Lewis and Clark capital call vote fails
TEA, S.D. — Scott Hain was disappointed in the outcome, but still had a positive outlook.
In a lopsided vote, a major construction budget was defeated at the Lewis & Clark Regional Water System board of directors meeting Thursday.
“Certainly, it’s disappointing,” said Hain, the Worthington Public Utilities general manager. “But you have to take the small victories — I guess the small victory being nobody on this board pushed harder for this than I did. I hope this is the first of what becomes an annual consideration by this board of a meaningful construction budget.”
There are 20 members of the Lewis & Clark board. The final vote was five in favor and 14 against. One member was absent due to a death in his family.
“I think there were some last-minute swings,” Hain said. “I think there are some directors that maybe wanted to cast a vote differently than the way they ended up casting their vote because of the uncertainties of their governing bodies. That’s the tough part of it.”
Worthington, Beresford, S.D., the Lincoln Pipestone Rural Water System, Lennox, S.D., and Luverne each voted yes.
Of the five yes votes, only Beresford and Lennox currently receive water through the system.
“I’ve appreciated the discussion we’ve had at the board level and I’m pleased that it came to where we’re actually having a vote today,” Hain said. “Next year, my speech is going to be — which it kind of was this year — ‘To my fellow directors, to those who are connected and receiving water, as you’re contemplating how you are going to cast your vote, I hope that you ask yourself the question, Would my vote be different if I were not connected and receiving water? If the answer to that question is yes, then shame on you.”‘
The remaining members, including the largest contributor — Sioux Falls — voted no.
“The city of Sioux Falls wouldn’t have water if it wasn’t for us,” said Jerry Lonneman, LPRW’s representative. “None of them would — it wouldn’t be complete.”
The members were voting on a construction budget of $21.6 million. However, the members would have been responsible for the remaining share, or a total of $16 million. Worthington’s share would have been $915,396. Sioux Falls would have had a share of slightly more than $7.5 million.
“You have the issue — I’m guessing next month we’ll talk about — Sioux Falls still contends they aren’t subject to a capital call provision,” Hain said. “Certainly without Sioux Falls, participation, it really changes the picture of this whole thing. Everybody knows they are the largest member and had this particular budget passed, I believe Sioux Falls’ number was like $7 million. If Sioux Falls doesn’t have to participate, that means the other members have to come up with that $7 million. That’s huge.”
Rock County Rural Water cast its vote against the plan.
“One of the main reasons we voted no, of course, is cost,” Rock County Rural Water Chairman Marv Tofteland said. “Not only the cost of the $16 million, but who is going to pay the interest over time? On $16 million, it could be $600,000 to $1 million a year. That’s our biggest thing. We don’t know where that’s coming from. Who is going to pay that and for how long?”
Even though Tofteland casted a “no” vote, he said he still wants to see everyone hooked up.
“We’d like everybody to be on Lewis & Clark no matter how it was done,” he said. “We still have to look at our owners and how we’re going to pay for this. We want it to be done as soon as possible, and we hope the federal government will find a way to make the money available in the future.”
One way the group is proceeding is by asking the state governments to provide more money.
“We’re pursuing additional funds from St. Paul and from Des Moines,” said Troy Larson, Lewis & Clark executive director. “Those will be known next summer, so I do anticipate there would be a much better chance for it to pass the next time. I’m not making any predictions, but I do think there will be more support for it next year when we know some of these things.”
What passed on Thursday was a much smaller construction budget. That utilized the anticipated money from the federal government.
“The challenge is we really can’t do much with the $3.2 million,” Larson said. “What we will do is build a joint meter building for Rock County Rural Water and Rock Rapids, but that’s a very small amount. Of the $3.2 million, we expect to have about $1.9 million left over.”
Larson said the idea is to use the remaining money from this year and combine it with anything received next year.
“That’s a way to straddle two fiscal years to pool the money,” Larson said. “We’d take $1.9 million we had left over and maybe $3 million for 2015 — that way we could award a contract for a larger piece of pipe. It is so inefficient from a cost standpoint to award one mile of pipe, and you’re just adding to the cost.”
As some of the money becomes clearer, Larson anticipates some votes could change in the future.
“What I took away from the vote is there are members who are always going to vote against the capital call whenever it comes up,” he said. “There are directors, based on conversations we’ve had — I know they are really interested in seeing what happens with our 2014 funding, with the proposed 2015 funding, with Des Moines, with St. Paul. I’m not predicting a different outcome the next time, but I do think it will be a much closer vote.”
For Worthington, Hain said he isn’t sure what’s next for the city.
“We’re going to continue to pray for rain and pray for a lot of snow this winter and hopefully our Bella wells recharge,” he said. “We have a great relationship with LPRW, and we’re going to maintain that. A lot of it is going to depend on what happens through the winter here, but I think over the winter we’re going to initiate some discussions with them.
“We’ve had some preliminary discussions with what happens if this thing doesn’t move and (if) we start seriously talking about jointly going out and laying some pipe across the country to get something done.”