The Hot Springs City Council on Monday fulfilled the detailed process required to apply for a Community Development Block Grant (CDBG) that, if approved, will pay for about half the cost of water and sewer line replacement on a the section of Highway 385/18 through the city that is set for reconstruction by the South Dakota Department of Transportation.

The proposed project includes replacement of antiquated water and sewer lines from the intersection of Summerville and Battle Mountain streets through town to Valley View Drive, said Bill Lass, a senior planner with the Black Hills Council of Local Governments, who assisted Hot Springs in preparing the grant application. The total project cost is estimated at $1.11 million, and covers 5,639 feet of sewer line and 2,950 feet of water main. If approved the federal grant would pay $565,975 of the amount, with the city pledging to cover the balance.

CDBG is a program of the federal Department of Housing and Urban Development allocated to the State of South Dakota, which awards the funds on a competitive basis, Lass explained. Hot Springs has used CDBG in the past to help fund its hospital and a new ambulance building, he said.

“CDBG is a great program,” he said. “If there are any downsides, there is a lot of paperwork.”

To complete the grant application, the council held two public hearings during its Monday meeting and approved a series of resolutions required for federal program participation.

Among the federal program requirements is a housing needs assessment, focused on providing low-to-moderate income housing, said Lass. The city’s application relies on a needs assessment updated from the last CDBG application five years ago, he said.

“We have put an emphasis in Hot Springs on housing, especially workforce housing,” said Mayor George Kotti. “We have been working to meet the needs identified in that study.”

Kotti cited several examples of actions the council has taken to encourage housing construction and improve economic opportunities in the community.

“I believe we have a good plan to provide affordable housing for our community,” he said. “We have been moving ahead and making progress.”

A major concern for the city, however, is an appropriate design for the state’s highway project, Kotti said.

“We have identified a safety deficiency in the Highway 385 design on River Street,” he said. “We maintain it is up to the South Dakota Department of Transportation to provide us with a safe and useable highway design, especially in our business district.”

Concern about highway construction was also mentioned by former council member Georgia Holmes, who gave the only public comment during the CDBG hearing, and supported the grant application.

“With this street coming through, it will cut back sales tax income. It’s going to hurt us,” she said. “Having the street open would be wonderful, but it’s going to be hard, hard, hard on Hot Springs for that street to go through.”

Because CDBG funds are awarded on a competitive basis, there is no assurance that Hot Springs will receive the money it has applied for, Lass noted in response to a question from the council.

“South Dakota has been very supportive of infrastructure, sewer and water (work) but it depends on the competition,” he said.

A decision on the city’s grant could come by year’s end, according to Lass. If the application is denied this year, the city could still apply later, even in the second year of the highway project in 2022, said Kotti.

The council on Monday also approved an application to the state revolving loan fund for a $3.85 million water system supply and storage project to construct a new well and storage tank for service to the southwest portion of the city. The new application doesn’t obligate the city to complete the project, but keeps it on the State Water Facilities Plan to qualify for funding in the coming years, said Kotti.

Action on the development projects overshadowed the council’s quick approval of second reading of the city’s $4.3 million budget. The annual spending plan includes $2.76 million in general fund spending, funded by an estimated $2.8 million in tax revenues, including $490,000 from sales taxes. The budget is not expected to result in significant changes to residents’ property taxes, Kotti said at a previous meeting.

The budget passed over the lone dissenting vote of Ward 1 council member Craig Romey. Romey did not explain his opposition to the measure.

Other business at Monday’s meeting was mostly routine and included approval of resignation of city attorney Chris Beesley, with appointment of Garland Goff to the position. The council also approved an online auction of surplus property by Bradeen Auction, with bidding to open Sept. 27 and close Oct. 3.

In closing remarks, Kotti addressed an issue that has arisen on social media regarding the city’s business climate and Burnout Pizza, a mobile food service operation.

“No one is trying to run any business out of town,” said Kotti. “We provide an atmosphere for businesses to thrive. We also have a book of ordinances…some to resolve issues that are not relevant today.”

The issue has caused council members to be viciously attacked and accused of not being business friendly, according to Kotti.

“(On social media) accusations can be made and not verified. They are done to stir emotions and commented on by people who don’t have all the facts,” he said.

“It’s important to deal with these issues with facts,” said Kotti, who added that the city may need to examine its ordinances to see if changes are needed.

“We want to work together and get this issue resolved,” he said.


The Hot Springs City Council approved a budget that included $7.1 million in total expenses and $7.4 million in total revenues, which includes .5 million in cash applied. The city’s governmental funds include the general fund, LLD, additional sales tax and BID. The governmental funds revenue is projected to be $4,307,985. Five enterprise funds – Water, Sewer, Solid Waste,

Southern Hills Golf Course and Evans Plunge – have separate revenue and expenses. The expenses and revenue were printed incorrectly in the Sept. 25 Hot Springs Star. We apologize for the error.

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