Other’s Opinion: Infrastructure — The cost of projects keeps escalating

Published 5:23 pm Friday, May 24, 2024

Getting your Trinity Audio player ready...

Mankato Free Press. May 16

We have for years bemoaned the inability, or unwillingness, of recent state legislatures to reach the necessary consensus to fund infrastructure projects. This tendency was particularly irritating during the decade or so when both inflation and interest rates were minimal.

That set of optimal conditions for public work projects is past, as sharply illustrated this week when the city of Mankato bit the bullet and approved a multi-year project to upgrade its wastewater treatment system.

Email newsletter signup

The project was first put out for bid in the winter of 2021-22 with an estimated cost of $45 million. More than three years later, the work is about to be begin with a price tag near $89 million, almost twice the initial budget.

The winning bid was also the only bid — and it was itself 11.6% above the city’s most recent estimate.

The City Council wisely absorbed the sticker shock and ratified the contract Monday. Assembling the financing for the escalating cost has been a long process, and it makes no sense to revisit it. Further delay is not likely to raise more funds or lower the expense.

The system, it should be noted, is not simply a Mankato issue. It also serves the municipalities of North Mankato, Eagle Lake, Madison Lake and Skyline, plus South Bend Township and the Lake Washington Sanitation District. It is truly a regional service, and as such merits the state’s financial support.

This week the council was also told that the city has successfully sold $11.2 million in bonds to finance street and utility projects and the All Seasons Arena project (which, like the wastewater system, is a regional endeavor shared by several other local governments). The interest rates on those two debt issuances are both under 3.5%, but still considerably higher than during the pandemic.

The Minnesota Legislature would do well to heed the moral here. The Legislature is in the final days of its 2024 session and once again in its habitual partisan standoff over the bonding bill, which requires a two-thirds vote for approval. The trajectory of the Mankato wastewater project, and of its other borrowing, illustrates the cost of procrastination on such matters.