Trickling money won’t stop city’s water issues

Are water rates in Hill City too low? Some have asked the question, especially in light of the recent water reservoir project that is currently unfunded, leaving some to wonder, with low rates, does Hill City miss out on grant opportunities other towns can apply for?

Rates in Hill City are a combined $20.80 per month for a 1,000 gallon minimum and each 1,000 gallons thereafter.

The rate consists of water usage fees, water improvement fees, sewer usage fees and sewer improvement fees. The usage fees are supposed to cover the costs of operations such as chemicals, salaries of maintenance personnel who work on the system and general system maintenance.

The improvement rates have been building since 2009 as a means  to collect more money.

“The problem is we just just want to arbitrarily raise operation rates,” said city administrator Brett  McMacken. “I mean  chemicals and salaries do go up but the goal isn’t to try to support a new water reservoir off of that.”

The water reservoir  project money will come in part from savings. 

But even McMacken admits the city is missing out on potential grant money due to the water rates in Hill City not being as high as required by some grant programs.

“When we work with different state agencies, some of them have rates that have to be at least this,” he said. “And if they’re not at least this we’re gonna call you up and say ‘you gotta jack the rates up because if you don’t you’re not gonna qualify for our program.’”

McMacken said Hill City has rates that are already some of the highest in the state.

“Hill City has always been within the top five most expensive rates in the Black Hills due to the topography and the system,” McMacken said. “For whatever reason it’s more expensive out here.”

McMacken stresses it’s not the cost to build a new system but rather the cost to deliver the service.

The water rates in Hill City do not go up annually. The rates have not increased since 2021. Keystone, by way of comparison, raises its rates every year. Currently its base water rate is $15.50 for residential usage and $19 for commercial. The sewer rates in Keystone are $26.50 for residential and $64.70 for commercial.

The city has had conversations about raising rates but does not raise rates annually.

McMacken said the city looks at “all kinds of stuff” related to any program it runs.

“We try to find grants or opportunities we can qualify for with existing things that we have on the books, as far as master plans or data or whatever their requirement is,” he said.

The city works with Black Hills Council of Governments to look for grants and loans.

McMacken encourages anyone who knows of additional grant money the city could go for to contact city hall.

Raising rates go through the budget process and are based on staff conversations centered around projected expenditures and volumes used by citizens.

“We are always trying to find chemicals that are the same good chemicals at a lower price,” and ask whether there is a cost savings in electrical or propane,” McMacken said.

“At a certain point we can’t make up the gap at operational efficiencies so  maybe we have to raise rates by three percent,” he said.

Although uncertain about the actual number,  McMacken estimates raising rates would yield the city approximately $12,000 in additional income  for the water and a little more for the sewer.

“It helps, but it’s not a huge pool of money that’s gonna solve all of our problems,” he said.