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Stimulus makes splash in Minnesota

Brian Johnson
Dolan Media Newswires

Minneapolis — Drinking and wastewater projects are moving forward throughout Minnesota with help from federal stimulus, but leaders in the local utility contracting industry say the needs still outweigh the available money.

In Minnesota, roughly $2.1 billion worth of such projects are in the queue. Aging infrastructure and new standards for clean water are driving the need, according to Jeff Freeman, deputy director of the Minnesota Public Facilities Authority.

The amount of money requested for the projects shows how dire the need is, said DeAnn Stish, executive director of the Minnesota Utility Contractors Association.

“We have massive demand here, and we have shovel-ready projects,” she said. “These are projects that have gone through almost all aspects of planning, environmental permitting and engineering. … But it takes money, and it’s a heavy, capital-intensive type of construction work.”

But Minnesota’s $107 million stimulus allotment for drinking water and wastewater improvements is making a splash – at least to some extent.

The stimulus money, financed through the state’s Public Facilities Authority, is above and beyond the state’s typical program, which is usually in the $180 million range, Stish said.

The latest round of stimulus allocations, announced in late July by the PFA, offered $27.3 million for a variety of projects, including $16.1 million for improvements to the city of Waseca’s wastewater-treatment plant.

Kirsten Morell, a spokeswoman for the Minnesota Department of Employment and Economic Development, said most of the PFA’s stimulus money is obligated.

“We expect it to be fully obligated soon,” she added. “There was a great deal of demand from our communities for the funding.”

The PFA makes below-market-rate loans and financing agreements with cities; the cities do the contracting.

Cities can apply for money by putting their projects on a priority list. The 2009 list included $1.8 billion worth of work, ranging from new treatment plants and sewer rehabs to plant expansions and treatment-facility rehabs.

Projects on the list are at various stages, Freeman said. The Minnesota Legislature directed that the stimulus money should go to approved and ready-to-go projects on a first-come, first-served basis.

Minnesota received its federal grant awards May 27. By June 2 the first contract was awarded, and since then, most of the money has been committed, Freeman said.

“Now just about all those projects would be under construction. … Cities were scrambling to move very quickly,” he said, “because they wanted to try to capture some of the additional subsidization from the stimulus money.”

One of the challenges facing the local industry: Minnesota’s piece of the national pie is locked in at 1.7 percent under a 15-year-old federal formula, and some people say the state is getting shortchanged.

Stish said the industry is working with members of Minnesota’s congressional delegation to update the formula, but changes are not likely to happen soon.

The industry is ready for whatever comes its way, but, despite the federal money and the new spate of projects, utility contractors are not rushing to put up help wanted signs.

Gary Lindblad, director of training for the International Union of Operating Engineers Local 49, said 1,500 members of the union are on the bench.

“We have apprentices and journey workers out of work now,” he said. “… We have ratios — only one apprentice for every 10 journey workers — and so when the journey workers are not working, the apprentices are not working either.”

The industry includes companies that install sewer and water and other utilities, as well as excavation and site-work contractors. Since those contractors hit the job site before any actual building can begin, they are among the first to see the effects of a downturn or the signs of better times ahead.

“We should be the first to see recovery,” Stish said. “We haven’t yet.”

Nevertheless, she said, the industry is grateful for the stimulus money even though it’s “a drop in the bucket” compared to the demand.

“No one is going to say anything disparaging about the stimulus money,” she said. “But the effect is not enough to make things jump … because there was no hiring of new people, and we still have almost half our workers sitting on the bench.”

Still, she said, “Imagine if we didn’t have the stimulus?”

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