Submitted By
Rob Sproule, Public Works Director
Reviewed By
A.M. Zayyad, Deputy Village Manager
Agenda Item Title
Title
A Presentation on the Village’s Lead Water Service Line Inventory and Draft Replacement Plan including Potential Financing Options and Impact to the Water & Sewer Fund
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Overview
Overview
Village staff, along with Kaitlin Wright from Baxter & Woodman, will provide an overview of the Village’s Draft Lead Service Line Replacement Plan, updates to the state and federal regulations including the Illinois Lead Service Line Replacement and Notification Act (ILSLRNA) and the Lead and Copper Rule Revisions (LCRR) and funding options and mechanisms that are potentially available to the Village for lead service line replacement and water infrastructure improvement projects. Along with this presentation, Village staff will also review the current financial status of the Water & Sewer fund and present potential financial paths forward to ensure that the Water & Sewer fund can continue to meet its financial obligations into the future.
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Recommendation
Recommendation
No recommendations at this time as this is a presentation.
Background
DRAFT LEAD SERVICE LINE REPLACEMENT PLAN UPDATE
Under the Illinois Lead Service Line Replacement and Notification Act (ILSLRNA) and the Lead and Copper Rule Revisions (LCRR), the Village of Oak Park is tasked with facilitating the replacement of all lead and galvanized requiring replacement (GRR) water service lines connected to its community water system. The purpose of the Lead Service Line Replacement (LSLR) Plan is to identify and locate lead and GRR water service lines, develop strategies to facilitate the replacement of these water service lines, identify funding mechanisms for replacements, and develop design and construction criteria for executing replacements. The provided LSLR Plan is the Village’s first draft and will be revised annually through Spring 2027. The Village will provide opportunity for public comment before the final LSLR Plan is due on April 15, 2027.
The Village has 12, 427 water service lines within its corporate limits and is actively working to confirm the material of each water service line. As of September 30, 2024, the Village has identified 7,245 lead and GRR water service lines with approximately 2000 of these water service lines already upgraded to copper on the Village’s side. At the required replacement rate of 5% per year for 20 years, the Village is required to facilitate the replacement of 363 lead or GRR water service lines annually beginning in 2027. With the average cost for a full water service line replacement ranging from $12,000 to $15,000, the total cost to replace all 7,245 lead and GRR water services will be approximately $97.8M with an annual estimated cost starting at $4.89M in 2024 dollars.
The ILSLRNA and the LCRR do not require a community water system to finance the full replacement of a lead or GRR water service line. Maintaining a water service line is considered a shared responsibility between the Village and the property owner. Village staff are currently assessing what funding options are available for both the Village and property owners. Different funding sources have different requirements associated with utilizing those funds and impact the Village and its residents in different ways.
- State and federal funding sources for lead and GRR replacements are still relatively inconsistent in availability and most require a community to be considered disadvantaged (based on median household income) to be eligible to apply. In addition to varying eligibility requirements, these funding sources often require the community water system to replace the entire length of the lead service line (both public and private side) and provide for reasonable restoration. These funding sources include U.S Congressional Directed Spending, the Illinois State Revolving Fund- Public Water Supply Loan Program, and HUD Community Development Block Grants. In addition to the above sources, Cook County is offering free lead service line replacements to licensed home-based childcare providers through their LeadCare program.
- If the Village chooses to utilize local revenue sources, such as water and sewer rates, issuing bonds, or implementing special levies focused on infrastructure improvements then a cost share program with property owners could be considered. There are a variety of different cost share programs that area communities have been implementing with the following conditions: a community water system pays for the public side and the community water system pays for a set percentage of the private portion up to a capped amount or a community water system pays for a set percentage of the entire service line up to a capped amount.
WATER FUND
At this time, the Village’s 2025 through 2029 Capital Infrastructure Program (CIP) has been reviewed as part of the Draft LSLR Plan. The Village will be required to facilitate replacement of any lead or GRR water service lines that are disturbed as part of these projects. There are a total of 695 lead and GRR service lines identified within the scope of the 2025 through 2029 Road Improvement Projects. While the Village is not required to finance the private side of these water service lines, the Village will need to budget for replacement of the public side as part of these projects.
Lead service line replacements along with water and sewer improvements associated with 2025 through 2029 Road Improvement Projects will notably put a strain on the Water & Sewer Fund. The Water & Sewer Fund is an enterprise fund whose goal is to recover the costs associated with providing the service through user charges, or in this case, water and sewer rates. The annual rate increases that the Village has approved have kept up with the costs associated with providing water but cannot accommodate the significant infrastructure improvements that will be necessary and mandated in the near future. Many of our neighboring communities have already undertaken large water rate increases (see table provided) to cover the increasing cost related to state and federal mandate and aging infrastructure. While the future is still uncertain regarding the financial opportunities that may become available, is now imperative that the Village complete a water rate study to inform water rate increases for fiscal years 2026 through 2030.
The water rate study, planned for 2025, will inform water rate increases for fiscal years 2026 through 2030 by taking an in-depth look at the community water system’s overall revenue requirements and long-term financial plan, the cost of service for each customer class (residential, commercial, industrial), the design of the rate structure, and the system’s current and projected debt service. The recommendations that result from the water rate study can help the community avoid a single large water rate increase that can shock customers, plan for capital improvements, present a transparent plan to lenders and other stakeholders, and communicate with customers about future impacts and rate increases.
While the Village awaits the recommendations from the 2026 - 2030 water rate study, Village staff will be recommending a water rate increase for 2025 to cover costs associated with next year’s rate increase from the City of Chicago, capital infrastructure improvements scheduled for 2025 and 2026 and work to create a healthy fund balance. The American Water Works Association has developed, and routinely updated, more than 190 standards to address all facets of water treatment, supply, and delivery. AWWA G410-23 “Business Practices for Operation and Management” recommends that a municipality maintain a minimum of 25% of their annual expenditures in cash reserves.
Fiscal Impact
No financial impact at this time as this Village staff is only seeking Board feedback.
DEI Impact
The DEI impact of lead service line replacement is multifaceted and can significantly contribute to health equity, economic opportunities, and community empowerment.
- Lead pipes are often found in older neighborhoods, which may disproportionately affect low-income communities. Replacing lead service lines can help reduce lead exposure, leading to improved health outcomes, particularly for vulnerable populations, including children and pregnant women.
- Lead service line replacement projects can create jobs and economic opportunities in underserved communities. As part of the ILSLRNA, the Village is to make a good faith effort to use contractors and vendors owned by minority persons, women, and persons with a disability for not less than 20% of the total contracts.
- Lead exposure is often a concern that communities may not fully understand. Replacement initiatives can include educational components that inform residents about the risks of lead, preventative measures, and the importance of clean drinking water. This knowledge is crucial for fostering informed communities and promoting health literacy.
While considering the benefits of lead service line replacement, it’s essential to consider potential barriers that might exist in the implementation of service line replacements. These challenges can include financial constraints for homeowners or lack of access to information regarding financing options and grant programs. Ensuring that replacement programs are accessible to everyone regardless of socioeconomic status, is crucial for achieving equity.
Alternatives
There are no specific alternatives to consider at this time as Village staff is only seeking Board feedback.
Previous Board Action
N/A
Citizen Advisory Commission Action
N/A
Anticipated Future Actions/Commitments
Staff will be returning in November, 2024 for a first reading of a recommended Water & Sewer rate increase for 2025.
Intergovernmental Cooperation Opportunities
N/A