With new spending room, Papio NRD is maxing out on debt

A dam near Werner Park in Sarpy County is one of six projects that the Papio-Missouri River Natural Resources District has issued bonds for, racking up $71.5 million in debt in three years, after receiving bonding authority from the Legislature. Critics worry that the expenses have gotten out of hand, thought officials say the projects are needed.

• A map of metropolitan-area dam projects.

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The Papio-Missouri River Natural Resources District has a new credit card, and the local agency has wasted no time using it.

Just four years after the Legislature gave the district bonding authority, the agency is close to maxing out its ability to go into debt.

In three years, the district has issued $71.5 million in bonds for six projects, including two major dam sites: one under construction near Werner Park in Sarpy County and another at 168th and Fort Streets.

Since receiving bonding authority, its annual budget has more than doubled thanks to new debt, even as the district's full property tax levy has dropped.

The growing debt worries some, including board member David Klug of Gretna.

Using so much bonding authority in such a short time, he said, “paints us in a corner.”

Soon, taxpayers could face the prospect of higher taxes, reduced services or both, he said.

“It's like we've got Daddy's credit card,” he said, “and we're going to max it out and deal with the consequences later.”

District officials have argued that changes in the floodplain are driving the need for these dams: As the metro area develops, paving over ground that would absorb storm water,

the risk of a catastrophic flood is increased. The district is running a marketing campaign hammering on the theme, raising the specter of past floods: “It could happen again.”

In 2006, the NRD approved a plan that called for as many as 29 dams costing $282 million to minimize that flooding risk. Then in 2009, the district got legislative approval for its bonding authority; it is able to use 1 cent of its property tax levy to raise revenue to pay off bonds.

Based on its current debt and property values in the six-county district, NRD officials figure they could take out only about $10 million more in bonds.

After that, if the district wanted to take on more debt, it would have to ask voters to approve using more of its taxing authority for bonds.

Had the district not gone to the Legislature for bonding authority, General Manager John Winkler said, project costs would skyrocket because of inflation and competition with developers for land.

If the district had to save up the money on the front end, he said, “you're looking at, what, 15 to 16 years before you could even start construction?”

Critics, however, question whether the dam sites are even necessary.

Although 11 cities and counties joined the NRD in a regional watershed pact, Douglas County pulled out around the same time the district started issuing bonds. It opted instead to develop its own storm water plan with neighboring Washington County, where residents had fiercely opposed dams that would have flooded dozens of farms.

The bonding legislation gave each county in the district final say over any reservoir project that falls within its exclusive zoning jurisdiction. So far, only Sarpy County has had that chance with the dam site near Werner Park.

Shawn Melotz, a farmer, an accountant and the president of the Papio Valley Preservation Association, a group that formed to oppose the dams, said going this deep into debt “burdens taxpayers for generations.”

“These expenses must be addressed and controlled,” she told the district's board.

To pay off the bonds, the district is using part of its tax levy that previously would have been set aside in a sinking fund.

The new arrangement gives the district flexibility to reduce property taxes or keep them the same each year, Winkler said. He's proud that the district has cut its overall tax levy by 3 percent in recent years.

“You'd be hard-pressed to find another government entity with that track record,” he said.

And he noted that the district has no intention of building every project in the original watershed plan.

For instance, although the big dams upstream in Washington County would provide a lot of flood control downstream, Winkler said, “we're never going to build those. Ever. It's just a political thing now.”

Winkler said debt financing will slow down as the district awaits the results of an HDR Inc. study of the watershed plan. Among other things, HDR will look at how — and whether — to finance the dozen other reservoirs planned for the metro area.

“Some of those might just fall off the list,” Winkler said.

Dam Site 15A at Fort and 168th Streets is the only new bond issue in the district's 2014 budget, and at $42 million, it's the largest yet.

The total cost to pay outstanding bond debt this year will be $4.58 million, according to a $92.7 million budget the board has recommended approving.

That's 6 percent larger than the 2013 budget — an increase driven by bond payments — but it keeps the overall tax levy the same.

The board will meet Sept. 12 in Dakota City to approve the final budget and set the tax levy.

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