RAPID CITY - Rapid City is considering spending up to $1 million from its .16 utility fund to build a booster station, water main and 750,000-gallon water reservoir near St. Martin's Drive.

The request was made on behalf of a planned development of the Good Samaritan Society-St. Martin's Village, a senior living campus planned for about 200 acres of land being acquired from St. Martin Monastery by the Evangelical Lutheran Good Samaritan Society.

The project would improve water service for the St. Martin's development but would also help improve water pressure for areas outside the development.

Marcia Elkins, city growth-management director, said the city's Catholic school system and Catholic diocese have been reported to be interested in buying other land from the convent for future expansion of the Catholic school system and the diocese.

The public works committee gave initial approval to the project, although several council members expressed concern about using the .16 fund to pay for the project with no guaranteed way of repaying the fund.

The .16 fund was created a few years ago using the additional sales taxes generated when the city increased its sales tax rate from an old rate of 1.84 percent to a new rate of 2 percent.

The city used the revenue to bond for about $18 million, of which $4 million was used to subsidize sewer rates over several years. The remainder was put into a special fund to be used as a revolving loan fund for infrastructure projects.

Alderman Tom Johnson expressed concern that only $2.1 million remains in the .16 fund but said he is more concerned that the St. Martin's project repayment is ambiguous.

"We 'may' include this on a future bond sale. That concerns me," he said. "No matter what we do, I think this fund should be repaid."

If the council agrees to fund the project, the $1 million would be repaid by including it in a potential future bond issue if and when the city moves ahead with building a second water-treatment plant for the Jackson Springs water gallery.

Johnson isn't sure whether the council will agree to tack on another $1 million to the Jackson Springs bond issue, considering it is likely to be a large bond as it is.

"This fund has been a tremendous fund. When we first got it going, it had about $18 million. All of a sudden, we're down to about $2 million," he said. "That's a great problem to have. We've seen a lot of growth; it's been a tremendous success. I just hope that if the council decides to spend this money that we have the intestinal fortitude to repay it."

Alderman Bill Okrepkie agreed, saying the city has other priorities and needs higher than those in the St. Martin's area. He also suggested using other city funds, such as the capital improvements fund, to pay for the project.

"Why are we tapping our limited, very carefully spelled out uses for .16 to pay for this particular project?" he asked. "I applaud what they're doing out there, and I know the sisters want to sell the property, and that's good. It's not that I'm against the project. I'm just against using .16 money to make this happen."

The full council will talk about the proposal at its regular Monday meeting.

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