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Dave Olson, Published December 01 2012

Work on diversion assessment district begins

FARGO – Work is starting on setting up a special assessment district that could play a role in providing the North Dakota share of the cost for a proposed $1.8 billion Fargo-Moorhead diversion project.

One price tag being tossed around for North Dakota’s share of the diversion is about $450 million.

While assessments could be a part of the funding picture, officials stress sales tax revenue will be the primary means to finance the local share.

Creating an assessment district requires determining benefits and assessing potential costs to various properties, a process likely to take at least eight months, said Mark Brodshaug, chairman of the Cass County Joint Water Resource District.

Brodshaug’s water district is taking the lead on the issue because it is the only local government entity that can assess costs across all of the jurisdictions involved.

Brodshaug said a committee will likely determine the specifics of an assessment district, which he said could cover an area bordered on the east by the Red River and on the west by the western alignment of a diversion channel.

He said the southern border of an assessment district could be just south of Cass County 16, while to the north it could be bordered by an area roughly defined by the Harwood area.

Public decides

Before an assessment district is established, affected property owners within the district would get a chance to vote on the idea.

The weight of a landowner’s vote would be commensurate with their potential assessment.

For example, someone asked to pay $5,000 over, say, 20 years would have 5,000 votes. Someone with a $500 assessment would have 500 votes.

Brodshaug said the goal is to use the assessment district very little, if at all, to generate revenue.

Instead, local leaders plan to rely on sales tax revenue from Fargo and Cass County.

During the initial design phases, sales tax revenues have kept up with costs incurred by the Diversion Authority.

But to keep up with additional design costs, as well as expenses required for land acquisition and construction, it is expected one or more bond issues will be needed, with the bonds to be paid back with sales tax money.

Maximizing revenue

Officials say bonds backed only by sales taxes are a problem for several reasons, including a requirement that a percentage of the tax revenue be set aside as a reserve.

Using an assessment district as collateral for bond repayment allows more sales tax proceeds to go toward debt payment, Brodshaug said.

Assessment districts hold a two-fold potential, he said. They can be used to help pay for the construction of a project, and to pay for its ongoing operation and maintenance costs.

Local officials hope federal authorization of a diversion could come early next year. If so, it could be nearly a decade before a diversion is actually built.

If a project is completed, Brodshaug said, a special assessment district could be activated at that time to provide funding for ongoing operation and maintenance.

He said assessment districts are like financial spigots that can be turned on and off.

Minnesota side

On the Minnesota side of the Red River, Moorhead and Clay County officials want the state of Minnesota to provide the local share of a diversion’s cost.

While that amount has yet to be pinned down,

$100 million has been floated as a possible number, said Clay County Commissioner Kevin Campbell.

Campbell said if Minnesota bonds for the money, the dollars can only be spent on aspects of the project that touch on Minnesota.

He said when a diversion receives federal authorization, the Buffalo-Red River Watershed District could establish a special assessment district to help pay Minnesota’s share of future operation and maintenance costs.

Brodshaug stressed that informing landowners about the benefits they would derive from a diversion project will be critical to passage of a special assessment district.

In the past, landowners approved special assessment districts to help pay for the Maple River Dam and the Sheyenne Diversion project, he said.

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Readers can reach Forum reporter Dave Olson at (701) 241-5555