ND considers policy changes for funding water projects
North Dakota officials are taking a fresh look at the policy for the state’s share of water projects at a time when coffers are flush and needs are massive.
The state Legislature’s interim Water Topics Overview Committee will hear testimony for cost-share policy revisions when it meets Thursday in Minot.
The State Water Commission also is considering changes to its policy for sharing costs on water projects. The ultimate decision will be made by lawmakers when they meet next year.
The changes could benefit two projects involving Fargo: the proposed $1.8 billion Fargo-Moorhead flood diversion and a proposed Red River Water Supply Project that has a price tag of $800 million to $1.1 billion.
Michelle Klose, assistant state engineer, said the revisions are intended to provide clearer and more comprehensive cost-share guidance for state and local officials.
The current policy, last tweaked in February 2013, is a collection of piecemeal provisions that were added in response to water needs as they arose over the years, including floods and droughts.
“It’s trying to have a little more consistency across the board with our cost-share policies,” Klose said of the revision.
Among the changes in a draft proposal that will be presented Thursday:
V Cost-share funds would be available for property buyouts for flood control projects. Project design costs also would be eligible for cost share.
V More funding would be available for water supply projects for communities experiencing population growth of more than 3 percent per year. Special consideration funding would be available, with up to 60 percent through grants.
V Water projects that would result in high costs per user would be eligible for low-interest loans.
The aim of the revised cost-share policy is to ensure that projects are financially sustainable by the local sponsors, and provide long-term benefits to the state, Klose said.
For flood control projects, the state’s share of a project cost could be up to 60 percent, with some projects up to 75 percent.
Sen. Tony Grindberg, R-Fargo, who is chairman of the water topics committee, said the ballooning Resources Trust Fund, swollen with oil extraction revenues, has spurred interest in water projects around the state.
The fund has a current balance of $429.4 billion, and appears likely to exceed the $546.9 million balance projected for the 2013-15 biennium by $100 million or $150 million, said Dave Laschkewitsch, who tracks the figures for the State Water Commission.
The money available for water projects now is coming in at the rate of $23.5 million per month – almost double the $14.2 million available for the entire 2003-05 biennium, he said.
Fargo is keenly interested in the cost-share policy. The city is a partner in the proposed F-M flood control diversion as well as the proposed Red River Water Supply Project.
Pat Zavoral, Fargo city administrator, said the city is urging that large projects, those costing $100 million or more, be considered by the State Water Commission individually, outside the cost-share policies.
The city supports the low-interest loan program to enable sustainable financing for water projects.
Meanwhile, municipal and rural water systems face dwindling federal funds for projects, putting more pressure on the state to come up with a bigger cost share, Grindberg said.
In light of the significant projects statewide, he expects a lot of discussion about increasing funding for a low-interest loan pool for water projects. Projects seeking funding for the next biennium must be submitted by April 18 for consideration by the State Water Commission.
The new cost-share policy won’t be clear until lawmakers decide the issue next year, Grindberg said.
“One thing’s for sure – there’s going to be plenty of debating and lobbying like no tomorrow before this thing is put to bed,” he said.