and Moorhead, along with Cass County, Clay County, and the Cass County Joint Water Resources District, have signed a joint powers agreement, which created the Metro Flood Diversion Board of Authority (Diversion Authority). The Diversion Authority is led by thirteen board members from the stakeholder entities. Its purpose has been to work with the US Army Corps of Engineers to build, finance, operate, and maintain a comprehensive project to provide the Fargo Moorhead metropolitan area with permanent flood protection from the Red River of the North and its tributaries. The Diversion Authority has developed a comprehensive and prudent financial model for the Project that assumes cost-share funding from federal and state grants. The local share of approximately $1.1 billion is being funded via a Cass County and City of Fargo sales tax. Voters have approved three half-cent sales taxes to be extended through 2084 to cover the local share.
||$ 2,750 million. Components of the Diversion Project
- $502 million for Lands and Impacted Property Mitigation
- $989 million for the Channel / Public-Private Partnership
- $703 million for the U.S. Army Corps of Engineers/ Southern Embankment and Associated Infrastructure
- $266 million for levees and other In-town projects in the cities of Fargo and Moorhead
- $44 million for Other Mitigation Construction
- $250 million for Non-Construction Costs
- $273.395 million Private Activity Bonds (Tax-exempt Green Bonds)
- Morgan Stanley
- Nikko Securities Indonesia
- Sumitomo Mitsui Banking Corporation (SMBC)
- $197.800 million Private Placement, MetLife Investment Management (MIM)
- $643.000 million Revolving Credit Facility. Water Infrastructure Finance Innovation Act (WIFIA) loans
- Caixabank, $222.40 million
- Korea Development Bank (KDB), $197.70 million
- Sumitomo Mitsui Banking Corporation (SMBC), $222.40 million
- $437 million from the Infrastructure Investment and Jobs Act, or IIJ (to complete all remaining portions of the federal work to include the Red River Structure, remaining southern embankment reaches and vital environmental mitigation.)
- Local Funding Matched P3 Financial Plan. Three voter-approved long-term sales taxes to allow for a multi-generational P3 payment structure
Funding for these projects will come from a mix of federal, state and P3 funding via local sources. The funding sources are as follows
Local: $1,044 million P3 Model (Funded with voter-approved sales taxes until 2084. Majority of local share will need to be financed
State of Minnesota: $86 million ($43 Million Project, $43 Million In-Town) $86 million shares will be funded in part by an estimated 2% reduction in flood-damage costs for the state
State of North Dakota: $870 Million ($570 million existing and $300 million new). Funding does not include requested $250 million long-term, low-interest loan
Federal: $750 million ($450 million existing and $300 million new). Project Partnership Agreement (PPA) signed in 2016 committed $450 Million; amount of funding escalates to year of expenditure; with assumed escalation, Federal total increases by $159 Million.
|Project Delivery / Contract Method
||P3 (DSAI - FMDA) DBFOM Availability Payments Based (construction milestone payments), 30 years & Project Bundling.
DBB (SEAI - USACE)
Fargo-Moorhead Area Diversion P3
- Acciona (, InfraRed Capital Partners, and Shikun & Binui
- North American Construction Group
Shikun & Binui USA, a member of RRVA, (through its US construction subsidiary, Shikun & Binui America, Inc. and its US concessions and investment subsidiary, Shikun & Binui Concessions USA, Inc.)
|Project Advisors / Consultants
US Army Corps of Engineers (USACE), Flood Diversion Board of Authority
- EY, Financial Advisor
- Ashurst, Legal Advisor
- Norton Rose Fulbright, Legal Advisor
- Ohnstad Twichell, Legal Advisor
- Jacobs Engineering Group (formerly LeighFisher), Technical Advisor
- Aon, Insurance Advisor
- Agentis Capital, Financial Advisor
- Torys, Legal Advisor
- Von Briesen & Roper, Legal Advisor
- Altus Group, Technical Advisor
- INTECH Risk Management, Technical Advisor
- Mazars, Model Auditor
- Orrick Herrington & Sutcliffe, Winston & Strawn
InfraRed Capital Partners, 30%
- Shikun & Binui Concessions USA, Inc., through its affiliate, holds 35% of the equity interests
- Acciona Construction USA, 35%
- Bondholders & Water Infrastructure Finance Innovation Act (WIFIA) loans
|Duration / Status
Currently on schedule for operation in the spring of 2027
|TIFIA Credit Assistance
|Financial Status/Financial Performance
Financial Close, October 13, 2021
- The infrastructure project is the first green finance initiative in the US specifically designed for climate change adaptation
- Innovative flood diversion P3 brought together key features of infrastructure and environmental finance
- The P3 is providing $330m in savings and will save 10 years in delivery
- Preparing the area for the effects of climate change and thus substantially contributing to climate change adaptation.
- Protecting the local population and the local economy from the damaging effects of catastrophic river floods.
- Fargo-Moorhead project team receives national Corps of Engineers’ award. The project is distinctive in numerous ways, ranging from alternative financing to split delivery implementation across multiple states, counties, and cities. Not only is it the first P3 civil works project in the Corps of Engineers' history but it is also the inaugural pilot project for the innovative funding concept.
- The project ranges from alternative financing to split delivery implementation across multiple states, counties, and cities. Not only is it the first P3 civil works project in the Corps of Engineers' history but it is also the inaugural pilot project for the innovative funding concept.
- With the historic project’s completion in 2027, more than 235,000 people, along with their homes and businesses, will be protected from the catastrophic flooding the area has experienced in past years.
- Project serves 245,000 people and created 4,185 jobs
- Mitigates stormwater issues for approximately 44,000 acres and 245,000 people in the Fargo-Moorhead metropolitan area.
- Prevents an estimated $194.8 million in annual stormwater and flood damages throughout the metropolitan area.
- Saves the Metro Flood Diversion Authority an estimated $438 million from financing with a WIFIA loan.
|Related Links / Articles
Joel Paulsen, Executive Director of the FM Area Diversion Project
Martin Nicholson, Deputy Executive Director Metro Flood Diversion Authority, Fargo, North Dakota
Aaron Snyder, the US Army Corps of Engineers (USACE) Water Infrastructure Financing Program lead
Katie Spear | S&B USA