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Flood funds

Bill’s intent creates rift in local support

File photo Water runs over Third Street downtown as flooding began in June 2011. Work on an enhanced flood protection project in Minot is scheduled to begin later this year.

A potential $180 million to $190 million for Souris River flood protection is included in a North Dakota House bill up for a floor vote today. That’s enough to pay for the first four phases of flood protection through Minot, along with related work to keep the project moving forward.

However, some of that money would be borrowed from the Bank of North Dakota, and with that loan, the intent of the Legislature is to not fund any further flood protection within Minot until 2025.

The Souris River Joint Board is concerned locking out Minot from future funding from the Water Resources Trust Fund for three bienniums. Ryan Ackerman, administrator for the joint board, said Tuesday if the House passes the bill, the board will seek to amend it in the Senate.

Rep. Roscoe Streyle, R-Minot, on the House Appropriations Committee, takes a different view of the bill language, which he had crafted.

“This is great language and I fully support the budget and concept. I would hope the Senate leaves the Minot sections alone in the bill. We need to build this project, and building phases 1-4 plus rural reaches is good for Minot, area, rural and the State of North Dakota,” Streyle said in a email response to a query.

House Bill 1020 does not earmark funds for specific flood control projects but does set aside $150 million in an account for flood protection projects. The assumption is the State Water Commission would allocate $70 million to $80 million of that amount for the Mouse River (Souris) Enhanced Flood Protection Project, a basinwide project that includes Minot.

The legislation gives the State Water Commission authority to borrow up to $110 million from the Bank of North Dakota for its 65 percent cost-share on the first four phases of the project through Minot. A section of the bill states the legislative intent is to not provide additional funding within the city limits of Minot from 2019 to 2025.

Streyle said he sought to include the legislative intent as a signal that Minot is willing to step aside for other projects in the future if it can get what it needs now for the portions of the project ready or nearly ready to go. He said the temporary halt in funding should not affect the ability to keep construction going on the project, as joint board members allege.

“They think they can build it quicker than they can,” he said. Streyle said the current pace of the project does not convince him that the Minot portion will need more money before 2025. If the pace turns out to be quicker than he expects, both he and other legislators will be happy to reconsider their legislative intent, he said. But he doesn’t anticipate that to happen. He noted the Souris River project has money previously appropriated that’s not yet been spent because construction hasn’t started.

“I am ecstatic that we are basically guaranteed, through this language, all the money to complete phases one through four, and that’s taking a lot of property out of the flood plain,” Streyle said. “I would rather have the guarantee of funding than be begging for phase four next time.”

In a sense, by taking out a loan, the state is committing funding long-term. If the water commission borrowed to its full authority, the cost of a 20-year loan would be $15.2 million per each of the 10 bienniums, Streyle explained. The legislative intent affects only Minot. It would not preclude the joint board from obtaining additional state money for flood protection features in Velva, Burlington or rural areas.

Meanwhile, the Minot city ad hoc sales tax committee met Tuesday to discuss options for paying the local share of flood protection. City comptroller Sue Greenheck presented scenarios that showed the impact different bonding situations could have on the need for sales tax.

The most realistic scenario is a $106.7 million bond, requiring a full penny of sales tax plus 40 percent of a second penny if paid off in 10 years. The city could pay the debt off with one penny over 15 years or 80 percent of a penny over 20 years.

The bond would just cover the first four phases of flood protection, not the entire project in the city or throughout the basin.

“We need to have a plan that gets the entire project done,” Josh Wolsky of Minot said. He voiced his frustration that discussion about how to pay for the project is at this early stage nearly six years after the flood and five years after the council approved an enhanced flood protection project.

“We are just coming to the table to talk about how we are going to fund this enormous, long-term financial burden,” he said. He suggested the city investigate funding the project with the help of special assessments or any cash reserves that might have accumulated during recent higher revenue years.

Committee chairman and council member Dean Frantsvog said the council was thinking about flood protection costs when it approved shifting a half percent of the first penny of sales tax to flood control a few years ago. The city has determined since then that more than a half penny will be needed.

Ward County Commissioner Alan Walter said the commission could seek to re-instate the county’s half percent sales tax for countywide flood protection when it expires at the end of 2022. The tax could expire earlier if enough money is generated to pay off building projects, but Walter said that doesn’t appear likely.

Minot’s second penny originally was imposed to cover the cost of the Northwest Area Water Supply project. Voters re-allocated the funding to infrastructure, community facilities and property tax relief in 2011, although the tax can revert back to NAWS if more money is needed to finish the water project.

The NAWS account currently has $33 million. Greenheck presented a scenario showing that only 30 percent of the second penny would need to revert back to be able to fund the local share of the project if federal and state money pays the full cost of a biota treatment plant near Max. If Minot had to include a 35 percent cost share on the biota plant, the NAWS account would go into the red next year and stay there through 2023, when a $25.2 million deficit is projected. That’s despite the scenario including 30 percent of a penny sales tax.

The scenarios all assume continued sales tax collections similar to this year’s estimate of $9.4 million annually per 1 percent of tax.

Construction on NAWS is being held up in a lawsuit brought by Manitoba and Missouri. A federal judge’s ruling is expected as soon as June, although appeals are likely.

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