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Erik Burgess, Published June 29 2013

Moorhead council balks at design ‘ante’ for diversion

MOORHEAD – A conflict is brewing here over design costs for the proposed $1.8 billion flood diversion.

The City Council may delay approving more design money for the project until its members know how much money Moorhead could be on the hook for, apprehension the mayor and the diversion board’s chairman say is unwarranted.

All eight members of the council told The Forum last week they had concerns about the city’s obligations for design costs. On Monday, the council tabled an agreement that would have authorized an additional $30 million in design dollars for the flood channel, which would push water around the metro area during major floods.

Fargo, the other local sponsor, unanimously approved the agreement Monday without debate.

Councilman Mark Hintermeyer even suggested at the meeting that the council should consider ending its local sponsorship of the project due to the financial concerns, especially given Moorhead’s tight budget.

Hintermeyer has since backtracked, telling The Forum on Thursday that he supports the project but is concerned about leaving Moorhead taxpayers high and dry with the bill.

“This is not about supporting the diversion or not, in my mind,” Hintermeyer said. “It is: Where does this money come from?”

Darrel Vanyo, Diversion Authority chairman, as well as Mayor Mark Voxland said Moorhead has never been contractually obligated to pay any amount, and the city in the past has paid what it can.

Voxland called the council’s discussion Monday night a “red herring.”

“I think the discussion Monday night was, uh, I don’t know, ill-timed if nothing else,” he said. “I really didn’t see it as adding to the total conversation of the diversion, and it might be a little more political than it is real.”

Elections for mayor and City Council are this fall. Voxland is not seeking re-election.

The concerns come as the project’s supporters hope the U.S. House authorizes the diversion later this year. The U.S. Senate signed off on it in May, though it still requires congressional funding.

No obligation to pay

The amendment to the design agreement tabled by Moorhead on Monday would allow the design budget of the diversion to exceed the previously set limit of $30 million by another $30 million. The council directed city staff to review what Moorhead has already spent on design of the project and what it may owe in the future.

The Diversion Authority had hoped to get federal authorization in place by 2013, so the diversion board needs to set new spending amounts for the next fiscal year. A budget and the new agreement must be in place by Oct. 1 to avoid stalling the project.

Moorhead will discuss the topic again July 8, but some council members said they may want to wait to vote on the design agreement until the Diversion Authority sets its 2013-14 budget.

“Let’s get the payment situation confirmed first then authorize the design agreement,” Councilwoman Nancy Otto said.

Moorhead has put forward some funds since the project’s Limited Joint Powers Agreement was first signed in 2011, but those amounts were never obligated by contract, making Monday’s council discussion a “moot point,” Vanyo said.

Moorhead and Clay County evenly split a $150,000 payment for the project’s 2011-12 budget, said Moorhead City Engineer Bob Zimmerman. For 2012-13, the two split a $290,000 payment, he said.

Some of the council now fears that those prices will only go up, and the council will have to pay more when next year’s budget is decided upon later this summer. Moorhead is expecting a more than $1 million budget deficit for the next fiscal year.

“It’s not that we don’t want to pay our share, we just really don’t know where the money is going to come from,” said Councilwoman Brenda Elmer.

But Vanyo said what Moorhead has paid, in comparison to what Fargo and North Dakota have invested, is “nothing more than a participation fee,” likening the amounts to antes in a poker game.

Still the diversion board has been more than willing to work with the city and the board will continue to help Moorhead pursue funds if the project is federally authorized and thus eligible for Minnesota state dollars, Vanyo said.

“We said (to Moorhead) ‘We’ll carry you until that time that we get authorization and go to Minnesota,’ ” he said.

The city hopes to have the state of Minnesota pick up much or all of the bill for its share of the construction of the project.

Moorhead councilmembers have expressed concerns that they’ll be on the hook for $3 million in design costs, or 10 percent of the $30 million.

The 90 percent to 10 percent split between North Dakota and Minnesota is taken from an early U.S. Army Corps of Engineers study that determined North Dakota would see 90 percent of the benefits of the flood channel, which backers say is needed to give Fargo-Moorhead a shot at protecting itself against a flood of record-setting severity.

Vanyo said authorizing the additional $30 million just brings the overall cap on design spending to $60 million. The 2013-14 design budget could be less than that $30 million.

Also, the Limited Joint Powers Agreement doesn’t obligate either state to pay any amount, Vanyo said, and he doesn’t see that changing.

“It’s pretty much what they (Moorhead) feel they can pay because it isn’t a demand to pay something that they couldn’t pay,” Vanyo said.

It’s only been “gentleman’s agreements,” not written contract, that say Minnesota will pay 10 percent and North Dakota will pay 90 percent, Vanyo said, and the Moorhead officials closer to the Diversion board – Voxland and Otto – seem to understand that better than Hintermeyer, Vanyo said.

Voxland said the council’s conversation Monday “didn’t seem to be factual” and was misguided.

“There hasn’t been any formula that’s been put into agreements that we’ve signed so far … that ties us to dollars,” the mayor said.

The design agreement would also make the Diversion Authority a third local sponsor, about which Hintermeyer also had concerns. Voxland said he supports that change because it gives some power to the other entities, including Cass and Clay counties and the water shed districts, that are affected by the project but aren’t sponsors.

Need to work together

When polled by The Forum, Councilman Luther Stueland was the sole council member who said he believed the city should pull out of the diversion entirely.

Stueland said the city and state have invested enough into Moorhead’s levees, which were beefed up after the 2009 flood and now protect to 42.5 feet.

“We’ve purchased an adequate amount of insurance,” Stueland said, referring to the city’s dikes. “Does it cover us for every possible event? No. But there’s no way to fund a project that covers every possible event, either.”

Despite their financial concerns, all seven other council members and the mayor said they support the project as a whole.

“We like the project; that’s not the issue,” Councilman Mike Hulett said. “And we’re not ready to abandon the project, but what we need to know is what our source of financing is going to be.”

With design work still to be done and the U.S. House authorization still pending, Vanyo said “it’s really bad timing” for the council to be raising the issue, and that all the affected parties need to work together.

“You don’t get authorization until you put forward a fair amount of work, as we (in North Dakota) have done,” Vanyo said.

While Moorhead has built its own protections up, Voxland and the majority of the council said they recognize that many who live in Moorhead work across the river, meaning a disaster for Fargo has implications that reach across state borders.

Voxland said waiting to authorize the design agreement is a show of bad faith to those that still need to approve the project.

“It really needs to continue to be worked on,” Voxland said. “Cass County, City of Fargo are willing to keep moving on it. They want to and need to keep working on it, and we need to be there to support them as we have from the start.”

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Readers can reach Forum reporter Erik Burgess at (701) 241-5518