Crooks council designates US Bank as depository amid disputed Northern Natural escrow terms

The City Council of Crooks voted to designate US Bank as a depository to permit compliance with a time-sensitive requirement tied to Northern Natural’s interim rate case.

Staff warned the council that Northern Natural requested a joinder and master escrow agreement that would require the city to transfer $119,325 into an escrow account at US Bank. Staff said the bank would place those funds into mutual-fund investments and cautioned that the suggested structure could conflict with South Dakota law and expose the city to investment risk.

“As a city, we cannot lose our principal,” the Staff member said, explaining that typical municipal practice is to keep deposits in collateralized, interest-bearing accounts rather than mutual funds. The staff presentation noted the proposed escrow investments were not FDIC insured and that the agreement’s language allowed potential loss of principal.

Council moved to designate US Bank as a depository and also voted to approve the master escrow agreement on the condition the city attorney review and approve its terms before any funds are wired. A council member stated the authorization was procedural to avoid a contract breach while legal and audit reviews continue.

The vote to designate US Bank passed on roll call. The council’s approval of the master escrow agreement was conditioned on attorney approval, and staff said they would coordinate with auditors and counsel to resolve the outstanding issues before any transfer of funds.

Next steps: staff will follow up with Northern Natural, consult the city attorney and auditors, and return with finalized documentation before wiring funds.