I hope the new year has ushered in a new sense of hope for the coming year. I’m sure we were all glad to see 2011 go. As we look forward to 2012, I want to give you an idea of what to expect in terms of continued reconstruction and restoration.

The removal of the remaining temporary levee will begin as soon as conditions allow. “When conditions allow”, will be described as weather allowing construction and the reservoir storage space along with weather projections looking forward. While current conditions in the Missouri River Corridor look favorable; conditions can change rapidly. As you recall, the imminent danger we experienced last year didn’t materialize until late May. The difference between this year and last year is the snowpack is significantly lower than last year at this time. We will take all of this into account before we begin construction. You can find the most recent Corps of Engineers newsletter and other important Missouri River links at http://www.dakotadunes.com/MissouriRiverInformation/Index.cfm, which was just updated today.

Having said that, we are taking the preliminary steps to begin removal of the temporary levee. The CID Board has authorized the bidding of the removal of the temporary levee from behind Spyglass to the end of Firethorn Trail and anything remaining north to the Meadows. We are also working with Dakota Dunes Country Club, to remove the temporary levee on holes 17/18 and replace it with a permanent levee, prior to the reconstruction of those two golf holes. This project is the first step in a series of steps we hope to undertake over the next few years to improve Dakota Dunes Flood Protection. From there, we will remove the remaining levee from Spanish Bay North to the Big Sioux levee. We hope to be able to restore the Bike Trail to its original configuration by 2013-2014.

Other work will include some repairs to the storm water system in the Spanish Bay area, the clearing of trees on the walking trails on the point, restoration of the Dakota Dunes Boulevard, Circle and cul-de-sacs. Street repair, where needed, will be completed later in the year after levee removal. In addition, Dakota Dunes Development Company is planning another addition with more residential lots on East Pinehurst.

To date, the CID has borrowed approximately $13.6 million (of $15 million available) from the State of South Dakota for preventive measures (levee construction and unwatering) and reconstruction/restoration. Through the public assistance program, FEMA and the State have reimbursed the CID approximately $9.4 million with $9.3 million of that being applied directly to the State loan, leaving a balance of $4.3 million. We have approximately $747,000 in additional reimbursement requests pending with FEMA. All of which, when awarded (hopefully within next 30 days), will be applied to the loan balance – reducing the balance to $3.5 million. We also have larger project reimbursement request into FEMA for $584,000. These take longer to make it through their system, but when awarded, they would also be applied against the loan reducing the balance down further to $2.9 million on cost incurred.

As I mentioned above, we still have some work to do, that work will be funded in part by remaining loan dollars available from the State, FEMA funding and cash flow. As FEMA/State reimbursement is received for eligible costs on the summer project, it will be applied to the loan balance. At the end of the day, we would expect our loan balance to be between $2.5 and $3 million. The final amount will be amortized over a 5 year period at 4.5 percent. Amortization and interest accrual is not likely to start until late 2012 or early 2013.

If I have written this correctly, you should probably be asking how we will service this debt. During the May and June construction of the levee, the CID entered into a loan agreement with the State to provide up to $15 million to finance the construction levees and other preventive measures and restoration. The FEMA/State reimbursement of those costs is applied to the loan. This reimbursement is generally 85 percent of eligible costs. The remaining debt not paid for by FEMA/State reimbursement is to be paid for using a combination of property tax revenues and a possible surcharge on your water/sewer bill. To date, the CID Board wants to focus that debt service on property tax, as it will be a deductible expense on your Federal Tax Return. To raise the necessary property tax revenue, in June, the CID Board passed and published an opt-out resolution that would allow the CID to collect up to $2.5 million in additional property taxes for 10 years for flood related construction. Every public entity must establish revenue needed from property tax and resulting mill levy by October 1 . In anticipation of the need for debt service revenue, in September, the CID Board set the opt-out levy (debt service levy) of $2.222 per $1,000 which given our current taxable value, should generate $847,000 in revenue, which is adequate to service debt under our agreement with the State. This levy is in addition to the normal operational levy ($2.986 per $1,000) that you would normally pay. These levies will be applicable to your 2011 taxes payable in 2012. The CID Board will review and set this levy each September to accommodate the final debt amount. To put this in perspective, if you have a home with a taxable value of $250,000, you can expect to pay an additional (over the normal operating levy) $555.50 or $46.29 per month ($250 x 2.222) in property taxes in 2012 to pay debt service for flood protection and restoration.

The CID Board has been cognizant of keeping mill levies in check. However for the next few years, we must also concern ourselves with investing in flood protection where it is feasible and makes sense. The value of all of our individual homes and businesses is dependent upon a strong market in Dakota Dunes. Consumer confidence can play a key role in market value and the CID needs to add that consideration as we plan for the future and protect property value.

If you have any questions feel free to email me.

Jeff Dooley
Manager
Dakota Dunes Community Improvement District
605-232-4211