Wednesday, October 12, 2011

Lewis and Clark - Another Fiscal Unknown

In the rush to push an event center through, we seem to have forgotten what other fiscal unknowns and necessities might be on the horizon for years to come. Add to the list of unknowns - the Lewis & Clark water project.

Nobody seems to be talking about the Lewis & Clark Regional Water System these days. Maybe the reason is that the construction project schedule will come to a screeching halt with the lack of future federal funding on this project.

The one thing that is clear these days is that the ability to count on the federal government to meet its commitments and/or obligations is long past. We heard recently that the federal funding for the city's transit system may be in jeopardy which would not be a surprise considering what the feds have done with their supposed commitment to fund Lewis & Clark. This project has become bogged down in the politics in Washington due to the mounting federal deficit and earmarks for local and state government projects.

In current dollars, the estimated cost of the entire Lewis & Clark project is said to be approximately $537 million. The project needs $35 million a year to stay on schedule and as reported in the Winter 2010 Explorer Newsletter, they were already 2 years behind.

$2 million in federal funding was proposed for FY 2011, with $1,996,000 actually funded of which $300,000 was set aside for the Bureau of Reclamation's administrative oversight.   Only $493,000 in federal funding has been proposed for this project in FY 2012. A far cry from $35 million a year needed to keep things going.

20 local members and 3 states have made pre-funded payments which allowed Lewis & Clark to somewhat maintain their construction schedule. The city, in the 2006-2007 time frame, added approximately $70 million to the city's debt which was secured by the second penny sales tax (to get a good rate) with the actual debt service to be paid annually out of the water fund. The water fund is a city enterprise account which means its fees/rates for water service is set and charged to the consumer in order to pay for its infrastructure and maintenance needs and debt service. 

The future construction schedule for Lewis & Clark Regional Water System is entirely dependent upon federal funding as the $153.5 million in prepayments has been spent or obligated towards current construction projects.

The federal government has appropriated $202.1 million (51% of its cost share) and has $194.3 million remaining which is increasing annually for inflation. No federal dollars means some members will not be connected to the system. Other members will pay more for the water. It means those members who prepaid their share will also have come up with the federal portion of their cost.

The City of Sioux Falls bonded the pre-payment to Lewis Clark for its share of the cost. It is a debt that will grow if the feds don't appropriate anymore money for its share. It looks to be pretty sure debt that the city will have to increase in the future. Add that possible debt to the possible debt if the feds don't come through on transit funding for the city's transit system.  Debt is adding up and we haven't even added that 22 year debt out of the second penny sales tax to finance the new event center.

Add another fiscal unknown to the list of fiscal unknowns. It makes one nervous.


  1. Thats whats happens when you vote out the Majority leader.

  2. And citizens wonder why the water rates continue to go up and up and up. Vote in this Mayor's dream vision of an EC and watch what happens to this city then. We are going to be in for a ride! A NO vote on the EC is the only sane thing to do right now. Bad vision, bad financial plan, bad location.

  3. L & C has pis'd me off from the beginning. I told the council to vote against the $70 million dollar bond, because this was a federal project and we will NEVER BE REPAID! They blindly voted for it, ALL OF THEM! And now the only one defending the project is a former comedian and state senator from MN, go figure.

    In a meeting with Cotter only a few months ago about water rate increases, I asked about the NEED of L & C. And he admitted we may not get it until 2012 or beyond, and when we do, it will be used for emergency use only. So let me get this straight, we paid $70 Million + interest for something we don't need and won't use much when we do get it.

    Kinda sounds like the Events Center? Huh?