McALLEN, Texas – Hidalgo County has finalized its agreement with the federal government to build a combination of levee and border fence along 22 miles of existing levees along the Rio Grande.

The Department of Homeland Security and a county drainage district will split the cost of the $113.9 million project. The federal government will pay $65.7 million for the border security portion of the project and the drainage district will pay $48.1 million for the levee improvements.

"The people and the future economic vitality of Hidalgo County are safer today than they (were) yesterday thanks to this federal grant and the open-minded attitudes of all who worked on it," Hidalgo County Judge J.D. Salinas said in a prepared statement. "We're glad this agreement is finally in place and that we can get on with the construction."

When Homeland Security Secretary Michael Chertoff announced the plan to combine the county's concerns for improved levees and the federal government's goals for securing the border, it was touted as a rare compromise in the contentious fight between local and federal government on the border fence. Chertoff came to Hidalgo County in early February to make the announcement amid much fanfare at a local Border Patrol station.

But the plan soon raised environmental concerns because it replaced a planned fence that small wildlife could pass through with a 16- to 18-foot high impermeable concrete wall.

The U.S. Fish and Wildlife Service informed Homeland Security in March that it could not sign off on the Hidalgo County project because it would divide critical habitat in the Lower Rio Grande Valley National Wildlife Refuge.

On April 1, Chertoff announced he was using authority Congress granted him to bypass three-dozen laws, including many environmental statutes, to move the fence forward.

The agreement, reached late Friday, includes two timelines for the project – a substantial completion date of Dec. 30 and a full completion date of March 31, 2009. County attorney Steve Crain declined to elaborate on what constituted substantial completion.

The source of the drainage district's contribution was not clear. Crain said they were reviewing financing options. Hidalgo County had initially offered to use a portion of a bond sale to pay for the project before seeking reimbursement from the federal government.

The county had been lobbying for help to improve its levees since Hurricane Katrina wiped out New Orleans' levees.

A local university economics professor released a study in March that estimated $1.76 billion in damage if the county's levees were breached.