The chances of building a new interchange at Hwy. 169 and Interstate 494 have grown brighter: The Federal Highway Administration has given conditional approval to a money-saving interchange design Minnesota has in mind.

Construction funding is still needed, but the design approval makes the project eligible for federal funds when they are available, said Wayne Norris, west area engineer for the Minnesota Department of Transportation. "This is a major, major hurdle for us.''

Traffic backs up during six hours each weekday at the interchange because of three sets of traffic signals on Hwy. 169. They are the only lights on what is otherwise a freeway through Edina, Bloomington and Eden Prairie. MnDOT says 75,000 vehicles a day travel that section of 169.

Last spring, the Federal Highway Administration rejected MnDOT's proposal to rebuild the interchange with just six of the eight expensive fly-over ramps federal policy requires on such major interchanges. The stalemate cost the project a share of the federal economic stimulus funds received by the state early in the year.

At that time, Derrell Turner, administrator of the Minnesota Division of the Federal Highway Administration, said federal design standards have to be uniform across the nation.

In a letter to MnDOT this week, Turner reversed that stance. He said the federal agency is willing to pursue MnDOT's scaled-back design on the condition that MnDOT promises to build the ramps later if they are needed. Turner said MnDOT and the federal agency would have to agree on future traffic conditions that would trigger the addition of the ramps.

U.S. Rep Erik Paulsen, R-3rd, praised the reversal, noting that he and Rep. John Kline, R-2nd, had written Transportation officials in support of the project that will be used by their constituents.

MnDOT wants to leave out the fly-over ramps from east 494 to north 169 and from south 169 to west 494, which the agency says would save $30 million. Traffic forecasts show relatively few vehicles would use those ramps because most motorists in that area travel in those directions more conveniently by using the nearby Hwy. 212.

For the $135 million still needed to build the downsized interchange design, the state will be competing for funding from a $1.5 billion pool of federal stimulus money targeted for transportation projects. The federal government expects to announce in mid-January where that money will go.

If the state receives the funding it is seeking, work would start next summer on the new interchange, Norris said. If that funding does not come through, the starting date of the project is indefinite, he said.

Eden Prairie City Manager Scott Neal celebrated the break in the impasse with the Federal Highway Administration. "We think our project, because of its traffic numbers, has a very good chance of being funded now because the feds and the state and the cities are all supporting the same project design.''

With as many as 5,000 applications, competition is fierce for the Transportation Investment Generating Economic Recovery, or "TIGER," funds that MnDOT hopes to win for the interchange.

Other state projects, including a proposed new Stillwater bridge, are competing for the funds as well.

To boost the 169-494 application's appeal, MnDOT has thrown in an intersection upgrade at Hwy. 101 on Hwy. 13 -- a Minnesota River port-to-market route in Savage.

The paired projects would deliver on two objectives: removing freight and commuter bottlenecks. The combined projects would cost $201.3 million. With a $135 million grant, MnDOT could come up with the rest, Norris has said.

Laurie Blake • 612-673-1711