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Making a list and checking it twice: Officials tick off state and local projects awaiting Obama's stimulus plan

MinnPost photo illustration by Corey Anderson

From school safety barriers in Grand Marais to wind farms near Rochester to a sewer system in Blue Earth County, Minnesota has a long list of projects ready to go as President-elect Barack Obama's proposes to stimulate the nation's economy with massive investments in public works.

At this point, though, it is pure guesswork to say which of Minnesota's billions of dollars in worthy projects might win support.

Obama has pledged to put at least 2.5 million people to work by "making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s."

He outlined his vision in sketchy terms: To gin up jobs in a hurry, priority would be given to "shovel ready" projects already in the pipeline. To also serve his energy agenda, public buildings would be made more energy efficient. Schools, libraries and hospitals would get better internet connections.


While specifics of any plan are months away, state and local officials already are compiling lists of road, bridge, water and energy-related projects that could be started quickly should the funding fall their way.

But the massive plan is sure to hit road blocks and speed bumps in Congress.

Supporters of such public works spending say it is a surer way to create jobs than tax rebates. As crafted by Obama, it also would serve multiple goals by repairing the nation's crumbling infrastructure, conserving energy and improving schools.

In addition to providing "an immediate stimulus," Obama said, the projects would be "down payments on the kind of long-term sustainable growth that we need."

Christopher Phelan is skeptical, though. He is a professor of economics at University of Minnesota and a consultant to the Federal Reserve Bank of Minneapolis.

"The problem with roads and bridges is that by the time you actually start to build them the recession might be over," Phelan said.

Building and repairing infrastructure is one of the responsibilities we expect government to shoulder, and the United States is overdue for the work. But risks of waste are high if massive sums are handed out in a hurry, Phelan said.

Also high are the odds that priorities will be grounded in politics rather than the merits of each project.

"Political clout is a bad way of allocating resources," Phelan said.

At this point, no one knows how big the pot of money will be, let alone the priorities and rules for spending it.  Some estimates peg it at $500 billion.

Highways and bridges
The Minnesota Department of Transportation has identified 200 projects worth $950 million that could be ready to start within 180 days.

Obama didn't say what he meant by "shovel ready," but he did suggest there will be a deadline for getting started: "If a state doesn't invest the money in roads and bridges it will lose the money." 

Congress could change the parameters — say, call for projects that could be started in 90 days. If that happened, Minnesota's list would change a lot, said Abigail McKenzie, who directs MNDOT's Office of Investment Management.

"If we had 90 days we would do quite a bit of pavement rehabilitation, low-cost safety improvements . . . maybe one or two expansion projects where we have a right of way," McKenzie said.

If the timeframe expanded, larger projects could be candidates, she said.

"It's all about what are the requirements and the timelines," she said.

MNDOT has identified $4.7 billion in bridge, highway, road and transit projects that need funding by 2012, and it must count on the federal government for a good share of that investment. So there is no shortage of candidates, McKenzie said.

Whatever the parameters, a burst of brand new highways and bridges is unlikely, said David Levinson, a researcher in the University of Minnesota's Center for Transportation Studies.

Obama plans to improve the transportation system already in place rather than start from scratch, Levinson said.

The average age of  the United State's highways and bridges is about 40 years, he said, and many of the bridges were designed for just 40 to 50 years of use so they are due for major repairs or replacement.

Minnesota's need for investment was made dramatically clear when the I-35W bridge collapsed in 2007, Levinson said. To be sure, there were technical reasons the bridge went down, but it also suffered from the fact that "nobody had invested enough to do proper inspection and modeling," he said.

Shaken by that disaster, Minnesota already is replacing and repairing dilapidated bridges as fast as funding will allow.

Light rail also is a priority in the Twin Cities. Levinson predicted that light rail and similar transit will be funded "outside the stimulus package" but that the pace of funding for that too will be stepped up.

Energy
"We will launch a massive effort to make public buildings more energy efficient," Obama said in a radio address outlining the recovery package.

