Timeline of water reservoir project shows numerous delays, failures

The water reservoir project in Hill City goes back nearly two decades, with several moving pieces causing delays of some sort or another.

In 2007 an engineering study recommended an elaborate system that would have been costly and required several locations for tanks.

The city then began working in the direction of one new tank and started looking to place it on Bishop Mountain Road. An engineer modeled the existing system by simulating pressures, giving the city knowledge that the elevation for the new tank had to match the existing tank. The Bishop Mountain location was perfect and the city moved forward with a private land deal. The deal fell through, however, forcing the city to begin the process again.

Officials then began to look at city-owned land  near the railroad tracks. The elevation for the property worked, so the city looked for funding from the federal government through its Rural Development (RD) program.

According to Katie Hammer with RD the initial contact date for the loan for the project was late December 2009, with an obligation date of 2011 and a de-obligation date inAugust of 2014. However, a short time later a subsequent loan was then obligated. 

Town records indicate that on Nov. 10, 2014, city engineer Doug Sperlich presented a design to construct a 250,000-gallon water reservoir and 10-inch PVC water main.  Discussion concerning the location of the water line and boring the new utility under the railroad tracks took place.

The Hill City Council approved the project and gave approval to let it out for bid the same evening. 

According to the city though, despite the obligations of funds by RD there were still hoops to jump through with the program. Hammer said RD is “regulated via 7 CFR Part 1780. An archeological study was required for the project. Specific requirements for environmental reviews are dictated by the regulation 7 CFR Part 1970 B. An environmental report was prepared in 2014 and the State Historic Preservation Office was consulted. RD required an archaeologist to review the final plans in 2022.”

City administrator Brett McMacken said the city worked with the train for a fair amount of time to secure an easement for the project. The cost of the easement was $41,000 according to Sept., 9, 2019, claims records. A track-inspection fee of $10,714.30 was also paid out on the project in 2020.

In the meantime Sperlich sold his company to one of his employees, Kale McNaboe, who took over as city engineer. An engineering  contract with McNaboe was signed in 2014 in the amount of $93,900. Final payment was made in 2016. No other invoices for engineering work have been received by the city for the water reservoir project.

In August 2020, with McNaboe as city engineer,  the design of the project changed due to the type of tank and slope of the hillside. McMacken said that time the city did look into alternative funding as well but that would increase water rates by about 30 percent, so that idea was taken off the table.

McMacken said by this time in 2020 the loan through RD was de-obligated again and took six months to get re-obligated.

The project appears to have fallen by the wayside as well in terms of accountability, as minutes from Hill City Common Council meetings indicate a gap of discussion of the project between December 2020 and March 2021. Written records from March 22, 2021, indicate “all the paperwork has been completed and it is ready for a contractor to be selected but with the Biden Administration change, they are doing a mandatory review of the funds.”

In May 2021 though, the City Administrator’s Report  said McMacken was working with the city engineer and RD on the water reservoir project. The minutes also make note of  checking to ensure CoBank “internal financing” was still available. In an interview conducted in May of this yea  McMacken said CoBank is an interim financing entity that RD requires the city to use during the construction phase of the project.

The July 26, 2021, minutes said the goal was to get the project under contract before the end of the year.

The project is mentioned again in May 2022 when minutes from the ninth indicate the “city has to look at the visual impact of the tank on the city.” The May 23, 2022, minutes show that McMacken was “waiting for the report on the water reservoir review.”

Minutes from the fall show McMacken and the town engineer still working on the project, until November 14, when it’s noted that RD needed two additional items from the city engineer. In the last meeting of 2022, McMacken indicated a proposed timeline for the project would be ready by February 2023 with bids closing in March 2023 if the council approved the action in January.

The project received one bid of $3,393,673.98. The city engineer’s estimate for the project was $1.9 million.

Once the project was found to have changed drastically in price the city could have chosen to submit an application for additional funding.  However, it is not a simple process, according to Hammer. 

“An application for additional funding would require the project to be re-bid with the required language for Build American, Buy American Act and American Iron and Steel.  It also would require updated environmental reviews since the items submitted at the time of the initial application would no longer be considered current,” said Hammer.

While both the water fund and the general fund are both doing well, funding this project from city reserves would deplete its savings.

The tank would have added an additional 250,000 gallons to the system, which currently stores between 125,000-150,000 gallons on the high side and 200,000 gallons the low side.

The lack of capacity is one of three factors influencing the city’s fire ISO ratings which will be going from a four to a five, affecting commercial insurance rates in town. A rating of one is the best possible with a rating of 10 meaning an area is unprotected. Three factors affect the rating, including telecommunications, city water supply and the capacity of the fire department along with its response time.

According to Hill City Fire Department chief Craig Comer, the fire department can only control one of these three pieces and is “doing everything within reason on the fire department side” to make sure it’s meeting the ISO standard. That includes being good stewards of taxpayer money in terms of equipment and personnel. The addition of the Bull Run subdivision and some large multi-story buildings downtown means there is an increased need for water.

“The city is growing,” said Comer, “putting more strain on the fire department.”

It is unclear when the project will appear on the agenda again despite the need not going away. McMacken said the city takes direction from citizens. 

McMacken expects to bring the project back but is unsure when. He said the city is doing research for funding options and that RD is out of the picture for now. He does not have any idea how much the project cost will increase while the city waits. 

“I have no idea if this project will double  in price,” McMacken said. “If that happened, yeah you bet I’m worried about that. There’s other projects in Hill City on the horizon that need to be done.”

These include a water main that needs to be replaced and updates to its wastewater treatment plant. 

“All of this stuff needs to get done,” McMacken said.