DEPARTMENT: Transportation
FILE TYPE: Consent Action
TITLE
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Amendment To 2026 Transportation Capital Improvement Program Budget For 117th Street (County State Aid Highway 32) Improvements, Rich Valley Boulevard (County State Aid Highway 71) To Court House Boulevard (Trunk Highway 52) In City Of Inver Grove Heights, County Project 32-65
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RESOLUTION
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WHEREAS, Dakota County (County), in cooperation with City of Inver Grove Heights (City), is proceeding with County Project (CP) 32-65 to reconstruct and realign 117th Street (County State Aid Highway 32) to improve safety, freight mobility, and corridor operations; and
WHEREAS, delivery of CP 32-65 requires the acquisition of multiple right-of-way parcels through negotiated settlements and condemnation proceedings administered through District Court, which include escrow deposits that delay reimbursement to the project; and
WHEREAS, several right-of-way settlements have required payments above initial appraisals due to updated valuations, severance considerations, and avoidance of potential litigation expenses, and these obligations must be paid as they are finalized; and
WHEREAS, construction-support services such as construction administration, materials testing, railroad coordination, and flagging continue to accrue at current 2026 market rates, and inflation has increased the cost of change orders, quantity adjustments, and other non-bid work necessary to deliver the project; and
WHEREAS, pending condemnation reimbursements from District Court and increased right-of-way and construction-support expenditures have created a funding gap within the current CP 32-65 budget, and maintaining timely financial authority is necessary to avoid delays in project delivery and coordination with external partners; and
WHEREAS, sufficient revenue exists within the Transportation Sales and Use Tax Fund to support a budget amendment to the 2026 Transportation Capital Improvement Program (CIP) to address these needs.
NOW, THEREFORE, BE IT RESOLVED, That the Dakota County Board of Commissioners hereby amends the 2026 Transportation Capital Improvement Program Budget for County Project 32-65 by $1,805,900 from the Transportation Sales and Use Tax Fund; and
BE IT FURTHER RESOLVED, That the 2026 Transportation Capital Improvement Program Budget is hereby amended as follows:
Expense
County Project 32-65: $1,805,900
Total Expense: $1,805,900
Revenue
Transportation Sales and Use Tax: $1,805,900
Total Revenue: $1,805,900
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BACKGROUND
Dakota County, in partnership with City of Inver Grove Heights, is constructing CP 32-65 to reconstruct and realign 117th Street between County State Aid Highway 71 and Trunk Highway 52. Construction began in 2025 and will continue through the 2027 season. Work to date includes major roadway reconstruction, freight movement and safety enhancements, railroad crossing upgrades, drainage and utility improvements, installation of new trail and pedestrian facilities, and full corridor realignment. As for Pay Estimate No. 7, approximately 57% of the revised contract value has been completed, with $8,345,582 in work certified to date.
As the project advances, remaining right-of-way obligations are being resolved through negotiated settlements and, where necessary, condemnation proceedings consistent with Minnesota eminent domain statutes. Several industrial parcels have required settlement amounts above initial appraisals due to updated valuations, severance impacts, and the avoidance of potential litigation expenses. Required condemnation escrow deposits placed with district court have also temporarily delayed reimbursement revenue, resulting in short-term cash-flow constraints as right-of-way payments continue to be issued. A total of $2,078,600 was originally deposited with district court for eight parcels as part of condemnation proceedings. To date, $1,188,800 has been reimbursed to Dakota County following court actions. An estimated remaining escrow balance of $889,800 is held in district court until the final distribution when the funds will be released back to the County. Another $416,100 in right of way budget is required to total $1,305,900 for:
• Final right of way settlements still pending
• Valuation and severance adjustments
• Condemnation related legal and administrative costs
• Cash flow between required right of way payments and court reimbursement
Although the construction contract was awarded at a fixed bid price in December 2025, continued inflation during the 2026 construction season has required additional railroad costs and construction related services. It is estimated an additional budget amendment of $500,000 is required for:
• Railroad coordination services
• Railroad flagging
• Railroad observation
• Material testing
• Quantity adjustments
A total budget amendment of $1,805,900 is needed to ensure the County can continue to meet right-of-way settlement requirements, fund railroad and utility coordination activities, and maintain continuous construction progress through the 2026-2027 seasons. The amendment also offsets short-term cash-flow impacts from District Court escrow deposits and inflation-driven increases in construction support costs, helping preserve schedule, safety, and overall project delivery. $899,800 will be released by the court back to the County after final condemnation distribution is complete.
RECOMMENDATION
recommendation
Staff recommend that the Dakota County Board of Commissioners amend the 2026 Transportation Capital Improvement Program Budget for CP 32-65 to include an additional $1,805,900 from the Transportation Sales and Use Tax Fund.
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FINANCIAL AND STAFFING IMPACTS
The 2026 Transportation Capital Improvement Program Budget currently includes $24,464,492 for CP 32-65. As of September 25, 2026, actual expenditures total $13,346,451, with an additional $10,685,998 committed, leaving a remaining available balance of $432,043.
This balance is insufficient to meet upcoming right-of-way settlement obligations, condemnation-related expenses, and construction-support costs that are now accruing. The difference between programmed right-of-way funding and actual costs totals $1,305,900, and an additional $500,000 is required to support construction-related cash-flow needs, resulting in a total shortfall of $1,805,900.
Sufficient revenue exists within the Transportation Sales and Use Tax Fund to fully support this amendment. No additional FTEs are required.
This amendment aligns with County budget compliance policies and ensures adequate budget authority to complete the project.
CP 32-65 New County Road 32/71 TH52 IGH Current Approved Budget (Before Amendment)
|
Funding Source |
Approved Budget |
Available Budget |
|
Sales and Use Tax |
$9,052,082 |
$432,043 |
|
City |
$5,734,000 |
$0 |
|
Federal |
$8,000,000 |
$0 |
|
Transportation Advancement Account |
$1,678,410 |
$0 |
|
Total |
$24,464,492 |
$432,043 |
CP 32-65 New County Road 32/71 TH52 IGH Proposed Amended Budget
|
Funding Source |
Proposed Approved Budget |
Proposed Available Budget |
|
Sales and Use Tax |
$10,857,982 |
$2,237,943 |
|
City |
$5,734,000 |
$0 |
|
Federal |
$8,000,000 |
$0 |
|
Transportation Advancement Account |
$1,678,410 |
$0 |
|
Total |
$26,270,392 |
$2,237,943 |
PREVIOUS BOARD ACTION
None.
ATTACHMENTS
Attachment: Project Map
CONTACTS
Department Director: Erin Laberee
Author: John Sass