City staff told the Lennox City Council on Dec. 23 that the city received a $10,500,000 payment from the South Dakota Department of Corrections and is holding the funds temporarily at First Interstate.

"On December 16, we received a check for $10,500,000 from the Department of Corrections," staff reported. The administrator recommended transferring the proceeds into the South Dakota Public Investment Trust (SD FIT) money-market account and using the interest to fund utility rebates while preserving principal for ongoing capital needs.

The council focused on two primary options: (1) issue one-time utility rebates to residential customers for 2024 surcharges, or (2) use some proceeds to pay off outstanding clean-water loans (estimated payoff discussed as approximately $3.93 million) to reduce future debt service and surcharges.

Proponents of rebates argued a lump-sum payment would deliver immediate relief to households. One councilor characterized a single rebate as more visible to residents than incremental monthly bill credits: "It's not it doesn't look as much of an impact than a rebate check at one time," noting the timing could help households after Christmas and during tax season.

Others warned that retiring the loans would lower long-term costs and protect future borrowing capacity. Staff said retiring the loans could transform certain debt into constitutional debt if secured differently, and noted that paying off loan principal could eliminate roughly $4 million of planned debt on the books.

Councilors also discussed administrative and technical hurdles to issuing rebates. Staff described the rebate process as potentially labor-intensive: running account reports, reconciling closed accounts, and either manually creating checks or using the billing system to apply negative adjustments. The city's billing vendor (G Works) will be asked to identify the necessary report and whether the rebate process can be automated.

The council tallied several other considerations: SD FIT's liquidity and yields (discussed yields in the 4% range), the need to reserve cash for upcoming wastewater engineering fees, and the risk that future councils could change rebate or debt decisions. Staff said SD FIT is not FDIC insured and uses professional money managers; the fund is designed for local governments.

Council members requested additional data before final decisions: itemized loan payoff figures and amortization schedules for the clean-water loans, the per-surcharge rebate amounts and the estimated administrative workload, and options to split investments between SD FIT and local bank CDs. Staff said they will produce the payoff amounts, amortization schedules and technical feasibility for an automated rebate before the next meeting.

No final motion to choose a disposition of the DOC proceeds was recorded; the council affirmed direction to continue planning for a rebate for 2024 while preparing more detailed payoff and implementation information for a subsequent meeting.