Minnesota is once again going to bat for federal money to fix the Hwy. 169-Interstate 494 interchange -- this time proposing to rebuild it as a national pilot project showing how to economize on design based on local needs.

The interchange now has three traffic signals that cause traffic backups six hours a day on what is otherwise a freeway through Edina, Bloomington and Eden Prairie. In a bid to start work on a new interchange in 2010, the Minnesota Department of Transportation has applied for $135 million from a $1.5 billion pool of federal stimulus money targeted for transportation projects.

If the state wins the $135 million, it would build a new interchange with just six of the eight high-cost, road-to-road fly-over ramps that federal policy normally requires at such a large interchange. MnDOT wants to eliminate two ramps -- the one from east 494 to north 169 and the one from south 169 to west 494 -- to 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.

But as a critical condition of receiving the grant, MnDOT also would promise to monitor the performance of the new interchange and build the two ramps later if they turned out to be needed. The point of the pilot demonstration would be to establish what safety and traffic performance measures should trigger adding the ramps.

Although nationwide competition for the money will be fierce, with as many as 5,000 applications, MnDOT is optimistic that the pilot project ''is a good selling point,'' said Khani Sahebjam, MnDOT's deputy commissioner and chief engineer. Award of the money from the Transportation Investment Generating Economic Recovery (TIGER) Fund will be announced later this year or early in 2010.

If the Federal Highway Administration goes for that approach, it would be a turnaround from six months ago. In April, Derrell Turner, administrator of the Minnesota division of the Federal Highway Administration, said absolutely not when MnDOT proposed to drop the two ramps. Turner said then that federal policy requires full, freeway-to-freeway interchanges in a design that remains consistent across the nation.

To the chagrin of the three suburbs flanking the interchange, the federal-state standoff meant the project was not ready to go and could not qualify for any of the $500 million in federal economic recovery funds MnDOT got earlier this year to create jobs.

Since then, upper-level discussions between state and federal highway officials in Washington, D.C., along with support from other states interested in similar design variations, have encouraged MnDOT to propose the project as a pilot in "performance'' design, Sahebjam said.

This time, however, if federal officials don't like the idea, MnDOT is prepared to ask for another $30 million and build it the way the highway administration wants it, Sahebjam said. "If they say we'll give you the money but you have to build the whole thing, fine.''

Turner declined to comment on the proposal. Highway administration spokeswoman Nancy Singer said only, "We're looking at it.''

To boost the 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 two objectives: removing both freight and commuter bottlenecks, said Wayne Norris, MnDOT west area engineer.

The combined projects would cost $201.3 million. With a $135 million TIGER grant, MnDOT could come up with the rest, Norris said.

'Freeway' with stoplights

How Hwy. 169 wound up with stoplights is a story that began well before Hennepin County landed federal funding to turn old County Road 18, a two-lane roadway, into a four-lane divided highway controlled by signals at Anderson Lakes Parkway, Pioneer Trail and Highwood Drive on the Eden Prairie-Bloomington border.

Complaints about delays and safety problems caused by the traffic signals started on day one after it opened in 1997. From 2006 to 2008, state records show 320 crashes occurred at the interchange and another 200 in congestion leading up to it. Though highway officials have been trying for years to correct the problem, a shortage of road construction money has delayed removing the lights.

In the county's defense, then-Hennepin Public Works Director Vern Genzlinger said trying to build a freeway from the beginning would have encountered such heavy public resistance and delay that the project could have lost its federal funding. During the early planning stages in the 1980s, Eden Prairie feared a freeway would encourage development to leapfrog its undeveloped areas to locales south of the Minnesota River. So 169 was planned with stoplights. By the time the highway was built in the mid-1990s, Eden Prairie was largely built out and no longer concerned about the leapfrog effect. But the project was already too far along to change it without risking losing federal funding.

In 1999, MnDOT had the chance to remove the signals in the interchange because the bridges carrying 169 over 494 were deficient and needed to be replaced. But MnDOT lacked the $80 million needed to build a signals-free interchange, Norris has said. For $11 million MnDOT fixed the bridges -- and replanted the lights.

In 2006, the signals at Anderson Lakes Parkway and Pioneer Trail were removed and the two roads were bridged over 169 at a cost of $20 million. But again, the money was not there to take out the signals at I-494 and Highwood.

Now daily delays have become so vexing that some drivers have urged the state to simply close off the cross streets, turn off the signals and set through-traffic free on 169.

This summer, Ray Brandt, a civil engineer and surveyor who lives in Savage, was so put out by 169 traffic jams that he drew up his own $60 million design to fix it. Brandt said removing the lights would be a simple matter of adding a loop on the southeast corner of the crossing and three new bridges. "If I had to drive 169 every day, I would be furious,'' he said. "It should not be that way."

If the TIGER grant doesn't come through, MnDOT officials said they would start a new round of discussions on the least-expensive way to improve the interchange.

Years of work have gone into the design, though, and Edina, Eden Prairie and Bloomington would oppose scrapping it for a quick fix, said David Lindahl economic development manager for Eden Prairie.

Two years ago, MnDOT suggested removing the signals and cutting off side streets to relieve the congestion, but that would cut off access to more than 20,000 jobs in the Eden Prairie Golden Triangle business park, Lindahl said.

"I don't think the locals would be supportive at all of just removing the lights and closing the access,'' he said.

So the grant application process continues. In the meantime, to keep the project moving forward, MnDOT has asked Edina, Bloomington and Eden Prairie to help acquire about 60 parcels of land that would be needed for a new interchange.

Laurie Blake • 612-673-1711