That effort could create thousands of jobs for workers with an array of skill levels, said Dave Sparby, president and CEO of Northern States Power Co.-Minnesota, an arm of Xcel Energy.

"A whole host of people" are needed to retrofit a commercial building, Sparby said, including engineers and specialists in lighting, heating and air conditioning as well as the people who hang insulation and change light bulbs.

And the energy saving could be substantial.

"There is a wide spectrum of outcomes depending on whether it's a new building or an old building, but it's not unreasonable to think of energy savings of up to 30 percent on average," he said.

Upgrading America's power grid and modernizing the transmission infrastructure to accommodate renewable energy is expected to be part of the proposed stimulus package. One of Obama's oft-stated campaign pledges was to create the capacity to capture wind energy in places like North Dakota and transmit it efficiently to population centers like Chicago.

Xcel is "well along in the path of meeting his objectives," Sparby said, with a program to bring wind energy from the Dakotas, western Minnesota and the Rochester area to the Twin Cities metro area.

Xcel would not expect to get cash grants for such work, but it does rely on tax credits that could be enhanced under the stimulus package.

And Minnesota would be well positioned to take advantage of any incentives the stimulus package might offer to add more renewable energy capability in wind and solar, Sparby said.

Water and sewer
Communities across Minnesota already have identified billions of dollars worth of projects needed to repair and upgrade water and wastewater treatment facilities.

For wastewater alone, the state has a priority list of 260 projects needing $1.8 billion in funding, said Jeff Freeman, who is deputy director of the Minnesota Public Facilities Authority.

That's just the short-term list.

Some projects are ready to go, Freeman said.

"We are looking ahead to the possible additional federal funds and being ready for that," he said. "We are surveying these projects, making sure we know the status and where they are with final designs. The list is somewhat fluid, and we have the ability to add projects which we may do if we get additional money."

Political non-starter
Minnesota Gov. Tim Pawlenty balked at the notion of massive stimulus spending after Obama briefed governors on his ideas this month, MinnPost's Joe Kimball reported.

"I want to see how it's structured," Pawlenty said. "We'll see. I don't want to just have the money go out without some reform in how it's spent. I don't want some committee chairman to cherry-pick his pork-barrel project."

Repeating an unconfirmed rumor that Pawlenty plans to run for president, Levinson at the Center for Transportation Studies said: "I would be surprised if he turned down the money. That would be a political non starter for him."

Sharon Schmickle writes about national and foreign affairs and science. She can be reached at sschmickle [at] minnpost [dot] com.

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Comments (11)

Re: "ready to go" infrastructure projects, I was glad to see water purification and wastewater treatment among the leading categories mentioned, AND that the list of such projects was (and I quote): "fluid".

Excellent illustration.

The B.O. plan is nothing more than trickle down liberal economics. Let us cut business taxes and a 2 year ban on capital gains taxes.

Just don't let the governor pick any projects lest we get experimental "clean" coal carbon sequestration and freight trains filled with coal from Dick Cheney's home state rumbling through Rochester day and night. And copper mines that could destroy northern Minnesota's forests and waters with poisons used in the process.

I feel more comfortable with Washington making firm and final choices from a list provided by Minnesota to which the governor has no more right to list items that would the legislature and state agencies.

BEFORE YOU GO OUT AND BUY A WINDMILL - YOU SHOULD
READ THIS

Wind Power Exposed: The Renewable Energy Source is Expensive, Unreliable and Won’t Save Natural Gas.

This is not what President-elect Barack Obama's energy and climate strategists would want to hear. It would be anathema to Al Gore and other assorted luminaries touting renewable energy sources which in one giant swoop will save the world from the “tyranny” of fossil fuels and mitigate global warming. And as if these were not big enough issues, oilman T. Boone Pickens’ grandiose plan for wind farms from Texas to Canada is supposed to bring about a replacement for the natural gas now used for power generation. That move will then lead to energy independence from foreign oil.

Too good to be true? Yes, and in fact it is a lot worse.

