McKenzie County Farmer - Latest News

Travis Bateman
Farmer Staff Writer

Based on Watford City’s March 17, 2026 budget presentation to the McKenzie County Commission and the city’s 2025 and 2026 budget documents, the city is making a significant request for county assistance to retire approximately $54 million in remaining energy infrastructure debt.

City leaders argue that eliminating the debt would free future revenues for long-term infrastructure, housing, and economic development projects while reducing the burden of legacy debt accumulated during the Bakken oil boom.

Watford City officials are asking McKenzie County to consider one of the largest financial partnership requests in recent years: the payoff of approximately $54 million in remaining energy infrastructure debt incurred during the height of the Bakken oil boom.

Mayor Phil Riley presented the proposal to county commissioners on March 17, outlining the city’s financial history, its role as a regional hub community, and the infrastructure investments that transformed Watford City from a small agricultural community into the economic center of North Dakota’s largest oil-producing county.

The request comes as city officials argue that many of the debts accumulated to build roads, water systems, sewer infrastructure and community facilities were undertaken not only to serve city residents, but also to support countywide growth driven by energy development.

A City Transformed by 
the Oil Boom
According to the presentation, Watford City’s population grew from approximately 1,744 residents in 2010 to roughly 8,500 residents by 2025, representing nearly 487 percent growth during the Bakken development era. At the same time, the city dramatically expanded its infrastructure systems to accommodate thousands of new residents, businesses and workers.
That rapid growth came with significant borrowing.

City debt climbed from approximately $370,000 in 2010 to nearly $137 million by 2015 as Watford City constructed and expanded water treatment, wastewater treatment, roads, utilities and other public infrastructure. While much of that debt has already been paid down, approximately $53.9 million remained outstanding entering 2026.

The presentation notes that total city debt has already fallen substantially from its peak, dropping from roughly $136.7 million in 2015 to approximately $76.7 million in 2025 and an estimated $53.9 million in 2026. Per-capita debt has also decreased significantly as the city has retired bonds and stabilized growth.

Current Budget Shows 
Continued Financial Stability
Budget documents provided by the city show a total 2026 budget of approximately $57.8 million, compared to about $50.4 million in 2025. The city’s major operating funds remain solvent, with projected year-end balances across all funds exceeding $45.7 million in 2026.
The General Fund is projected to end 2026 with more than $8.1 million in reserves, while the Gross Production Tax Fund is expected to maintain nearly $2.9 million. Enterprise funds such as Water Works and Sewer operations are also projected to maintain substantial balances.
However, city officials contend that despite healthy operating finances, debt obligations continue to limit the city’s ability to address future capital needs.

Historical Partnerships Cited
Riley’s presentation repeatedly emphasized that Watford City’s growth was made possible through partnerships with McKenzie County, the North Dakota Governor’s Office, the Legislature and various state funding programs.

The city highlighted more than $20 million in Energy Impact Grant funding received during the boom years and pointed to legislative changes that increased local shares of Gross Production Tax revenues while creating mechanisms allowing communities to borrow against future GPT revenue streams.

The presentation also references previous cooperative efforts between the county and city, including:
• Joint Law Enforcement Center projects.
• Court services facilities.
• Economic development projects.
• The Bakken Area Skills Center.
• Bright Minds Childcare Center.
• Wolf Pup and Wolf Run housing-related projects.
• Debt reduction partnerships involving housing developments and workforce initiatives.

Existing County Debt 
Buydown Program
City officials pointed to an existing debt reduction partnership already underway between McKenzie County and Watford City.

According to the presentation, a Joint Powers Agreement covering the third and fourth quarters of 2025 and all four quarters of 2026 provides approximately $18.15 million in debt reduction assistance over an 18-month period. Those funds support accelerated infrastructure projects and capital improvement planning.

Projects identified as beneficiaries of the current partnership include:
• $4 million in chip seal improvements.
• $2 million in mill-and-overlay street projects.
• $6 million in water main replacements.
• $1 million in pedestrian and sidewalk improvements.
The new proposal seeks to expand upon that concept by eliminating the remaining energy infrastructure debt entirely.

The $54 Million Request
At the center of the presentation is a request for McKenzie County assistance to retire the city’s remaining energy infrastructure debt, listed at approximately $54 million.

The debt portfolio includes several bond issues tied to sewer, water, highway and gross production tax-backed infrastructure projects dating primarily from the boom years between 2013 and 2019. The city’s analysis shows that retiring the debt would also eliminate future interest obligations while substantially reducing long-term financial commitments.
City leaders argue that debt elimination would allow future revenues that are currently committed to bond payments to be redirected toward infrastructure renewal and community development rather than debt service.

Looking Beyond the Boom Era
The presentation outlines nearly $393 million in future capital improvement needs through 2040, including more than $302 million categorized as growth-related infrastructure.

Among the largest upcoming projects identified by the city are:
• $45 million in legacy infrastructure replacement within the original 21 blocks of old town.
• $18 million for a new fire hall.
• $15 million for Downtown Area 2-A redevelopment.
• $9.5 million for 14th Avenue Southeast construction.
• $3.3 million for Park Avenue reconstruction.
• $2 million for Downtown Area 2-B improvements.

City officials characterize many of these projects as essential investments necessary to maintain infrastructure constructed during the rapid-growth era while preparing for future economic diversification.

City’s Argument: Debt Relief Creates Future Capacity
In concluding the presentation, Watford City officials emphasized that the request is not solely about reducing financial liabilities but about positioning the community for the next generation of development. They argue that debt relief would allow revenues currently dedicated to bond payments to be redirected toward aging infrastructure, affordable housing, downtown redevelopment and other community priorities identified jointly by the city and county.

The city specifically highlighted replacement of aging infrastructure in the original downtown area, housing-related infrastructure improvements, continued downtown redevelopment and other community investments that could be prioritized in partnership with McKenzie County.
The proposal now places county commissioners in the position of determining whether county resources should be used to accelerate the retirement of city debt in exchange for future infrastructure investment and economic development opportunities.

The discussion comes amid continuing debate across western North Dakota about how best to utilize Gross Production Tax revenues generated by the Bakken, balancing immediate infrastructure needs against long-term investments designed to sustain communities long after oil production declines.