MARSHALL - Lewis & Clark Regional Water System members have been forced to deal with a lose-lose situation to complete the project, and this week chose what they believe is the lesser of two evils.
The board of directors voted this week on whether to continue the "wait and see" strategy and hope future federal funding finally increases so construction can resume or initiate a capital call loan where the members loan $16 million to L&C; future federal funds would be used to re-pay them.
Fourteen of the 19 board members (one director was absent with notice) voted to reject the capital call loan, which means L&C will continue that "wait and see" strategy for FY14.
"They were absolutely picking their poison, for sure," said Lewis & Clark Executive Director Troy Larson. "These were two terrible options. They had to pick their poison, and the federal government forced them to do it."
A second vote on the capital call loan will occur next summer for possible inclusion in the FY15 construction budget. Larson isn't predicting anything how that vote will turn out, but he believes it will be much closer than Thursday's, because more will be known about other funding sources by then. He said there are five unknowns that will be answered by that time: the final amount of FY14 funding; the amount the president proposes for FY15 funding; whether or not the system will get additional funding from the state of Minnesota and the state of Iowa; and whether or not the city of Sioux Falls will be exempt from having to pay in to the system - that's something that will be sorted out by attorneys on both sides.
Project officials plan to request $63.8 million from the state of Minnesota and will look to get it as part of 2014 bonding.
The three states involved and 20 members have pre-paid 100 percent of their cost share, or about $154 million. The federal government has paid about half of its share to date. Larson said the fact that no Minnesota members - and only one in Iowa - are currently receiving water from the system is "outrageous. Members in Iowa and Minnesota are being left out in the cold. They have paid their share of the project. That's just outrageous."
Minnesota members include Luverne, Worthington, Lincoln-Pipestone Rural Water System and Rock County Rural County District.
The $16 million from the capital call loan would have, along with other funding, allowed L&C to construct 18 miles of pipe from the Iowa border to Luverne. Members would be repaid by future federal funding.
According to its website, the system is 65 percent completed but six years behind schedule. There is no construction planned for 2014.
Lewis & Clark is projected to provide treated water to its member municipalities and rural water systems to more than 300,000 people in parts of eastern South Dakota, northwestern Iowa and southwest Minnesota. Lewis & Clark's member systems will use this new source of water to either replace or supplement existing sources of supply.
Larson said there's no way to pinpoint when the project will be fully online since federal funding, he said, isn't even keeping up with inflation.
"We're currently on a path to infinity," he said.
Frustration among the system's members with the feds, he said, peaked some time ago.
"The members are now beyond frustrated, they are outraged," he said. "This is just unconscionable what they are doing. This project meets every criteria you could ask for - on the front end, jobs through construction, on the back end, expanded economic development - and it's only getting more expensive because of inflation. This is not a museum, this is not a stadium, this is drinking water. The federal government is failing to prioritize this."