Much of the traffic backup on 394 is attributable to destinations past downtown Minneapolis. The same is said for traffic coming south on I35W. I suggest a new urban freeway connection, extending I-394 on a direct (if not necessarily a "freeway") connection over the Mississippi River, through Northeast Minneapolis, and connecting to I-35W somewhere between Hennepin and Johnson.
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Hennepin/Lyndale/Lowry Hill is a mess. streets.mn recently had a great discussion about it:
I particularly like the suggestion by Alex. A roundabout/traffic circle could create some nice public spaces.
Improve MN Hwy 95 from I94 to US10/61 to a four lane divided road.
Once we have a comprehensive local and regional transit system in place, Minnesota could establish a tolling system for administering our highway infrastructure; a pay-as-you-go demand-side strategy that would cover the cost of maintaining our highways, un"socialize" the cost of suburban development, and supply a market-driven solution to traffic congestion.
redo 494 694 94 interchange in woodbury, use flyover ramps