FM Area Diversion P3 Project Agreement Receives International Award
FOR IMMEDIATE RELEASE
FARGO, ND (January 17, 2022) – The Fargo-Moorhead Area Diversion’s P3 (public-private partnership agreement) recently received an international award naming it the Americas P3 Deal of the Year. The project is the first flood protection/resiliency P3 in the United States and one of the first worldwide. It also is the first project in the United States Army Corps of Engineers (USACE) P3 pilot program to reach financial close.
Project Finance International recognized that the diversion “brought a series of firsts to the U.S. public-private partnership market with a deal that may become a template as climate change increases flooding concerns.”
“Achieving this recognition speaks to the incredible teamwork of those involved in developing and delivering this project. In our collective efforts to bring flood protection to the Fargo-Moorhead area, we are leading the way for similar projects across the world,” said Joel Paulsen, executive director of the Metro Flood Diversion Authority (MFDA), which procured the P3 agreement with the Red River Valley Alliance.
The Alliance will design, build, finance, operate and maintain the diversion channel.
“This deal represents a great public-private partnership success, showing true dedication and collaboration between three Alliance partners: ACCIONA, Shikun & Binui USA and North American Construction group,” said Esther Madrigal Diez, project manager for the Red River Valley Alliance. “We commend MFDA for its diligent work and commitment to this deal and are grateful to be part of this historic project that will pave the future of P3 flood protection ventures.”
The P3 Deal of the Year award also recognizes the MFDA’s “innovation” in using a “multi-faceted financing” approach. Numerous government and commercial entities collaborated to secure the necessary funding for the $2.75 billion project. Financial close took place in October 2021, and the construction on the channel portion of the project will begin later this year.
“This project brings together years of work to develop a comprehensive financial plan, which included the use of multiple innovative financial products and a P3 Project Agreement,” said John Shockley, MFDA General and Bond counsel, who is a partner at Ohnstad Twichell, P.C.
The project financing includes the use of a U.S. Environmental Protection Agency Water Infrastructure Finance and Innovation Act Loan, U.S. Department of Transportation Private Activity Bonds, North Dakota Public Facilities Authority Loans, temporary financing, and long-term sales tax bonds. Funds are also contributed by USACE and the State of North Dakota. Financial closing of the P3 Project Agreement achieved the final element of the financial plan.
“The project financing is innovative and really represents a path forward for other large projects across the United States,” Shockley said. “It can serve as a model for future flood control and coastal storm surge projects.”
The MFDA is the governing authority managing the FM Area Diversion. The project is designed to provide permanent, reliable flood protection to the Fargo-Moorhead metropolitan area. Construction on the FM Area Diversion began in 2017 with expected completion of the project by 2027. For more information about the MFDA, visit FMDiversion.gov.
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