Hoeven: Fargo-Moorhead Regional Flood Protection a First-in-the-Nation Project
Senator Marks Two Key Milestones - First Major Army Corps Project to Use P3 Model, Will Save Project $330 Million & 10 Years; WIFIA Loan Will Save Nearly $500 Million
FARGO, N.D. – Senator John Hoeven today marked two first-in-the-nation milestones in the effort to build permanent, comprehensive flood protection in the Red River Valley:
- The selection of the project’s P3 partner. This is the first major Army Corps’ project to utilize the P3 split-delivery model, which enables the project to be built more cost-effectively and on a significantly faster timeline.
- Compared to traditional construction delivery, the P3 model will save the project $330 million and 10 years.
- Hoeven has worked to advance the Fargo-Moorhead project as a proof-of-concept for the rest of the nation, demonstrating a solution to help the Corps resolve its project backlog and build critical infrastructure in a more timely way.
- The signing of Fargo-Moorhead’s $569 million Water Infrastructure Finance and Innovation Act (WIFIA) loan. This is also the first Army Corps project to utilize a WIFIA loan, which:
- Removes the risk of increasing interest rates and provides lower rates than other financing options.
- Allows the project sponsor to draw down funds as needed, enabling less debt to be carried earlier in the project.
- Provides flexibility in its payback schedule.
- Will save the project nearly $500 million over the life of the loan.
“Today marks two significant milestones in the effort to build permanent flood protection in the Red River Valley, and they are both first-of-their-kind accomplishments in our nation,” said Hoeven. “This is the first Corps project to use the P3 method, as well as the first to receive a WIFIA loan. We have been hard at work on these two priorities in recent years, passing more than a dozen different pieces of legislation to help ensure flood protection is in place sooner and at lower cost to local taxpayers.”
Advancing the P3 Model
Since the P3 method was approved by the Diversion Authority in 2015, Hoeven has worked to ensure projects that use alternative financing methods receive fair treatment during the Corps’ cost-benefit analysis. The senator has:
- Advanced in annual funding legislation measures to:
- Direct the Corps to issue policy on the consideration and incorporation of public-private sector partnership projects into its budget.
- Prioritize the funding of projects that use P3 or other alternative financing models.
- Repeatedly raised this issue with leaders at the Army Corps and the Office of Management and Budget (OMB), which is responsible for approving the Corps’ annual work plan.
At the same time, Hoeven has worked through his role on the Senate Energy and Water Appropriations Committee to secure increased funding for the Army Corps’ construction account across the past six fiscal years (FY) to help ensure the project received support. As a result of these efforts, the project has received $310 million in federal construction funding to date, nearly half of the federal funding commitment of $750 million, which the senator worked to increase from $450 million under the renegotiated Project Partnership Agreement (PPA).
Securing a WIFIA Loan
Hoeven initially secured a formal invitation from the Environmental Protection Agency (EPA) for Fargo-Moorhead to apply for a WIFIA loan in 2019, following his efforts to fund the program. The EPA’s invitation is a critical step, as they are limited through a competitive process. Specifically, the senator:
- Outlined the benefits of the WIFIA program to local officials at a roundtable in April 2019 and encouraged them to seek a loan.
- Secured funding through his role on the Senate Appropriations Committee for the EPA’s WIFIA program in FY2019.
- Passed legislation in the FY2019 Energy and Water Development Appropriations bill directing the Corps to complete a detailed plan for implementing its WIFIA program and providing up to $6 million for this effort.
- While the Corps worked to implement its program, the project sponsors opted to utilize EPA’s WIFIA program.
- Repeatedly urged the EPA Administrator to advance the project’s selection.
- Worked with the EPA to expedite Fargo-Moorhead’s application and prevent delays that could have resulted from an interagency effort to standardize the WIFIA loan process.
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