Rapid City approves application for $3.93 million loan to rebuild Well 4 on Sunnyvale Drive

The Rapid City Council on Monday approved a resolution authorizing the city to apply for up to $3,932,000 in state loan funds to reconstruct and equip Well 4 on Sunnyvale Drive.

City officials said the work would reuse the existing well casing, replace a failing well house removed earlier this year and add off‑site water and sewer connections. The council approved the application after a presentation from Jennifer Seitzma, executive director of the Black Hills Council of Local Governments, and Brandon Quiet, the city operations engineer.

The project is intended to increase redundancy and resilience in Rapid City’s water system as population growth pushes maximum day demand toward the system’s current production capacity. Brandon Quiet told the council that testing shows the existing well casing can be reused — a cost-saving outcome because drilling a new municipal well was described as substantially more expensive.

Officials outlined alternatives the city considered, including doing nothing, rehabilitating the existing well and building a new well house (the preferred approach), drilling a new well on the same property, or acquiring new property and drilling elsewhere. Quiet said the city’s property for Well 4 is roughly one‑third of an acre, and that drilling a new well typically requires a site closer to one acre because of equipment needs.

The council heard a cost breakdown: approximately $2,100,000 to construct the well house, $250,000–$300,000 for the pump and down‑hole equipment, and a few hundred thousand dollars for off‑site water and sewer improvements and testing. The application package also includes cleaning, pump testing and consultant fees. The council was told the likely loan terms are about 3.75% for 30 years, subject to final approval by the state program.

Jennifer Seitzma said the city’s state water plan application originally listed three separate well projects; the three wells together are estimated at a little over $19 million. City Finance Director Daniel Ainsley told the council the debt service for this loan was already reflected in the rate structure the council adopted previously, and that the council does not need to increase rates to cover the loan.

Officials discussed repayment options: a general obligation bond (requires voter action), a sales tax revenue bond, a water revenue bond, or a dedicated project surcharge on water bills. The project surcharge was described as a commonly used option for water and sewer infrastructure because it does not count against the city’s constitutional debt limit. Staff said a surcharge for this loan would be about $0.84 per account per month but could be offset by a corresponding reduction in meter charges so the net effect to users would be zero. Finance staff cautioned the surcharge requires additional internal accounting and state reporting.

Council members questioned the cost and process; several members and staff reiterated that reusing the existing well casing reduces risk compared with financing a newly drilled well that might not meet anticipated yields. After discussion, the council voted to approve the resolution authorizing application for financial assistance and to designate an authorized representative to sign loan documents.

Motion: Approve resolution authorizing application for State Revolving Fund financial assistance for improvements to Rapid City Well Number 4. Mover: Councilor John Roberts. Second: Councilor Seacrest. Outcome: Approved (motion carries).

The council also acknowledged that the three‑well package will return for further approvals and that staff will provide the precise financing and construction schedule as contracts and bids are finalized.