Rapid City is considering establishing a low-interest, revolving-loan fund to assist commercial property owners with the cost of adding sprinkler systems during remodel projects.

City code often requires a fire-protection system, including fire sprinkler and fire alarm equipment, when significant alterations are made to buildings that can cost $30,000 to $50,000.

When property owners don't have the money to cover the cost, they often ask the city to approve a deviation from the requirement, which could create a liability issue for the city if something happens later.

City staff proposed creating a $500,000 "life safety" fund to help property owners with the cost of sprinkler systems. Property owners could ask for up to 80 percent of the cost of installation at a 4 percent interest rate.

A committee consisting of the mayor, council president, finance officer, city attorney and fire chief would review all requests. No money would be loaned until work is completed and a copy of the invoice is received by the finance officer. Borrowers would be required to make semiannual payments on the loans, which would be for no longer than five years.

Only a mortgage or letter of credit would be accepted by the city as a guarantee that the loan would be repaid.

The proposal was referred back to the council's May 28 legal and finance committee for more discussion at the request of Alderman Tom Johnson. Johnson said he would prefer establishing the fund using an ordinance, instead of a resolution, because an ordinance requires two votes and would provide a higher level of scrutiny.

Alderwoman Karen Gundersen Olson said establishing the fund would be an important step in assisting redevelopment projects, particularly downtown revitalization efforts. Olson said downtown property owners often face a challenge and financial burden when they want to fix up older buildings.

In other business, the council approved a change order of $87,612 for the multipurpose arena under construction at the Rushmore Plaza Civic Center for 500 additional club seats at the facility.

The cost is being paid entirely by the Rapid City Rush hockey franchise. Alderman Tom Johnson said the additional seating will make a difference in the profitability of the new arena and the hockey team.

Contact Scott Aust at 394-8415, or scott.aust@rapidcityjournal.com