Wind has been the cornerstone of almost all environmentalist and social engineering proclamations for more than three decades and has accelerated to a crescendo the last few years in both the United States and the European Union.

But Europe, getting a head start, has had to cope with the reality borne by experience and it is a pretty ugly picture.

Independent reports have consistently revealed an industry plagued by high construction and maintenance costs, highly volatile reliability and a voracious appetite for taxpayer subsidies. Such is the economic strain on taxpayer funds being poured into wind power by Europe's early pioneers -- Denmark, Germany and Spain – that all have recently been forced to scale back their investments.

As a result this summer, the U.K., under pressure to meet an ambitious E.U. climate target of 20 percent carbon dioxide cuts by 2020, assumed the mantle of world leader in wind power production. It did so as a direct consequence of the U.K. Government's Renewables Obligations Certificate, a financial incentive scheme for power companies to build wind farms. Thus the U.K.'s wind operation provides the ideal case study -- and one that provides the most complete conclusions.

The U.K. has all the natural advantages. It is the windiest country in Europe. It has one of the continent's longest coastlines for the more productive (and less obtrusive) offshore farms. It has a long-established national power grid. In short, if wind power is less than successful in the U.K., its success is not guaranteed anywhere.

But wind infrastructure has come at a steep price. In fiscal year 2007-08 U.K. electricity customers were forced to pay a total of over $1 billion to the owners of wind turbines. That figure is due to rise to over $6 billion a year by 2020 given the government's unprecedented plan to build a nationwide infrastructure with some 25 gigawatts of wind capacity, in a bid to shift away from fossil fuel use.

Ofgem, which regulates the U.K.'s electricity and gas markets, has already expressed its concern at the burgeoning tab being picked up by the British taxpayer which, they claim, is “grossly distorting the market” while hiding the real cost of wind power. In the past year alone, prices for electricity and natural gas in the U.K. have risen twice as fast as the European Union average according to figures released in November by the Organization for Economic Cooperation and Development. While 15 percent energy price rises were experienced across the E.U., in the U.K. gas and electricity prices rose by a staggering 29.7 percent. Ofgem believes wind subsidy has been a prime factor and questions the logic when, for all the public investment, wind produces a mere 1.3 percent of the U.K.'s energy needs.

In May 2008, a report from Cambridge Energy Research Associates warned that an over-reliance on offshore wind farms to meet European renewable energy targets would further create supply problems and drive up investor costs. No taxpayer respite there. But worse news was to come.

In August, the most in-depth independent assessment yet of Britain's expanding wind turbine industry was published. In the journal Energy Policy gas turbine expert Jim Oswald and his co-authors, came up with a series of damning conclusions: not only is wind power far more expensive and unreliable than previously thought, it cannot avoid using high levels of natural gas, which not only it will increase costs but in turn will mean far less of a reduction in carbon dioxide emissions than has been claimed.

Oswald's report highlights the key issue of load factor, the actual power generated compared to the theoretical maximum, and how critical it is to the viability of the wind power industry. In 2006, according to U.K. government statistics, the average load factor for wind turbines across the U.K. was 27.4 percent. Thus a typical 2 megawatt turbine actually produced only 0.54 MW of power on an average day. The worst performing U.K. turbine had a load factor of just 7 percent. These figures reflect a poor return on investment. But this poor return is often obscured by the subsidy system that allows turbine operators and supporters to claim they can make a profit even when turbines operate at a very low load factors. So what’s the bottom line? British consumers are paying twice over for their electricity, funding its means of production and paying for its use as end users.

Variability is one of the chief criticisms levelled at wind power. When the wind drops or blows too hard, turbines stop spinning and you get no power. Wind turbine advocates have claimed that this can be avoided by the geographical spread of wind farms, perhaps by creating an international “supergrid.” But, as Oswald's report makes clear, calm conditions not only prevail on a fairly regular basis, they often extend across the country with the same conditions being experienced as far away as France and Germany. Worse still, says Oswald, long periods of calm over recent decades occurred in the dead of winter when electricity demand is highest.

