MINOT (AP) - North Dakota Highway 23 through Watford City is known for its ruts, cracks and drainage problems.

"The street is definitely in need of repair," said Lowell Cutshaw, the city engineer in Watford City. "It's a very rough ride."

Watford City plans to make the repairs next summer as one of several cities participating in the North Dakota Street Program.

The North Dakota Department of Transportation began receiving federal funding in 2005 to develop a program to improve state highways in towns with populations of less than 5,000. The state expects to receive about $3 million annually.

After three years of surveying communities and program planning, the department has selected towns to participate during the next three years. Work will start in Ashley, Center, Hillsboro and Watford City next year.

Projects set for 2009 will be in Carrington, Gackle, Velva and Fairmount. In 2010, projects are planned in Stanley, Lidgerwood, Cooperstown and Mohall.

Watford City's project will reconstruct Highway 23, update the sewer system and water lines, install new sidewalk, plant trees and add lighting. The transportation department expects to bid the project in November.

The city will pay for the sewer and water, expected to cost around $1 million. The remainder of the project is eligible for federal funding of 80 percent, with the state and city each kicking in 10 percent.

The federal funding is capped based on 80 percent of the initial estimate of $2.5 million. Costs likely will be higher, and the city will be picking up the additional expense.

Still, Cutshaw said the North Dakota Street Program is a boon to the participating cities.

"If cities had to fund all these projects, it just wouldn't happen," Cutshaw said.

Velva Mayor Cindy Shattuck said her city also feels fortunate that federal and state funds are available because just paying the local share of improvements on N.D. Highway 41 will be a stretch.

Like Watford City, Velva will have the full cost of water and sewer improvements. The costs will come on top of the bill that Velva residents already are paying through special assessments for a new water treatment plant. Velva also faces additional costs with a proposed new water transmission line.

"The hardship is going to be coming up with money to pay for these projects," she said. "We did pass this summer a 1-cent city sales tax … but it's not going to be able to make the full payments."

Investing in the street repairs is necessary, though, Shattuck said. Several years ago, the state overlaid the street down the middle, which improved the driving surface but created uneven spots for pedestrians.

"There are places where the water puddles, which, of course, that cracks the highway even more," Shattuck said.

The sidewalks also are unsafe because some have heaved, creating an uneven surface, and some are narrow, she said.

The work includes the area from a bridge at the north end of town to the railroad underpass on the north side of U.S. Highway 52. Highway 41 runs through Velva's main business district.

Next summer, Velva will be working with the state on a separate project to address drainage problems at the underpass. There will be one lane of traffic through that area during construction.

"When we are under the construction periods, we hope that everybody will be patient because there will be some congestion," Shattuck said. "There will be some cumbersome driving on that road."

The underpass work is estimated to cost about $700,000, of which Velva's share would then be $70,000. Actual costs will be known once bids are taken this fall.

Shattuck said the city's second 1-cent sales tax is designated for infrastructure. The new tax could generate nearly $60,000 for the underpass work. The city's original 1-cent tax allocates 40 percent to infrastructure, and money from that account also will go toward the underpass work.