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Kenmare receives oil and gas impact grant

It took a long time, but the state of North Dakota has made good on a promise to the city of Kenmare.

6/20/17 (Tue)

It took a long time, but the state of North Dakota has made good on a promise to the city of Kenmare.

Last week city hall was notified that Kenmare would be receiving its $500,000 oil and gas impact grant.

In a “Surge Funding” bill in the 2015 Legislature, it was noted that Kenmare would receive $1 million in total funding, with half coming from the Strategic Infrastructure & Improvement Fund (SIFF) and half coming from the oil and gas impact grant fund. Both funds receive a portion of the oil and gas taxes.

The $500,000 coming from the SIFF fund was paid almost immediately, but the then the bottom fell out of the price of oil and those allocations came to a grinding halt.

That meant Kenmare, Berthold, Burlington and Stanley would have to wait for money that wasn’t necessarily promised, but authorized to be used should funds be available, according to Gerry Fisher, the administrator of the Energy Infrastructure and Impact Office.

“Please note, an appropriation by the Legislature only authorizes funds to be used and is not a guarantee that the appropriated funds will be available,” Fisher said. “As a result in the significant drop in the price of oil, in February 2016, the state revised its revenue forecast to estimate that the grant fund would receive only $28.6 million of the $139.3 million anticipated.”

Regardless, the money finally arrived and the city council’s intent is to use most of that money to pay off a $336,344.88 loan that was taken out to upgrade the sewage lagoon and build a third cell for that lagoon that was mandated by the state Health Department.

In addition, engineering fees to Ackerman-Estvold Engineering in the amount of $45,318.50 will also be zeroed out, according to city council member Glen Froseth.

Those two debts will use nearly $382,000, leaving approximately $118,000.

Froseth, who was in the House of Representatives in 2015, said the money has to fall into a specific category and for the city of Kenmare, that generally means improving infrastructure.

He said a security fence needs to be built around the old landfill that is expected to cost in the neighborhood of $12,000.

“Oil and gas impact fund grants are for health and safety, priority 1,” Froseth said. “Then, they’re available for community grants.”

The money that was available in oil and gas impact fund from the beginning, was doled out to needs such as critical care hospitals, first responders, fire departments and police departments.

Then and only then, Froseth said, could that money be used for infrastructure needs such as a lagoon, city streets, or even equipment to keep streets clean and maintained.

Froseth said half of the original money was to come out of the SIIF Fund, and now that the price of oil has somewhat rebounded, the oil and gas grant fund can distribute the other half  to meet its obligations that also includes $200,000 to Berthold and $100,000 to Burlington.

When the original allocations were announced, the city of Berthold went ahead and purchased a building to renovate as the new city hall.

However, the city ended up taking out a loan for that purchase so the intent is to use it to pay off the loan with a starting price of $250,000.

According to Fisher, in July of last year, the revenue forecast projected the oil and gas impact grant fund would receive $73.4 million, an improvement but still short of the $139.3 originally anticipated.

In an October letter to Kenmare city auditor Marki Ellis, Fisher admitted the holding of funds may have had some impact on the city.

“We understand the challenges this may present the city of Kenmare,” Fisher wrote. “We appreciate your understanding as we work through this situation and will pass on additional updates as they materialize.”

According to Froseth, one of the sticking points may have been in the engineering.

He said when the third lagoon cell was planned, it was later discovered that sludge had to be removed from the two existing cells, which increased the cost of the project considerably.

As a result, Ackerman-Estvold carried that debt, telling the city it would expect reimbursement when the impact grant comes through.

According to Froseth, the impact grants were designed to assist those communities on the border, or fringe of the Bakken. Impact is seen and felt in communities like Kenmare and Berthold, but the activity doesn’t flush these cities with cash, like it would in Watford City, New Town or Williston.

As a result, infrastructure begins to suffer, thus the funding was allocated in 2015 to rectify that problem... Read EVERY WORD on EVERY PAGE of The Kenmare News by subscribing--online or in print!