Lewis & Clark board struggles to find funding for water project

SIOUX FALLS – Following a second straight year when it has received too little federal money to do any construction, the board of the Lewis & Clark Regional Water System is considering dramatic options to complete the project.

Sioux Falls began receiving water from the system last summer. But an almost chronic shortfall in its federal allocation has put construction far behind schedule, and nine of Lewis & Clark’s member communities and rural water systems have yet to be hooked up, the Sioux Falls Argus Leader reported.

This year, President Barack Obama’s administration has proposed only $3.2 million for the project, following a $495,000 appropriation last year. At that rate, it would be almost impossible ever to complete the project. Based on a master plan estimate this year, the remaining cost to finish construction is $201.45 million.

Facing federal allocations that have slowed to a trickle, the Lewis & Clark Regional Water System board is contemplating how it can turn up the heat on the administration to increase funding and even whether it should dramatically change the nature of the project to get it done.

The board met on May 2 in Tea. In a straw vote to assess interest, board members were virtually evenly divided on whether they should seek to have $100 million of the remaining federal authorization converted from grants to a zero interest loan that the 20 members would repay over 40 years.

Board member Ivan Friese of Parker said his community might accept taking on additional debt after seeing the value of the system’s water.

”I think I could make it work,” he said. ”We’ve got the water, and we’ve got quality water like we’ve never had before.” Board member Chad Huwe of Sioux Falls, though, noted the city’s share of such a plan would be $1 million a year over the 40 years of the loan repayment. ”At this point, I would say no,” he said of Sioux Falls’ tolerance for that. ”I’m looking at $40 million.”

Roger Lamp of the Lincoln County Rural Water System in Harrisburg said if he brought such a proposal to his board, ”I would not have a job,” and board member Scott Buss of Minnehaha CWC in Dell Rapids said if Lewis & Clark took on an additional $100 million of debt, his organization probably would drop out of the project.

Sell water to nonmembers

Board members also discussed a proposal from the board’s vice chairman, Murray Hulstein of Sioux Center, Iowa, to raise money for construction by selling water to nonmembers, and legal counsel Monte Walz introduced a plan to complete the project in a decade on a pay-as-you-go basis by raising $23.8 million annually from a $5 charge per meter per month plus imposing an annual fee of $2.48 per thousand gallons on half of each member’s reserved capacity from the project.

Chairman Red Arndt of Luverne, Minn., noted the Gevo renewable fuels plant in Luverne and the Gold’n Plump chicken processing plant there both could close this summer if last year’s drought continues, because Luverne will be unable to provide those industries sufficient water. Luverne badly needs to be connected to the system, Arndt said.

”I really believe we need to look at something like this to get it done,” he said of self-funding the project to finish it. ”We can’t wait 30 years.”

Arndt said of the administration’s approach to funding the water projects, ”They don’t know what they’re doing. They think $3.2 million is a lot of dollars.”

Money allocated from states

Larson predicted one scenario could split Lewis & Clark apart.

If the board takes no action to move the project forward and instead looks at it as a long-term investment that might pay off a decade or more down the road in a new federal administration, members desperate for water will try to find additional money in their respective states, Larson said. If a state is successful, it would leverage that against the federal appropriation.

So, for example, if Minnesota could come up with an additional $30 million for Lewis and Clark, all the federal money for the project would go toward completing the Minnesota portion of it.

Of the $201.45 million outstanding cost of completion, $63.84 million is due to be spent in Minnesota, $65.97 million in Iowa and $30.4 million in South Dakota. The remaining $41.24 million consists of expenditures allocated across all three states, such as the cost of wells and the water treatment plant.

Apply pressure for Congressional help

What is especially dismaying about this year’s $3.2 million appropriation, Larson said, is that Lewis & Clark officials were expecting more, as much as $9 million.

”We threw everything at it,” he said of a pitch to the administration that included strong support from the South Dakota, Minnesota and Iowa congressional delegations and a paid lobbying effort.

”The administration touts the importance of critical infrastructure. Those words ring hollow, at best, hypocritical, at worst,” he said.

Even more frustrating, water system officials don’t know why the Obama administration does not consider the water projects a higher priority.

”We are totally baffled,” Larson said.