Official Newspaper of Eddy County since 1883
Official Newspaper of Eddy County since 1883
USDA-RD orders utility rate study
City officials knew they had spent tens of thousands of dollars more than expected to treat the city’s water supply last year. They learned just how much, and what they need to do to get back in the black, at their regular meeting on Tuesday, Jan. 2
Interim City Auditor Andrew Presnell had prepared two reports for USDA-Rural Development (USDA-RD), the federal agency that provided grant and loan funds to complete the water plant upgrades, water main replacement and water tower renovation projects.
Submission of quarterly reports for a period of two years is a condition of the funds received for the project. The reports detail the revenue and expenditures for two city funds: the water debt fund and the water works fund.
The water debt fund is where the loan payments for the water projects are paid out of each year. The $16.50 monthly fee collected from each user is deposited in that fund, as well as city sales tax dollars designated for the water project. The city must also maintain a certain level of reserve funds, per USDA-RD requirements. Revenue into the water debt fund exceeded the expenses and reserve set aside by $14,057.80 in 2023, Presnell explained.
The water works fund, on the other hand, covers operations and maintenance of the water system, including the water treatment plant. The money collected from each household for its water usage each month provides the revenue for the water works fund, and the costs associated with treating and distributing the water to users are paid out of this fund.
The expenses to operate and maintain the city’s water system exceeded the revenue generated from users by $89,398.20 last year. As a result, commissioners approved a transfer from the general fund to the water works fund to shore up that account, as per USDA-Rural Development requirements.
The largest reason for the deficit was the cost of chemicals, which far exceeded initial expectations and engineer estimates.
The city switched chemical suppliers last fall as a result, a move that is expected to cost about $75,000 less in 2024 than in 2023, the majority of the shortfall.
Another unforeseen expense was a pipe repair at the water plant undertaken mid-year. The change in chemical suppliers should also alleviate the need for these types of repairs, officials believe.
“I think we’re in a pretty good place with the water system right now,” Richter concluded.
After review of the quarterly reports, Ranetta Starr of USDA-RD expressed her concern with the deficit. “The quarterly reports noted a substantial deficit in the water fund. In order to ensure proper sustainability we are requiring you to undergo a rate study with Midwest Assistance Program,” she wrote in a letter to Presnell.
Presnell has been in contact with individuals from the Midwest Assistance Program, which will review utility rates in other communities and recommend appropriate adjustments to New Rockford’s rates. The city will complete the rate study as required and the commission will make the final determination about whether to actually adjust rates.
In other business, commissioners learned that the city is slated to receive $28,053.83 from the state’s Legacy earnings highway distribution fund. The dollars are legacy fund earnings allocated to political subdivisions that must be used for roadway improvements, Presnell said. Since all of the city’s streets were recently rehabilitated, he recommended that the funds be placed in a CD to generate interest until needed to complete annual crack sealing and other maintenance.
There is no time limit for using the funds, Presnell said. The commission agreed, and passed a motion to place the funds in an 11-month CD at Bank Forward, which will generate 5.25 percent interest.
Presnell reported that the city has been awarded funds from the North Dakota Forest Service. The $6,240 will serve as reimbursement for the costs of tree trimming along Central Avenue and 1st Avenue South this past fall.
The commission also approved a contract with Nexus Planning and Consulting, pending City Attorney Travis Peterson’s review and acceptance of the terms. The organization will assist the city in applying for grant funding to make necessary upgrades to the sewer system – particularly from the easternmost lift station and out to the city’s lagoon system. This is the next major infrastructure project in the city’s long-range plan.
The next meeting is set for Monday, Feb. 5 at 7 p.m.
