Regional rural utility cooperatives back legislative proposal to refinance government loans

By Andrew Weeks

Rural utility cooperatives that serve the Greater Grand Forks region are backing legislation that would allow them to refinance government loans at current interest rates.

The proposed legislation, called the Flexible Financing for Rural America Act, was introduced in the U.S. Senate in July by Sen. John Hoeven, R-N.D., and backed by Sen. Tina Smith, D-Minn., and two other legislators from Arkansas and Arizona. If approved, the legislation would allow electric cooperatives and rural telecommunications providers to refinance their Rural Utilities Service (RUS) debt at current market rates without penalty. The benefits of being able to do so, they say, will trickle down to customers and enable a stronger recovery from the economic challenges of the coronavirus pandemic.

“Electric cooperatives and telecommunications providers are critical to the quality of life in rural areas,” Hoeven said in a statement on July 2, noting the restrictions on U.S. Department of Agriculture RUS loans “hamper the ability of these organizations to cope with the challenges of COVID-19. The Fed reduced interest rates specifically to help businesses through this difficult time, and it makes sense to enable rural electric cooperatives and telecoms to benefit from this important tool, supporting a stronger recovery in our rural communities.”

Hoeven said rural cooperatives and businesses would gain flexibility in managing their cash flow and allow them to pass their savings on to customers.

“We’re very grateful for those loans, and we always repay our obligations,” said Rich Whitcomb, CEO of Halstad, Minn.-based Red River Valley Cooperative Power Association, noting the problem is, unlike homeowners, utility co-ops have been unable to refinance their loans. “It’s kind of an outdated quirk in the regulations.”

When a cooperative takes out a loan, for instance, it is fixed at 30 years or more and they will be penalized if they pay it off early.

“That’s fine,” Whitcomb said. “But the interest rates are so low and the economy, especially the rural economy, is hurting and fragile and we can’t refinance those loans like you can if you’re buying a house. … So, all we’re asking is to keep paying our obligations but with the ability to refinance our loans to current rates without penalty. That’s what we’re asking to do.”

Former U.S. Congressman Jim Matheson, now CEO of the National Rural Electric Cooperative Association (NRECA) in Washington, D.C., told the Herald that there is about $43 billion worth of loans from cooperatives across the country.

The NRECA serves 900 electric cooperatives in 48 states – or covers about 56% of the landmass in the country, Matheson said.

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That equates to about one in every eight Americans or a population of 42 million people served by the co-ops. They also serve about 92% of the persistent poverty areas of the country.

“And we have no shareholders to fall back on, so every issue we deal with has a financial impact that goes straight to the bottom line of the consumer,” he said. “That’s why this issue … the ability to refinance our debt at lower interest rates mean so much to us; it all affects the consumer because of the way we’re structured.”

Cooperatives are employee-owned and not-for-profit.

“We estimate that if they can all refinance that debt, it would result in, over the length of time of all the debt, roughly $10 billion of savings,” Matheson said. “So this is real money for us, this is a big deal. … Unfortunately, for us to make this change, we need an act of Congress.”

The proposal has received bipartisan support from lawmakers in many parts of the country, but Matheson said he doesn’t even like to call it that.

“We like to even say it is being nonpartisan; it’s just doing the right thing for the communities we serve,” he said. “It’s not about Republicans or Democrats, and it has nothing to do with East, West, North or South, or whatever other part of the country, because we have sponsors from everywhere. That was a strategy that Sen. Hoeven suggested; he said let’s not try to run up a bunch of co-sponsors right away, but let’s get great representation across the country.”

Still, Whitcomb said it has “an upper Midwestern flavor because they (legislators) understand that in a lot of places, like here, electric co-ops are one of the real economic drivers. … We’re not-forprofit and so with the ability to refinance, that money is going to go back to the members in some form. It has to because it’s in our bylaws and that’s who we are.”

