South Dakota - Clark Rural Water System Regionalization to Bradley and Willow Lake
Clark Rural Water System (RWS) is a water provider located in the northeast part of South Dakota encompassing large portions of Clark and Codington counties (Figure 1). The system serves approximately 1,200 individual users and provide seven communities bulk water supply. The project improved water quality and system pressures throughout Clark Rural Water System’s distribution network. The system was near or at capacity and was extremely strained during peak demands. The project also connected the city of Willow Lake to provide bulk water service as well as provide individual service to the town of Bradley residents.
Willow Lake (population 263) had its own wells but the water quality was poor, and the wells were in need of significant repair and possible replacement. In order to provide service to Willow Lake improvements were made to the Clark RWS system to increase capacity. Improvements include looping of line and installation of parallel pipe to increase pressure and provide redundancy in the system, as well as construction of a 6-inch PVC service line to Willow Lake. Prior to work beginning Willow Lake was able to find and repair a water leak resulting in over 200 percent water loss (Figure 2). Prior to this leak being repaired purchase of water was not affordable.
Bradley (population 72) was connected as a bulk water user to Clark RWS, but the town’s distribution system was experiencing excessive leaks, low pressures, and poor water quality (Figure 3) and needed to be replaced. This project installed new distribution system piping, valves and meters. Once these improvements were completed, customers in Bradley were metered and became Clark RWS customers. A project on its own for Bradley would have had a higher cost ( approximately $1,437,000), and the town would still need to provide for ongoing operation and maintenance.
Improvements were made in the northwest portion of the Clark RWS system to help convey water to an existing pump station and minimize pressure losses in that region by installing parallel lines on the north and south sides of the pump station.
Clark Rural Water System was the applicant for the funds. While this is one project in total, there are three distinct projects that were viewed somewhat separately when considering how to fund the project. The cost of the improvements and components needed for Bradley to become individual users of Clark RWS was $900,000 of the total cost. The cost for Clark RWS to provide bulk service to Willow Lake was $600,000. The remaining $1,450,000 in cost was for improvements in the Clark RWS. Based on conversations with Clark RWS the portions of any debt taken on specifically for Bradley and Willow Lake were assessed back to those users since they are the only ones to benefit from those costs.
For this project since a large portion of the costs are related to serving Bradley and Willow Lake, we were able to provide Clark RWS the disadvantaged rate and term those communities are eligible for which is 2.00 percent for 30 years. This offers additional savings for the Clark RWS only portion of the project which would otherwise not be available.
Clark RWS was awarded a $2,950,000 Drinking Water SRF loan, at 2.00 percent for 30 years, with 43.1% as principal forgiveness, not to exceed $1,270,000.
Overall, the funding package provides $1,270,000 in subsidy and leaves a $1,680,000 loan, but the repayment of the loan is not proposed to be spread-out over-all users but broken down into the three distinct projects described earlier.
Bradley’s portion of the project was $900,000, and they were provided $770,000 of principal forgiveness leaving a remaining loan balance of $130,000. Based on Bradley’s users being Clark RWS individual users their rates will be $57.50 for 5,000 gallons usage plus an additional $12.31 for debt service. This brought total rates to just under $70.00. While this is higher than many South Dakota communities Bradley no longer has any responsibilities for operation and maintenance of the system which results in additional cost savings.
Willow Lake will be connected as a bulk user to Clark RWS and their portion of the project is $600,000. They were provided $100,000 of principal forgiveness leaving a remaining loan balance of $500,000. This loan amount will require $12.41 per user for debt service in Willow Lake which is comparable to the debt service for the Bradley users. Willow Lake will purchase bulk water from Clark RWS at a rate of $3.80 per 1,000 gallons which amounts to $19.00 for 5,000 gallons, and a combined debt service and usage cost of $31.41. Willow Lake’s current rates are $46.00 for 5,000 gallons. Willow Lake will continue to operate and maintain its water system. The remaining $14.59 per user appears sufficient to provide for those costs allowing the community to remain at their current rate.
The Clark RWS portion of the project was $1,450,000, and they were provided $400,000 of principal forgiveness leaving a loan balance of $1,050,000. With Clark’s current revenue and the additional revenue generated by adding Bradley users and Willow Lake bulk supply it was anticipated that a rate increase was not necessary. The Clark RWS rural household rate is lower than the rural household rates of other rural water systems that have received subsidy previously. With a large portion of this project benefiting the communities of Bradley and Willow Lake, additional subsidy was provided to encourage the regionalization and consolidation aspects of the project.
For more information, please contact
Mike Perkovich
mike.perkovich@state.sd.us
605.773.4216
Figure 1 – Clark RWS Service Area
Figure 2 – Willow Lake service pipe leak and adjacent sewer connection
Figure 3 – Bradley hydrant flushed for five minutes still flushing large iron and sediment deposits
