South Dakota rushing to invest $700 million in ARPA funds on water projects

PIERRE – South Dakota lawmakers, state agency leaders and water system managers are hustling to spend roughly $700 million in COVID-era funding on water and sewer projects before the federal government claws it back.

The money was part of the American Rescue Plan Act (ARPA), a $1.9 trillion aid package Congress and the Biden administration passed in 2019 to help states recover from the pandemic.

ARPA rules require states to allocate all the funds by the end of this year and spend it by the end of 2026 or ship it back to Washington for possible usage by other states.

The deadlines, coupled labor and materials shortages, have instilled a sense of great urgency among the Legislature and the state Department of Agriculture and Natural Resources (DANR), which is responsible for permitting water and sewer projects.

“Hundreds of millions of ARPA dollars are still unspent, so until it’s done, none of us can feel comfortable,” said state Sen. Helene Duhamel, R-Rapid City. “It’s caused me some sleepless nights. And until everything is resolved at the end of the session, it’s a nail-biter.”

The state has allocated $600 million toward more than 200 one-time individual water and wastewater system upgrades and expansions, but less than a third of it has been spent. The remainder is in jeopardy unless state lawmakers take fast action and those who will use the money spend it before the deadlines.

South Dakota lawmakers are currently debating how to allocate the remaining $94 million of ARPA water funds. At the start of the legislative session, $131 million of ARPA funds overall were unallocated.

But those working on water and sewer system improvements are heartened by a new spending approach unveiled by DANR this legislative session.

Rather than accept proposals for any new qualifying projects at this late date, the agency instead proposes that the state use the final $94 million to boost spending on projects that already were approved in the original 2022 spending plan.

Andy Bruels of the DANR said he is confident that the strategy will enable the ARPA funds to be spent before the deadline.

"We’re not really concerned at all in getting those done," Bruels said in an interview with News Watch. "By working with existing projects, there’s no concerns in my mind."

Two other water-related funding measures moving through the Legislature this session

Senate Bill 66 would allocate $13 million in ARPA funds to improve or upgrade water and sewer systems at state-owned facilities, including replacing aging sewer lines at Sylvan Lake Lodge in Custer State Park and fixing a retention pond at Mitchell Technical College that is prone to overflow.

Senate Bill 7 and Senate Bill 16, which are similar, would provide funding from fees and other sources to complete up to a dozen water, irrigation and flood control projects at a cost of nearly $20 million. Those measures are part of the annual state water project proposals known as the State Water Resources Management System, or SWRMS. Gov. Kristi Noem signed SB 7 into law earlier this session.

Among those projects are an irrigation upgrade in Belle Fourche and flood control projects in Sioux Falls, Vermillion and along the Big Sioux River corridor. Partial funding is also included for studies of three projects that would tap the Missouri River for drinking water for northeastern South Dakota and the greater Sioux Falls and Rapid City regions.

The DANR's 2022 ARPA spending plan included 207 water and sewer projects that so far have used about $180 million of the $600 million in federal grants allocated, Bruels said. Those projects, which also will be the focus of the proposed $94 million in Senate Bill 53 from the current legislative session, have been provided with more than $1 billion in low-interest state loans to reach completion, he said.

The project list is long and covers cities and towns from Webster to Yankton in the east and from Isabel to Oral in the west. The largest grants are for wastewater system rebuilds in Aberdeen, Brookings, Yankton and Rapid City, where a $44 million ARPA grant will help pay for a $145 million wastewater project, the largest on the list.

Small towns will also benefit, including from a $25,000 grant for water system improvements in Canova, a $45,000 grant for new water meters in Presho and a $150,000 grant for system improvements in Alexandria. As a result of the grant program, taxpayers and rate-payers will see far smaller special assessments for utility improvements on their monthly bills.

The Randall Community Water District is using millions in federal funds to provide a new source of drinking water from the Missouri River.

Headquartered in Lake Andes, the system has been allocated two ARPA grants totaling $14 million and more than $80 million in low-interest state loans that will offset the costs of more than $100 million in improvements and expansions, according to general manager Scott Pick.

The district will receive a $2.7 million ARPA grant to help pay for $9 million in internal system improvements. Meanwhile, the district has been allocated an $11.3 million ARPA grant to help pay for a $95 million, two-phase plan to build a new 70-mile water line from its Missouri River intake site at Pickstown to Stickney and finally to Mitchell, Pick said.

The new water line will provide a secondary, redundant water source for Mitchell, he said.

Sen. Reynold Nesiba, D-Sioux Falls,, said the ARPA funds for infrastructure will benefit South Dakota for generations, including the spending on water and wastewater projects as well as funding for workforce housing and a new state medical lab.

“We’ll look back and see that regardless if you like him or not, Joe Biden has been one of the most consequential presidents for the state of South Dakota in our history,” Nesiba said at the SDNA press conference. “To have $700 million for water and wastewater treatment funds ... It is once-in-a-generation funding.”

— This article was produced by South Dakota News Watch, a non-profit journalism organization located online at sdnewswatch.org.

This article originally appeared on Sioux Falls Argus Leader: SD rushing to invest $700 million on water projects