MARSHALL — Lincoln Pipestone Rural Water is trying to develop a new water source that could help residents in northern Lyon County.

The water provider is also turning to area counties for help with the financing of new wells, water pipelines and a water treatment plant, said LPRW General Manager Jason Overby.

At Tuesday’s Lyon County Board meeting, Overby said LPRW was asking if Lyon County would be interested in issuing bonds for $9.8 million of the project.

“LPRW does not have the ability to take out a loan, per se. We have to rely on the counties to help issue bonds,” Overby said. “Since we started this, we had got a blessing from Lac qui Parle County … They have taken on the first phase of the financing at $9.9 million.” LPRW had earmarked a second phase of the financing at $9.8 million, and a third phase of about $6.5 million, to cover the debt load, he said.

Overby said Yellow Medicine County was considering whether to help with project financing. LPRW was also asking Lyon County to consider whether it would be a bond issuer.

After hearing more details about the water project and how it would be financed, county commissioners voted in favor of issuing $9.8 million in bonds.

Overby said LPRW is proposing to build new wells, a new water treatment plant and pipelines in the northern part of its service area, which includes parts of Lac qui Parle, Yellow Medicine, Redwood and Lyon counties. The project would allow LPRW to serve water users in areas that have groundwater with high concentrations of minerals.

“We have a lot of interest in the northern parts of our system. They have poor water quality, and we’re trying to shore up a (water) source and treatment for the future,” he said.

Overby said the project would affect residents in Lyon County. The city of Cottonwood has signed a water purchase agreement with LPRW, and there are also rural water hookups in the county.

In addition to developing a new water source in Burr and building a water treatment plant near Boyd, LPRW plans to build a water tower north of Green Valley as part of the project, he said.

LPRW has done some construction already for the water treatment plant west of Boyd.

“The pipeline project has been bid out. It’s an 18 and-a-half mile transmission line from our treatment plant, including raw water lines, back to a sizable line over by the city of Clarkfield,” Overby said.

“As far as timelines, we are looking at having completion of the pipeline likely within the end of 2026, possibly into 2027 depending on how things go. The treatment plant would be in 2028. So we hope to have our first drop of drinking water in spring or early summer of 2028,” he said.

LPRW secured $5.75 million in appropriations from the state’s Public Facilities Authority for the North Area Water Source project, as well as a combination of a $2.19 million grant and a $26.17 million loan from the USDA’s Rural Development Program.

“They actually had to go to the national office to get this approved. It surpassed the state allocation,” he said.

Overby said Rural Development advised that they would need to separate the loan into three smaller sub loans. One reason for that was it might be easier for southwest Minnesota counties affected by the project to issue smaller bonds, he said.

“There’s no debt to the county. Lincoln Pipestone covers all that,” he said.

The process for the county would involve passing a motion to approve moving forward as the bond issuer, and then entering into an agreement with LPRW and the Minnesota Rural Water Finance Authority. There would also be a joint powers agreement with the nine counties served by LPRW.

In discussion of the proposal, Commissioner Rick Anderson said that if Lyon County issued bonds for the $9.8 million, it might make helping with financing the project “an easier sell” to Yellow Medicine County. Commissioners were also in favor of improving water quality for Lyon County residents.

Commissioners voted to approve issuing $9.8 million in bonds for the project.