YANKTON, S.D. (KELO) — A state fund capped at $25 million can be tapped, but only as a last resort, for 1.5% loans on local highway projects, the South Dakota Transportation Commission decided Tuesday.
The commission adopted the two-page guidance to help municipal, county, town and township governments that need highway or bridge improvements “for an imminent and impactful economic development project.”
The maximum loan amount is $7 million. Applications go through the South Dakota Department of Transportation.
Commissioner Mike Vehle of Mitchell expressed his reservations several times but he voted for it, after saying a local government must fulfill all requirements before its application reaches the commission.
Commissioner Don Roby of Watertown warned that trying to collect an unpaid debt from a local government could be “very difficult” but he liked that the guidance lets the commission be subjective in reaching a decision.
“I don’t see us doing a lot of these at all,” Roby said.
A borrower must make annual payments on a loan and must fully repay in seven years. Borrowers would need to pledge their shares of federal highway funds or get another government to provide the guarantee.
Commissioner Kathy Zander of Pierre said she was initially nervous but liked the $25 million cap.