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Minnesota’s Rural Communities Will Struggle to Pay for Needed Water Infrastructure

Minneapolis just unveiled a $60 million water tunnel to help the city manage runoff. But what about the state’s small rural communities?

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In Brief:
  • Minneapolis built a new $57 million tunnel to carry excess stormwater from downtown streets to the Mississippi River.

  • The existing, century-old tunnel system was stressed due to development and more intense rainstorms.

  • Statewide water infrastructure needs are estimated at about $11 billion.


  • Fifteen years ago, new to his role as a sewer engineer for the Department of Public Works, Joe Klejwa entered a tunnel 70 feet below downtown Minneapolis.

    He was on a quest to assess the city’s subterranean tunnel systems, which were built to help drain stormwater from the surface into the Mississippi River. Some of the tunnels were more than a century old; others were built in the 1930s. In the time since, the wooden framing surrounding the concrete tunnels had rotted away, leaving gaps between the concrete and the surrounding sandstone. The city had been built out over the same time, with impervious pavement forcing more water into the tunnels. To top it off, storms — including two intense rainstorms in 2010 — had put so much water pressure in the tunnels that they had begun to bulge out into the soft sandstone and crack.

    “There was almost two feet of sand that had settled [in the six-foot tunnel],” Klejwa says. “We were crawling on our hands and knees.”

    The department soon began planning a new tunnel to expand capacity for stormwater drainage and relieve pressure on the existing system. Nearly a decade and a half later, the city opened the tunnel. At a press conference earlier this month, Minneapolis Mayor Jacob Frey said it was part of a massive investment in climate-resilience infrastructure that is needed across the country in the coming decades.

    “This work is some of the most important because it impacts your day-to-day life,” Frey said. “When it’s working well, you don’t hear about it. And the fact that you haven’t been hearing about this particular project means that is government working for you.”

    Despite the cost of digging a new underground tunnel, it’s comparatively easy for a big city like Minneapolis to finance new water infrastructure. Local bond financing backed by utility ratepayers covered the majority of the $57 million price tag for the tunnel. Smaller communities with fewer ratepayers and less valuable properties are in a tighter spot. And those communities are all over the state.

    Minnesota cities need about $11 billion in upgrades and repairs to drinking water, wastewater, and stormwater systems. Many of those communities are rural — “four blocks by four blocks in the middle of cornfields,” says state Sen. Scott Dibble, who helped secure some state funding for the Minneapolis tunnel — and have no way of funding new infrastructure on their own. Some communities have infrastructure needs that amount to about $500,000 per household, when the homes there are only worth around $100,000 apiece, Dibble says.

    “It’s not cost-effective” to upgrade water infrastructure in small and shrinking communities, says Erin Riggs, director of the Environmental Finance Center at the US Water Alliance. “People’s homes are worth less than it would cost to build the infrastructure. But at the same time these are communities and they’re people.”

    Riggs’ group helps small communities navigate grant opportunities in their states. With the passage of the Infrastructure Investment and Jobs Act in 2021, there’s a lot more money available for water infrastructure projects, much of it distributed through state revolving funds. But small communities often have trouble navigating the application process, or are loath to take on a loan at all, knowing how difficult it will be to pay back, Riggs says.

    That makes funding water infrastructure a hard social challenge. Unfunded water infrastructure needs amount to about $1 trillion over the next few decades, according to some estimates.

    The Minnesota Legislature adopted an infrastructure bill last year allocating about $500 million for water infrastructure projects. Earlier this year, Gov. Tim Walz proposed a nearly $1 billion infrastructure bill that included millions more for water systems. The bill was blocked by Republicans in the state Legislature.

    It’s going to take a lot more state and federal money to maintain clean water and prevent runaway flooding, especially as climate change causes more frequent extreme weather and changes long-held patterns. Because of warmer temperatures in Minneapolis, for example, snow melts in the spring over a much shorter span of time than it used to. What once took a month now takes a few days, Frey said at the press conference.

    That builds more pressure in the tunnels, causing the occasional geyser to shoot through a manhole on Minneapolis streets. The Department of Public Works was spending around $600,000 a year just to clean the sand from the existing tunnels, and more to fix the cracks caused by excess pressure.

    The costs of maintaining infrastructure are only expected to rise. But by building more resilient systems — like a tunnel system that can manage more stormwater — cities could save more money in the long term. The new tunnel in Minneapolis took two and a half years to build, and required digging out 70,000 tons of sandstone and pouring 23,000 cubic yards of concrete.

    The United Nations Office for Disaster Risk Reduction estimates that building more resilient infrastructure adds only a small capital cost that can be offset with long-term savings. The World Bank has estimated that the financial benefits of investing in resilient infrastructure are about four times as high as the cost. The Infrastructure Investment and Jobs Act includes some small grant programs that can finance more resilient stormwater systems. But utilities, cities and states are on the hook for much of the funding.

    Dibble helped build support in the state Legislature for two grants to help pay for the tunnel, totaling about $18.4 million. Building that support took years. Not because there was any outright opposition to the project or using state money to help pay for it, Dibble says, but because it lacked the political sparkle of more visible projects.

    “It was not easy to get because it’s boring,” Dibble says. “It’s not a pretty thing that sits above ground and is a cultural amenity or a gorgeous thing. … It’s the thing that makes everything else work.”
    Jared Brey is a senior staff writer for Governing. He can be found on Twitter at @jaredbrey.
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