Ben Fladhammer, communications manager at Minnkota Power Cooperative, said his organization is behind the legislation. Electrical consumption from industrial sources has declined during the pandemic and there’s been an increase in unpaid bills from customers. As such, he said, it is anticipated that electric cooperatives around the country will sustain significant losses through 2022. The legislation would help meet these challenges.

“COVID-19 presents challenges for rural communities and for electric cooperatives, and we believe it’s important that Congress helps us out and takes some steps to relieve that burden,” Fladhammer said. “We feel that this is a really smart way to do that.” Minnkota, headquartered in Grand Forks, serves eastern North Dakota and northwestern Minnesota.

“Essentially, this gives us the flexibility to manage financial shortfalls and focus on long-term stability in the rural communities that we serve,” he said. “Having the flexibility to refinance our existing loans really enables us to meet the evolving needs of our member consumers and help them continue their work as partners in our communities’ long-term economic recovery.”

“Bring it on,” said Tom Edwards, accounting and finance manager at Nodak Electric Cooperative, “because this is going to save members some money.”

He said Nodak, which has about 15,000 members in Grand Forks proper and rural communities in 13 counties, currently has about 21 outstanding loans, all at variable interest rates.

“If we were able to refinance all 21 of those loans we could save $11.5 million,” Edwards said – or, broken into the number of years remaining on the loans, that’s about a half-million dollars every year for the next 23 years. “If we had to have a rate increase, it would save about a half-percent every year. If a cooperative could shave off a half-percent of their rate increase, if they needed one, it’d save the end user some money, that’s for sure.”

Edwards said, as the proposal moves forward, he anticipates discussion will happen on urban and rural topics, but he’s hopeful the legislation will pass. Congress has yet to move on the proposal, but Matheson said lobbying efforts will continue. Whitcomb said he is encouraged by what he is seeing.

“There are 67 sponsors of this bill in the House, and they’re from places like Arkansas, South Carolina, Alabama, they’re from Minnesota, Wisconsin, North Dakota. They’re spread out geographically, which gives me hope,” Whitcomb said. “And there are 19 senators who have signed on saying this makes sense. … If you think about it, we have a lot of support. That’s very encouraging to us; it is now just trying to get this across the finish line because it really would help everybody.”

Minnesota residents, who live in the land of 10,000 lakes, know about whitecaps on the water when the wind blows. Using that analogy, Whitcomb said there have been strong headwinds even before the pandemic, such as Minnesota and North Dakota farmers who had to leave their sugar beets in the field this past year or those who couldn’t harvest corn because of unfavorable weather conditions.

Whitcomb said the bottom line is that times are tough and many people have a hard time paying their bills.

“There are whitecaps in the economy right now due to the pandemic,” he said. “If this bill passes, it’ll help electrical co-ops calm those waters. This allows everyone the chance to face those headwinds from a little stronger position. … Electricity is such a basic need. If we can provide enhanced value and keep rates competitive, that’s going to help calm many of those whitecaps.”

FARGO, N.D. • Logan Dahlgren has joined Enclave as senior accountant.

A native of Vergas, Minn., Dahlgren brings more than five years of experience in accounting. Most recently, he served as accounting specialist at East Shore Garment Co. in Detroit Lakes, Minn.

Dahlgren graduated from North Dakota State University with a bachelor’s degree in accounting. He currently serves as a city councilman and volunteer fireman in Vergas, Minn.

MINOT, N.D. • Zeb Pulkinen joins Houston Engineering Inc.’s Minot team as a Technician I. He will primarily work in the field, providing survey and construction observation services for projects across western North Dakota.

A Minot native, Pulkinen has watched floods, oil booms, and other events create an ongoing need for new reliable infrastructure throughout the region.

He earned his associate degree in petroleum engineering technology from Bismarck State College and his bachelor’s degree in geology from Minot State University. Pulkinen’s experience and education make him a great addition to HEI’s team to ensure infrastructure being built will serve clients for years to come.

