The proposed water and wastewater rate hikes, which would raise an average Rapid City household’s water bill by 43 percent over the next five years, passed through its first reading before the Rapid City Council Monday night with little discussion or resistance from council members.
The resolution setting the new rates was approved 8-2, with Alderman John Roberts and Alderwoman Becky Drury voting in opposition.
Currently, a single-family residence pays an average of $30.72 per month for city water and $24.03 for wastewater services, explained Tom Gould of HDR Engineering, the consulting firm hired by the city to study the utility and current rate structure.
Those payments were calculated based on an average use of 5,600 gallons of clean water per month and 4,500 gallons of wastewater collected from such residences per month. Assuming the usage was the same in 2018, Gould said those rates would rise to $33.74 per month for city water and $25.78 for wastewater services next year, an overall rise of $4.77. By 2022, the water bill would be $46.66 and the wastewater bill would come in at $31.98. The current rates have not increased since 2012.
City Operations Management Engineer Dan Coon said the rate hikes were to cover the increased operating and maintenance costs associated with the city services. The utility’s reserve funds have also fallen considerably over the past few years, Coon said, necessitating the large jump from 2017 to 2018.
“We’ve just gotten to the point where we’ve depleted our reserves to uncomfortable levels,” Coons said in a Journal interview on Oct. 10.
In a Journal interview before Monday’s meeting, Gould said the annual operating and maintenance cost was $5 million for the water utility service and $5.3 million for the wastewater utility. Those are expected to rise to $5.5 million and $5.9 million, respectively, in 2018.
The water reserve fund had dropped to $2 million and the wastewater reserve fund had dropped to $159,000, Coon said Monday. With the rate hikes, the city hopes to raise the water fund to $6.6 million and the wastewater fund to $4.5 million by 2022.
Explaining her opposition to the increase, Drury blamed the city for failing to raise rates since 2012, leading to a more dramatic increase now. She proposed the idea of stretching the rate hikes over a longer period of time to lessen the rise.
Alderman Ritchie Nordstrom expressed disappointment that the two utility rate public open houses that HDR and the city held to inform citizens of the change and study behind it were very lightly attended.
“I’m just disappointed that we cannot get the public interested in this,” Nordstrom said.
Though the resolution incorporating the new rates was formally approved on Monday, the city ordinances with the old rates—which were amended to delete the old rates and approved on Monday—must go through another hearing before the Legal and Finance Committee and Rapid City Council before the new rates are truly finalized.
The committee meeting will be at 12:30 p.m. Nov. 1 in the council chambers within city hall, with the council meeting at 6:30 p.m. Nov. 6 in the same location.
In other business Monday, the council:
• Confirmed the appointment of Nick Stroot as director of the city’s Community Resources Department. The position has been vacant since June, when former Director Jeff Barbier and the city parted ways. Stroot has served as Pennington County's Human Resources director since 2009 and will begin his new position with the city Oct. 30.
• Approved an agreement to contribute $2 million from the city’s Vision Fund account to help fund the construction of a new 28,400-square-foot, $7.1-million facility for Rural America Initiative. The agreement stipulates that the city money will be used only for construction work and that RAI will be reimbursed by the city once the work is completed. RAI must begin construction of the facility by Sept. 1. Once completed, the new facility will house RAI’s Head Start program, a federal program that promotes the school readiness of children ages birth to 5 from low-income families who are enrolled in a federally recognized tribe. Other programs, which have been housed in various rental properties over the past few years in order to meet demand, will also be moved to the new facility.
RAI has acquired the land, at 2112 South Valley Drive, and is currently completing its financing, with construction expected to begin sometime early next year. The lot is on the site of the Johnson Ranch Subdivision, which is being developed by area developer Hani Shafai.
• Approved a resolution to declare the city’s 4.3-acre parcel at 108 E. Main St., directly east of the city’s main fire station and midway between downtown and South Dakota School of Mines & Technology, as surplus and to appoint freeholders to appraise the property. The move is the first step as the city looks to transfer the property to the Rapid City Economic Development Foundation. The city acquired the property for $1.4 million in 2012. City staffers will now begin working with the foundation leadership to draft an agreement for the transfer of the property.
• Authorized the mayor and finance director to sign the official Community Development Block Grant contract with the Department of Housing and Urban Development. The city’s Community Development Division will receive $433,236 from the federal government’s CDBG program, $236 more than Barb Garcia, manager of the Community Development Division, had estimated the city would receive.
Later in the meeting, the council also approved allowing Youth & Family Services to use $68,000 awarded in CDBG monies for a use different than was originally approved in May. The funds, which are awarded and managed by the city’s Community Development Division, were intended for roof repairs at Youth & Family Services' 1920 North Plaza Blvd. location. The money will now go toward development projects as YFS expands its current campus at 120 E. Adams St.
• Authorized city staff to begin advertising for bids on the reconstruction of 38th Street from Clifton Street to Range Road. The work will include reconstruction of the road’s sanitary sewers, water, storm sewers and street surface, and is estimated to cost $3.1 million. Construction is scheduled to be take place over two phases in 2018 and 2019.
• Approved an agreement that will bring $632,205 from the South Dakota Department of Transportation to Rapid City as it implements necessary activities identified by the city’s Metropolitan Planning Organization Unified Planning Work Program. The city must match those funds with $139,207 from its own coffers, with the money going toward transportation studies, project planning and staff time from the city’s Planning, Public Works and Community Resources departments.