Sioux Valley Dakota First Nation is forging ahead with a new development along the Trans-Canada Highway, even though a neighbouring municipality has withdrawn its support for the project.

The First Nation, which is 240 kilometres west of Winnipeg, has started building a multimillion-dollar gas station and commercial development at the corner of highways 1 and 21, nine kilometres south of the reserve.

"We have a lot of young people that are looking forward to employment, looking forward to opportunities," Chief Vincent Tacan said Tuesday. 

But a disagreement between the community and the neighbouring rural municipality of Sifton over a service agreement has plagued the project. The RM of Sifton withdrew its support for the development last month after Sioux Valley wouldn't sign a service agreement with the municipality.

Tacan said they initially hoped the RM would extend water and sewer service and fire protection to the development, but he was later told that the RM couldn't offer water and sewer. 

Vince Tacan

Sioux Valley chief Vincent Tacan speaks with CBC on Tuesday, March 1. (Riley Laychuk/CBC)

Tacan said he was presented with a draft agreement that covered fire protection seven months after he requested it, but he turned down the draft and asked that changes be made. 

The lack of a fire protection agreement means the RM's firefighters won't go to the new development if there's a fire. Sioux Valley has its own fire department nine kilometres away on the First Nation. 

RM of Sifton Reeve Rick ​Plaiser said the RM's council withdrew its support for the project after Sioux Valley didn't sign the agreement. 

"We hustled to get that agreement made up and [Sifton] signed it prematurely," he said.

Plasier said council supports any economic development in the region, and he is in favour of both sides coming back to the table. 

Tacan said the withdrawal of support didn't come as a surprise.

"I kind of expected something," he said. "I was kind of skeptical at the start."

Despite the lack of an agreement, construction is moving forward, Tacan said. 

"It doesn't really matter. I'm going to move forward regardless," he said.

"Right now we are working on a first phase, the Petro-Canada and the commercial building," he said. "We're hoping it will house VLTs and some office space [as well]." 

Sioux Valley will keep water and sewage waste in holding tanks on the property until a permanent solution is found, he said. 

"This isn't something that is just hoping to benefit Sioux Valley. It's going to benefit the whole area," Tacan said. 

He said they hope to have the gas station open by July and the rest of the development completed later in the year.