In a move to solidify the final piece of funding for the upcoming Phase One home buyouts, the Valley City City Commission approved accepting a loan of $1 million from the Public Works electrical department at a special meeting Tuesday.
“We felt that it was time to make a vote on this,” said City Commissioner Matt Pedersen. “The buyout candidates are ready to go.”
“I don’t think we’ve got a choice of where we get the money,” said Mayor Bob Werkhoven, “and the City Attorney has indicated that we are within the law as far as (the loan), so now we can feel our conscience is clear.”
The inter-agency loan is allowed for under a provision in the North Dakota Century code, the Surplus in Municipal Utilities Fund, section 40-33-12.
“Essentially that section of law states that if there is a surplus in the utilities fund, the municipal body can invest it,” City Attorney Russell J. Myhre said. “This would be a warrant, a bond or essentially a loan. We’re going to draft it up so it will constitute a loan paid back to the municipal utility fund.”
The public works department currently has a roughly $7 million surplus over and above its operating expenses, and Century Code allows for the transfer of up to 20 percent of those funds to other departments within the city.
“The million dollars represents about 14 percent of the total surplus, so it’s within the provisions of the statute,” Myhre said, adding that he is going to recommend the city pay some sort of interest rate on the loan.
“I don’t want this to just be a facade transaction, I want it to be that we’re following the statute properly,” he said.
The loan was the city’s first choice in lieu of taking money from an alternative city fund or raising taxes.