Despite a projection of more than $150 million in reserves at the end of the year, finding a way to pay for Minot’s capital improvements and other projects is a balancing act, Finance Director David Lakefield told the Minot City Council Monday.

Council member Mike Blessum responded that recent council decisions to spend money on a railroad quiet zone, Broadway Circle and land purchase at Public Works make the balancing act more difficult.

“These are the types of decisions that make our future look a lot more difficult, and these are the types of property tax decisions that affect the people of our city,” Blessum said. “We’re making it more difficult for ourselves with each decision that’s made.”

Lakefield presented a monthly finance report to the council that included a review of cash reserves, a good share of which is committed or earmarked for future and ongoing projects.

Lakefield said the city forecasts a future need to borrow $100 million through local revenue bonds for capital improvement projects.

“This is where some of that reserves come into play,” he said in describing how creating reserves helps manage bonding for capital expenses while also addressing unexpected bills.

“When we are looking into the future, there are a lot of things that come up that we aren’t able to predict and forecast very accurately,” Lakefield said. “It’s a balancing act in how much is enough in reserves to have in case those things happen and how much is too much and how much is not enough.”

Blessum said council decisions to pull $1.4 million out of reserves for the Broadway Circle project along with $920,000 for the Public Works land purchase and about $2 million for a railroad quiet zone aren’t helping build reserves needed for the future.

“It’s hurting us,” he said. “In decisions over the last couple of months and actually even the ones just since I have been on the council now for six weeks, we have already got well over $3 million that we made in decisions that’s making that bonding picture worse.”

Separately, council member Rob Fuller raised concern about a $35 million construction contract between the Souris River Joint Board and Wagner Construction for the MI-7E phase of the flood protection project. The council voted to ratify the contract. MI-7 is in the Roosevelt Park and Zoo area.

Pointing out the contract is 25% over the engineer’s estimate, Fuller said it isn’t feasible to continue absorbing inflationary increases and still keep the project on track.

“We keep seeing these numbers and our sales tax dollars aren’t going up, which is how we are paying for this. How are we going to end up paying for it?” Fuller said.

“There might come a point where we have to stall flood control for a little while to wait until we pay something else off, so we can take something else on,” Utilities Director Jason Sorenson replied.

City Manager Harold Stewart mentioned the joint effort with the state to accelerate construction to get ahead of inflation. Flood protection is largely being funded through state revenue and a 35% local cost share from a portion of Minot’s city sales tax.

An alternative if the sales tax can’t keep up due to inflation is to add another revenue source, such as Hub City funding received from the state, Stewart said. However, he warned that scaling the project back would have significant and dire consequences to residents.

“We can cut back on scope, but all that’s going to do is reduce your flood plain map, which means that more of our citizens are going to have to pay for flood insurance. That’s going to be extremely expensive for them and unsustainable and untenable. So this is a commitment,” he said.

In discussion of a storm sewer district project to alleviate periodic flooding in north Minot, Blessum raised concern over the practice of increasing payments to engineers when they perform work beyond their contracted scope.

The council voted to increase the engineering payment on the storm sewer project from $234,000 to $424,000 to cover additional work related to right of way acquisitions, additional alternative analysis and an expanded size of the project. That work wasn’t originally anticipated to be needed.

The council also voted to pay an additional $40,000 above a $646,492 engineering contract on a northwest water main replacement due to additional design and changed conditions during the course of the project.

Blessum said contractors, in the future, shouldn’t be performing work outside the contract and expecting the city to pay for it. He noted contractors place themselves in peril of not getting paid by doing so.

Utilities Director Jason Sorenson took note of the concern and indicated engineering work will be monitored more carefully going forward.