Commissioners vote to apply for loans to improve Milk River Levee

Hill County has officially begun the process of applying for loans necessary for bringing the Havre-Milk River Levee system in line with the U.S. Army Corps of Engineers standards.

The Havre-Milk River Levee, which was completed in 1957, was designed to prevent destructive flooding that often devastated the area.

However, after inspections in 2014 and 2015, the Corps said the Milk River Levee did not meet their standards. Problems with the levee include structures being built too close or against the levee and trees growing on it.

If the levee isn't certified by the Corps, people determined to be in a floodplain may be required to buy flood insurance.

The decision to move forward with the applications was made at the end of a public meeting between Hill County commissioners, Bear Paw Development Corp. Director of Community Development Lisa Moisey and Craig Erickson of Great West Engineering, who joined the meeting by telephone.

The first topic of discussion was the primary funding source for the project, a loan from the Economic Development Administration. The administration's Denver office has made over $100 million in loans available for projects like this, Erickson said.

The loan would allow the county to bring the levee in line with the Corps' standards in one big project instead of incrementally, as detailed in the System-Wide Improvement Framework, or SWIF, document written on behalf of the county by Great Western Engineering. That framework is currently being reviewed by the Corps.

"When the draft was prepared, we were not aware of, or rather the Economic Development Administration had not announced, that this funding was available," Erickson said. "...The work described in SWIF, like most capital improvements plans, is spread out as resources become available over time."

"I think this ... is what makes this project feasible," said Hill County Commissioner Mark Peterson.

The loan will cover 80 percent of the project's projected $2.5 million cost, provided the county can match it. Although, Peterson said the projected cost may rise once the county has a better idea of how much the maintenance costs of the levee will be post-improvement.

"That's part of the funding source we need to look at. At this point we're getting about $40,000 a year to maintain it," Peterson said "... I think we need to understand what the today-costs are, not what the costs were back in the '50s."

Erickson agreed with that assessment.

"Capital costs are one thing, but you also have to understand the long-term (Operation and Maintenance) costs," he said.

The $2.5 million estimate includes the capital costs of the project but does not address new maintenance costs. Erickson said that a preliminary engineering report would detail those new maintenance costs and would be necessary if the county were to apply for the EDA loan.

That report has a cost of its own.

"We've been given a quote by Great West that the cost of the PER would be 15,800 (dollars)," Moisey said.

Discussion then turned to the subject of an INTERCAP loan that could cover the cost of the report as well as other predevelopment costs.

Moisey said the variable rate loan, provided by the state of Montana Board of Investments, could be paid off early using funds from the Coal Severance Tax Trust Fund without penalty.

Erickson said this would minimize accrued interest on said loan, and that those funds would become available later this year or early next year.

"That leaves us basically with two options," Peterson said, use the INTERCAP loan for the preliminary engineering report and any other expenses, or hold off on some maintenance to the levee and use some rural special improvement district funds to pay for the PER and take care of maintenance when the funds become available.

However, he questioned the wisdom of the second option.

Erickson said using the INTERCAP loan has advantages. He said that the county wouldn't need to pay interest on money they didn't use, and that the application was simple and would require only four to six weeks, at most, to gain approval.

Peterson proposed applying for a $50,000 loan to pay for the preliminary engineering report and any other pre-development costs.

Erickson recommended that the commissioners prepare for the INTERCAP loan. Once that funding was secured, Great West Engineering would begin development of the preliminary engineering report, while Bear Paw Development worked on the EDA and Coal Severance Tax Trust Fund applications.

"There is a small amount of risk. It is possible that the EDA grant would not be awarded," Erickson said. "But based on the feedback that both Great West and Bear Paw Development have gotten from the EDA's representative here in Montana, this project is certainly within the wheelhouse of this program."

he said he believes that there is a strong chance that this project will be funded.

Peterson made a motion to proceed with inquiries about getting an INTERCAP loan, and to "get this project moving forward."

Hill County Commissioner Diane McLean seconded the motion.

Hill County Commissioner Michael Wendland, however, expressed concern that the motion was too broad.

"It does seem pretty vague that we're just gonna start a process for something that we don't really have all our I's dotted and T's crossed for," Wendland said. "... It obviously concerns me that we're just jumping in here trying to get a loan to do something that we don't really have a full grasp of."

Peterson disagreed.

"I see the savings being far far greater than the cost of putting this together," he said.

Moisey said that Bear Paw Development would begin work on the INTERCAP application.

Peterson's motion was approved with him and McLean voting yes and Wendland voting no.