Periods of low wind means a need for pumped storage and essential back-up facilities. Oswald told The Register online news service that a realistically feasible U.K. pumped-storage base would only cope with one or two days of low winds at best. As regards back-up facilities, Oswald states the only feasible systems for the planned 25 gigawatt wind system would be one that relied equally on old-style natural gas turbines. As Oswald says however, the expense of a threefold wind, pump storage and gas turbine back-up solution "would be ridiculous."

The problems don’t end there. The British report highlights what more and more wind farms would mean when it came to installing gas turbine back-ups. "Electricity operators will respond by installing lower-cost plant ($/kW) as high capital plant is not justified under low utilisation regimes."

But cheap gas turbines are far less efficient than big, properly sized base-load turbines and will not be as resilient in coping with the heavy load cycling they would experience. Cheaper, less resilient plants will mean high maintenance costs and spare back-up gas turbines to replace broken ones that would suffer regular thermal stress cracking. And of course, the increasing use of gas for the turbines would have a detrimental effect on reducing carbon dioxide emission – always one of the chief factors behind the wind revolution.

Oswald's report concludes also that the all this wear and tear will further stress the gas pipeline network and gas storage system. "High-efficiency base load plant is not designed or developed for load cycling," says Oswald. Critically, most of the issues raised in the independent report have not been factored into the cost of wind calculations. With typical British understatement, Oswald concludes that claims for wind power are "unduly optimistic."

We think they've been blown away.

Sorry, but government can’t create jobs. The money for these projects must be taken from some other people in the economy. All government can do is move money around – less the administration cost of moving money around. In economics, it’s called the theory of the “seen” versus the “unseen.” You can point to people making sewer improvements and say “Look at all the jobs we created.” What you can’t see is all the jobs not being created because the money is going down the sewer.

Now, a robust private economy creates the need for sewers and other infrastructure projects and does create jobs for people who build them. That’s tax money well spent, but the need is driven by the private sector. We don't (or shouldn't) just build sewers or roads or bridges for the helluva it. If Minnesota needs to go to the federal government (that is taxpayers in other states) for money to fix its infrastructure, then one has to ask, just what is the state spending tax money on that it doesn’t have money to provide the basic government function of sewer maintenance? That is the “unseen” lost opportunity cost.

Wind + Natural Gas is the Pickens plan, which will work fine in the short run. And I don't want to hear any crap about opportunity cost after the Bush administration gave several trillion dollars away to bail out the financial industry.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/26/MNVN14C8QR.DTL

hello dave
i see you are like most environmentalists who don't want to be confused by the true scientific facts regarding global warming. you would rather get your information from a failed politician.

you are willing to lower the standard of living of your children in the name of a HOAX.

GLOBAL WARMING IS A HOAX SUPPORTED BY PEOPLE OUT TO DESTROY OUR WAY OF LIVE AND PROSPERITY.

THE GOOD NEWS IS THERE IS NO GLOBAL WARMING -- BE HAPPY

I'm having trouble understanding where the starting line is for jobs creation in our proposed "shovel ready" projects list. Seems like jobs will be created at the planning stage, once the green light is given to consider a project. Every step will bring on more jobs. What might be important to consider for the state and every community in Minnesota is to recognize that it has been well documented that for each artist, performer, author that locates in a community, three jobs are created.

Minnesota might want to set a statewide goal for jobs creation in the culture arena over the next two years. I suspect there's similar documentation for broadband infrastructure at the local level (not including Internet access) that would create additional tens of thousands of Minnesota jobs over the next two years as well.

You seem to overlooked a clear investment priority for the 21st Century to make all communities wired to broadband for high-speed internet access, etc. We can create an information highway for the whole country. Rural communities can be very viable if they have the same access as our cities. The Blandin Foundation has led this effort. It should be an area for investment throughout the Midwest and the country. It is to today, what electricity was to the 1930's.