ST. PAUL, Minn. • KLJ Engineering welcomes Arash Moin and Amy Mathews to its St. Paul office.

Moin has joined the team as a civil engineer with a focus in civil water. He has a bachelor’s degree in civil engineering with an emphasis in water resources from the University of Minnesota-Twin Cities.

Mathews comes to KLJ as a content strategist. She has a bachelor’s degree in journalism and mass communication, as well as graphic design, from Drake University.

GRAND FORKS, N.D. • Kevin Cooper has been hired as a developer at Red River Regional Council. With funding provided by the US Department of Commerce Economic Development Administration, Cooper will be leading economic recovery and resiliency strategic planning in Region 4, which includes Grand Forks, Nelson, Pembina, and Walsh counties.

Cooper comes to RRRC with nearly 30 years of experience in economic development and higher education. He earned his bachelor’s degree in business administration from Mayville State University, and a master’s degree in business administration from the University of North Dakota. He earned certifications as an Economic Development Finance Professional through the National Development Council, and Strategic Planning Professional from the Association for Strategic Planning. He is a past president of the Economic Development Association of North Dakota.

MITCHELL, S.D. • The Mitchell Prehistoric Indian Village has hired Kimberly Burg to the newly created position of assistant executive director.

Burg will focus on marketing, membership, events and grants.

She has a bachelor’s degree in park and recreation management from South Dakota State University and completed a Leisure Time Business Management Internship at Walt Disney World in Florida. She has worked in city, state, and national parks in South Dakota, North Dakota and Wisconsin. Most recently she worked for the City of Mitchell at James Valley Community Center.

The Mitchell Prehistoric Indian Village, located north of Mitchell, is the only active archaeological site in South Dakota that is open to the public. Burg has a bachelor’s degree in park and recreation management from South Dakota State.

FARGO, N.D. • Essentia Health has recently welcomed new doctors at clinics across the region, including the following:

Dr. Michaela Heller is welcoming new patients at the Essentia Health clinic at the 32nd Avenue clinic in Fargo.

Dr. Heller earned her medical degree from University of North Dakota School of Medicine and Health Sciences in Grand Forks, N.D. Her residency was at Akron General Medical Center Obstetrics & Gynecology in Akron, Ohio

Dr. Jessica Munro is welcoming new patients at Essentia Health-South University Clinic, also in Fargo.

Dr. Munro earned her degree from Illinois College of Optometry in Chicago.

Andrea Solberg, CNP, who specializes in obstetrics and gynecology is welcoming new patients also at the 32nd Avenue clinic in Fargo.

Solberg earned her Master of Science in Nursing degree from Maryville University, St. Louis, Mo. and is board certified by the American Academy of Nurse Practitioners.

RAPID CITY, S.D. • Urologists Melissa Brown, M.D., and Russell Hayden, M.D., recently joined the Monument Health Rapid City Medical Clinic on Fifth Street in Rapid City, S.D.

Dr. Brown is a Urologist with more than 27 years of experience treating the full spectrum of general urology conditions. She is also a clinical instructor with the University of South Dakota’s Sanford School of Medicine.

Before joining Monument Health in the Black Hills, Dr. Brown practiced in Aberdeen and also spent time in Arizona, Minnesota and Massachusetts. She is a member of the American Board of Urology, the American Urological Association and the Society of Women in Urology. She is also a Fellow of the American College of Surgeons.

Dr. Hayden is a Urologist with a sub-specialty in male infertility. He completed his residencies in General Surgery and Urology from Massachusetts General Hospital in Boston.

Before joining Monument Health, he served as the Fellow in Male Infertility and Sexual Medicine and as an Instructor of Urology at Weill Cornell Medicine in New York.

He is a member of the American Urological Association, the American Society for Reproductive Medicine, the Society for Male Reproduction and Urology, the Society for the Study of Male Reproduction and the New York Academy of Sciences. He has published papers, written chapters and presented on several topics, including vestibular prostheses, azoospermia metastatic prostate cancer and more.

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