No takers on Crosstown highway reconstruction

Crosstown/I-35W project
A map shows the Crosstown Highway/I-35W construction project. It's now on hold because no contractors submitted bids for the project.
Map courtesy of MnDOT

When MnDOT said a few months ago it didn't have enough money to pay for the project, it asked contractors bidding on the $250 million rebuild to loan the state the funds. The contractors rejected the idea and warned at the time they'd refuse to submit bids. That's exactly what happened.

A statement from MnDOT says the agency is disappointed the I-35W/Crosstown project did not receive contractor bids. MnDOT declined to supply a spokesperson to elaborate.

The agency wanted to begin construction this summer on the project, which is expected to take at least three years.

This is the most recent delay. Others have been caused by squabbles over design.

The Crosstown highway affects thousands of drivers who each day squeeze through an interchange in south Minneapolis on the border with Richfield, where Interstate 35W merges for a time with Minnesota Highway 62.

Lots of people from State Rep. Ron Erhardt's Edina district use the interchange, and he is not happy with the news.

There was just too much risk for there to be viable proposals.

Erhardt, a Republican, says it's more evidence the state needs to raise the gasoline tax and other vehicle fees to help pay for high priority projects, like the Crosstown rebuild.

"MnDOT and the administration need to face up to the fact that we need cash going into the system," says Erhardt. "I would think the administration would be nervous about the political consequences about not being able to start this project, and/or other projects."

Gov. Tim Pawlenty's spokesman Brian McClung says the governor has told MnDOT to immediately resume work on finding a solution to the Crosstown financing problem.

McClung reiterated Pawlenty's opposition to a gasoline tax increase.

"When you are paying $2.81 on average today in Minnesota for gas, I find it unlikely that the public is going to want the government to reach deeper into their wallets every time they fill up at the pump," McClung says. "So we believe that through efficiencies and spending smarter we can get more, and we have indeed funded transportation at a higher level than any other governor."

A good share of the spending has come from borrowing. The state has also spent ahead on anticipated federal transportation revenue.

The result is an increasing amount of the state's transportation money, now and into the future, is dedicated to paying off the debt. And spending ahead on anticipated federal revenue means a significant portion of that money is not available in the future.

State Sen. Steve Murphy, DFL-Red Wing, who chairs the Senate Transportation Committee, is not convinced most Minnesotans would oppose increasing gas taxes and other vehicle fees.

"I think, and firmly believe, that a lot of moderate Republicans and conservative Democrats understand that the key to economic viability in the metropolitan region is a transportation system that works," says Murphy.

Beyond the political implications of the delay in rebuilding the 35W/Crosstown interchange, are the economic ripple effects.

One is that delay increases costs. Road and bridge building costs, by one estimate, are rising at four times the rate of inflation -- or about 12 percent a year -- because of rising prices for concrete and steel.

Another ripple effect is felt in communities affected by the project.

Richfield city council member Bill Kilian says he's very disappointed at hearing about the delay. Kilian says the city has a string of infrastructure and other development projects whose start times were tied to the Crosstown rebuild beginning this summer.

"It would probably affect the rebuild of the 66th St./Portland Ave. intersection," says Kilian. "It could also affect Richfield Lake and water treatment for the runoff."

Minnesota's road builders had warned the state through their lobby group, the Associated General Contractors, earlier this year they would not be submitting bids for the Crosstown rebuild.

Contractors were uneasy with the unorthodox financing plan that would have required them to provide money to keep the work going between state payments.

"There was just too much risk for there to be viable proposals," said Dave Semerad, chief executive of Associated General Contractors of Minnesota. He said contractors were not sure they would be paid back.

Companies who bid would have had to front the state $96 million until the full federal funding was available in 2008.

Rep. Mary Liz Holberg, R-Lakeville, chair of the House Transportation Finance committee, says it's possible another factor contributing to contractors' reluctance to bid is the cost of the project has risen as much as $300 million.

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