Want an interchange? Show us the money

09/02/2007

A trend toward private subsidies for roads and bridges is gaining steam - and raising questions about whether developers' cash should skew priorities.


By David Peterson,
Star Tribune
Last update: September 01, 2007


Tim Gump wants a new interchange added to Interstate 94 north of Maple Grove. And because it could trigger more than a billion dollars' worth of development, with Gump's own company at the center of the action, he is willing to lend the $20 million it would cost government build it.

"The cities up there are excited," he said. "Legislators are excited. Users are excited. On a stretch of freeway with no access for several miles, this could add 20 to 30 minutes to their lives every single day."

So far, however, the light's still red. Why, some ask, should this project jump decades ahead of others, just because it is blessed with promoters with access to big-time cash?

But with highway funding from public sources in short supply across the nation, and states reacting to Minnesota's bridge collapse by shifting funds from new roads to maintaining what already has been built, experts say we may be on the verge of an era of private financing of bridges and intersections.

"This is getting ready to explode nationally as an issue, it really is," said Robert Puentes of the Washington-based Brookings Institution.

It has been building in Minnesota for several years now, said Tim Murnane, senior vice president of Opus Corp., a major commercial developer. "Since the budget cuts hit a few years ago," he said, "we've been tapped" -- to the tune of tens of millions of dollars from his firm alone.

John Breitinger, general manager of retail investments for United Properties, another huge commercial developer, describes it as a "big" and "very timely" issue. He too, he said, faces a situation in which a $20 million investment in infrastructure in Burnsville "will unleash more than $1 billion of developable land for the city."

Some say that companies such as Opus and United should be tapped: If they, and later their tenants, are making money triggered by public investments, or need the investments to get to work, they should throw some chips on the table.

But others worry that the process of ranking the importance of projects for roads and bridges will be skewed if developers take a seat at the table.

Finding a balance

Though she is vigorously pushing special legislation to make Gump's intersection happen in her district, Rep. Joyce Peppin, R-Rogers, is aware of the pitfalls.

"The developer is trying to turn a profit," she said. "The trick is to get cozy enough to get a good deal, but not so cozy that you get tricked into something that isn't good for the people you represent."

That's exactly the rub, said Trip Pollard, land and community programs director for the Southern Environmental Law Center, a nonprofit group working in six Southern states. Private partnerships have become a huge issue in the South, he said, as rapid population growth has been shadowed by tight budgets for roads.

Case in point, he said: "In the Charlottesville, Virginia, area, along the main commercial strip, Route 29, there've been three major rezonings in the past two years that have required developers to put up money for road improvements in order to get approval."

If that means the creators of sprawling forms of development are paying more of the cost, he said, all to the good; but if they are pushing society in ways it wouldn't choose to go otherwise, it's not so good.

Opus has helped finance road and bridge improvements in at least three big Twin Cities projects in recent years, Murnane said: a shopping center in Woodbury, Best Buy's corporate headquarters in Richfield and the Arbor Lakes retail center in Maple Grove.

Discussions are taking place with United and others about helping pay for road improvements in at least two major developments proposed in Bloomington: one just south of the intersection of Hwy. 100 and I-494 in Bloomington, and another across I-494 from Best Buy.

Think 'proportional'

In some cases, Murnane said, the underlying problem is that "we're at capacity:" existing roads just can't handle any more traffic. He doesn't mind contributing to a solution, but warns that projects lucrative to cities won't happen if they expect too much.

"The word that comes to mind is 'proportional,'" he said. "We need some equity. The bigger question is: 'Where are the dollars coming from to upgrade our infrastructure?' That's unfortunately a very topical question right now," as states and the federal government weigh tax increases for transportation after the I-35W bridge collapse in Minneapolis.

Gump is a partner in the Hopkins Beard Group, which has bought land in Hassan Township near a site -- Brockton Lane -- that local officials have long projected as an intersection with I-94. He is talking to shopping-center developers and wants to build homes nearby as well.

If there is a special legislative session to address the I-35W bridge collapse, he and his allies will seek legislation allowing him to be reimbursed over time for the money fronted for the intersection, which he and others say has wide support in the community.

"Counties and cities cannot get these things done," he said. "There is not state funding. How do you get it done? In comes the Beard Group: We'll front-load it, but we need to get paid back. We think it's a creative solution."