Council considers using prison-related reserve funds to finance Lewis and Clark water expansion

The Lennox City Council discussed financing options for the Lewis and Clark Regional Water System expansion on July 1 and heard an option to fund the project with an interfund loan from the city’s “super fund” (proceeds tied to the Department of Corrections project) rather than adding a new customer surcharge.

City staff said a conventional approach would add a water revenue bond surcharge — roughly $6–$7 per customer on average — to cover equalized annual debt service of about $90,000. As an alternative, staff proposed using super-fund proceeds to lend to the water fund at a council-determined interest rate (including the option of zero interest), which could lower annual debt-service payments to roughly $50,000 while keeping the burden internal to city accounts.

Staff noted the financing answer depends on variables that remain unsettled, including whether the planned prison connection will use city wastewater and final project costs set by state decisions. The council indicated the interfund-loan option was palatable and asked staff to develop a full proposal by August so payments can align with the project schedule and the January–February payment cycle.

Council members emphasized they prefer not to reintroduce a surcharge previously removed; staff said they will develop options that minimize new surcharges and return to council with the details and an implementation timeline.