Posted on March 4, 2024
It is as clear as the mud at the bottom of Lake Mitchell, right! Hopefully this will clear up a great number of misconceptions related to Lake Mitchell improvements.
The big question, what exactly is the resolution by the Mitchell City Council passed at the last meeting? The last meeting set a maximum amount the city will borrow via the State Revolving Fund (SRF) loans from South Dakota Department of Agriculture and Natural Resources (DANR). The project was estimated and still is at $25 million. What has changed is the amount the city is proposing to borrow at 3.75% interest, for 30 years. After hearing from the public and City Council, the loan amount should be reduced, an extensive review was made on city funds. Since we have had a couple of good years relative to sales tax collections and interest paid on money in the bank, we determined the loan amount could be reduced substantially. The resolution was proposing that reduction to be fully transparent with residents of Mitchell.
This does not reduce the cost of the project. It reduces the amount of money paid back for interest on the SRF loan. The project remains $25 million. It breaks out as follows:
- Project mobilization: $1 million
- Lake Mitchell drawdown: $3.5 million
- Dredge material disposal site: $1.5 million
- Additional sediment trap at mouth-of-lake: $1 million
- Construction phase services: $1 million
- Contingency for unforeseen issues: $4 million
- Dredging (actual internal load control): $13 million
- Total project: $25 million.
It is a $25 million project, not a $25 million dredge. This ultimately saves the city $5.6 million in interest payments over the life of the SRF loan.
Mitchell Mayor Bob Everson pictured during a 2021 Mitchell City Council meeting
How do we get to that figure? There is cash already set aside of $3.5 million for the drawdown (which has already been approved and is in the budget currently); we add cash from Capitol Project reserves of $4.7 million to reduce the loan amount; and we borrow $16.8 million from DANR in the SRF loan. The total amount for project is $25 million, the expected interest paid is $11.4 million, with a grand total with interest of $36,439,784.
