State official: Buffalo Gap must remove 38 lead service lines by 2037; $1.3 million pipe project largely funded

Erin Fania, a drinking-water program official with the South Dakota Department of Ag and Natural Resources, told the Buffalo Gap City Council that federal changes to lead-and-copper rules require towns to remove all lead service lines within 10 years of the rule’s effective date and that Buffalo Gap’s 2024 inventory lists 38 lead service lines and 14 lead connectors.

“The LCRI requires all lead lines to be removed from all water systems within 10 years of that rule becoming effective,” Fania said, referring to the Lead and Copper Rule Improvements that take effect Nov. 1, 2027. She said the inventory counts 38 public-side lead lines (the portion from the water main to the curb stop) and 14 lead connectors that also must be replaced when exposed during work.

Jennifer Seitzna, executive director of the Black Hills Council of Local Governments, briefed the council on the financing package for a planned $1.3 million project to replace cast-iron mains and service lines. She said the Board of Water and Natural Resources recommended a $338,000 loan combined with roughly $978,000 in principal forgiveness — a 74.5% subsidy — and that the loan terms offered included about a 3% interest rate for 30 years.

“You got about $978,000 in grant,” Seitzna said. She told the council the state’s model shows the town could restructure rates and add a surcharge to meet debt coverage while keeping adjusted rates well below the all-loan scenario.

Seitzna said the town will need to approve two formal resolutions to accept the funding: a bond resolution prepared by bond counsel and a surcharge resolution that authorizes the rate structure and surcharge collection the state will monitor annually. “That just makes your loan legal,” she said of the bond resolution, and she cautioned the council that the state requires a 110% annual debt-coverage calculation that may prompt future adjustments to the surcharge.

Under the timeline described by Fania, the LCRI becomes effective Nov. 1, 2027, and systems must complete full replacement by 2037. Fania said towns must replace no fewer than four service lines per year starting in 2027 to stay on track. She recommended the council confer with the town’s water operator and engineer to confirm which inventory addresses are included in the current project scope.

Seitzna warned the council that federal funding programs face possible reductions and that moving forward with the heavily subsidized package reduces the risk of much higher future costs. She also urged the council to update the town’s SAM registration so it can receive disbursements and to sign the county mitigation participation letter before the grant deadline she cited as May 30.

Seitzna and Fania both said the facilities plan for the project includes replacement of service lines to the curb stop (the town’s responsibility); homeowners who want the private-side portion replaced can arrange separate work with contractors while crews are mobilized, but those private costs would be billed to the homeowner and are not eligible for the town’s grant funds.

The presenters offered follow-up resources, including the state inventory (which Fania said is public) and assistance from the Black Hills Council office to prepare the two required resolutions and to guide the town through federal registration and funding steps. The council did not take a final vote on the project financing during the meeting; Seitzna recommended placing the bond and surcharge resolutions on a future council agenda for formal adoption.

The council’s next procedural steps to secure the funding are: verify which inventory addresses the current project covers with the town engineer, update SAM registration, and schedule formal consideration and potential adoption of the bond and surcharge resolutions at an upcoming meeting.