RAPID CITY, SD – A move to pause the Rapid City Common Council’s consideration to hire outside counsel to pursue unpaid utility bills for several Tzadik Property Management properties failed Monday night but not without discussion about city processes and costs.
At the regular council meeting Monday night, council woman Laura Armstrong proposed pausing action on the item until a city working committee could review the process that allowed the debt to get into the six-figure range and what the city could expect to recuperate should it pursue action against the management company that owns several properties including Star Village.
“So, they owe us hundreds of thousands of dollars. Do we know how much money it’s going to cost to hire an attorney? How much is going to be for out of court, in court services?” Armstrong said. “What is our return on investment? I think we’re going to get pennies on the dollar if anything.”
As of August, outstanding utility balances accrued by Tzadik were:
- Mountain View Estates LLC – $83,814
- Oxford Apartments LLC – $24,649
- Dakota Flats LLC – $2,721
- Tzadik Lacross Apartments LLC – $141,950
- Tzadik Rapid City Portfolio LLC – $390,070
Councilman John Roberts disagreed with Armstrong, saying legal action was the only way to recoup some of the lost revenue from unpaid utilities.
“We can sit and beat our heads against the wall all day long to figure how to make this never happen again and it will still happen again,” Robert said. “The biggest problem that we have as a city, and the reason it got to this point now, is because we’ve only got one option – they start getting behind, we turn off their water. Do you want to turn off the water to 300 residents? That’s impossible to do.”
Responding to a question about the cost of litigation, Carla Cushman, City Attorney, City of Rapid City, said the agreement for outside counsel was capped at $50,000. What the city could expect to collect from litigation was unknown, she said.
“It’s very difficult to predict the results of litigation, how expensive it’s going to be, and what the results are going to be,” Cushman said. “But this is relatively straightforward and I feel confident that this would be successful in retrieving some money on behalf of the city and our enterprise funds.”
The council voted 8 to 2 to authorize the city attorney’s office to hire outside counsel to pursue collection of just under $650,000 in unpaid water, sewer, and trash collection bills, interest and penalties on unpaid amounts from several Tzadik managed properties. Councilman Bill Evans and Armstrong voted no.
There are just more than 100 accounts that are included in properties covered by the Council decision.
The timeline for resolution in the matter is unclear. Charges for unpaid utilities in the Tzadik Rapid City Portfolio LLC, which includes Star Village properties, have been accumulating since after Tzadik filed for bankruptcy in April 2025.
