During their regular session earlier this year state lawmakers defeated a proposal, introduced by Senator David Hogue (R-Minot), which would have invested Legacy Fund dollars into an infrastructure loan program for local governments.
The benefit would have been cheaper, faster financing for infrastructure projects, which saves tax dollars, but the Legacy Fund would have still earned (albeit below average) interest on the loans.
Now some groups are coming together to discuss the possibility of using the initiated measure process to implement the idea.
Lance Gaebe, the state’s former Land Commissioner who now works for Clearwater Communications in Bismarck, is organizing a meeting in that community today. “I’ve invited leaders of Garrison Diversion, Southwest Water, Western Area Water; officials from Grand Forks, Fargo, Valley City, Minot, Devils Lake who are active in water and other infrastructure projects,” he told me this morning adding that he’s also invited “some water resource districts” to the discussion.
Gaebe says he’s “not looking to spend legacy fund, but to allow it to be invested in ND projects.”
“Let the fund work for North Dakotans and save it for the future,” he added, noting that what’s being considered is “essentially” what Hogue proposed. Gaebe also said what his coalition is working on is “not ready for prime time.”
“We’d like to have something more solid before a lot of publicity.”
I think this is a wonderful, potentially game-changing idea for North Dakota.
I get that it’s not a sexy idea. We’re talking about a change in how we finance things like sewage treatment plants. It’s probably not something the average member of the public spends a lot of time thinking about. But by leveraging the billions of dollars sitting in the Legacy Fund we could save millions of dollars on the cost of building these projects. North Dakotans could essentially lend themselves the money, at very low interest rates.
What’s more, the timeline on these projects could be shortened, which also saves tax dollars.
The availability of this sort of lending could make local governments more nimble and cost efficient as they grow. Those are big, big wins if we can pull it off.
Even better, there’s really no cost to the Legacy Fund. We wouldn’t be spending those dollars, as Gaebe notes. Rather, they’d be invested in the loans. The Legacy Fund would be paid back, with interest.
Just a lower interest rate than our local governments typically pay to finance these projects.
I am not a fan of the initiated measure process generally, but the Legislature really did miss a big opportunity by taking a pass on Hogue’s proposal this session.
UPDATE: I’ve obtained a copy of the draft measure, which you can read in full below.
Here’s the bullet points
- The State Investment Board would invest up to 15 percent of the Legacy Fund into this loan program.
- The funds would be used to make loans to what the Legislature defines as “essential” local infrastructure projects.
- Interest rates cannot exceed 1.5 percent per year
- Loans cannot be longer than 45 years
It was made clear to me that this is a draft of the proposal. The organizers are still very much open to feedback at this point.