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A Resolution Approving a Lead Service Line Replacement Pilot Program in 2026 and Directing Staff to Prepare the Necessary Budget Amendment in an Amount Not to Exceed $607,500 and Authorizing Its Execution
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Introduction
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As part of the requirements associated with the Lead Service Line Replacement and Notification Act (LSLRNA), the Village is required to implement an affordable pathway for property owners to replace the private side of their lead or galvanized service lines. One pathway towards achieving an equitable, affordable mechanism for residents, would be implementation of a low interest, installment loan that would be billed directly to residents via their water bills. Village staff are proposing a pilot program for this year specifically targeting those properties impacted by the Water & Sewer Improvement projects.
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Recommended Action
Approve the Resolution.
Prior Board Action
There is no prior Board action associated with this item.
Background
As part of the requirements associated with the Lead Service Line Replacement and Notification Act (LSLRNA), the Village is required to implement an affordable pathway for property owners to replace the private side of their lead or galvanized service lines. After reviewing eligibility requirements associated with available grant opportunities, the Village found that any available grant funding would be limited to small, strategic project areas that would not overwhelmingly support the average Oak Park property owner. Many Oak Park property owners have already replaced their private side service line on account of leaks, property rehabilitation/renovation, or previous year’s Water & Sewer Improvement projects without any assistance from the Village. One pathway towards achieving an equitable, affordable mechanism for residents would be the implementation of a low-interest, installment loan that would be billed directly to residents via their water bills.
Public Works staff studied the possibilities associated with offering an affordability program that could potentially fund itself year over year by fronting the initial investments from the Water & Sewer fund and then having all future installment payments revolve back into the same fund for future replacements. Details of the Lead Service Line Replacement Pilot Program are as follows:
Eligibility Requirements: The program would only be available for properties with existing lead or galvanized service lines on the private side. Properties with existing copper service lines would not be eligible for this program. The program would only be offered to those properties impacted by Water & Sewer Improvement projects in which the Village is commencing the work requiring the replacement of the private side lead or galvanized service line. The loan is only available for properties utilizing the Village’s contractor to perform the replacement at the published unit costs.
Terms: The current unit pricing being offered is $7,500 for a 1” copper service line, $10,000 for a 1-1/2” copper service line, or $12,000 for a 2” copper service line. This proposed loan would be paid over 72 months at a 2.16% interest rate. This is the same interest rate provided by the IEPA to municipalities utilizing the PWSLP and breaks down to $111.16 per month for a 1” copper service, $148.21 per month for a 1-1/2” service, and $177.85 per month for a 2” service.
Delinquent Payments: Should a property owner fall behind or become delinquent on payments, the Village would not shut off the property’s water; however, the balance will continue to accrue interest and be collected at the time of sale or closing of the water account.
Revolving Fund: As payments are collected, they will be put back into the fund to allow for future lead service line replacements. If successful and the Village Board chooses to move forward with full implementation of the affordability program, it is estimated that the program could eventually fund itself without the need for any investment from the Water & Sewer Fund.
Timing Considerations
In order for this pilot program to effectively assist the Oak Park residents facing lead service line replacement as part of the Water & Sewer Improvement projects slated for this year, timely decision-making surrounding an affordability program is imperative. Construction is scheduled to begin in June 2026.
Financial Impact
Based on current project information, there are an estimated 81 properties with lead or galvanized service lines requiring replacement as part of the 2026 Water & Sewer Improvement projects: 33 properties on N. Euclid and 48 properties on S. Scoville. The Village’s standard replacement size is a 1-inch copper service line, with a current unit cost of $7,500 per replacement. If all 81 eligible properties participate in the pilot program, the maximum initial cost to the Water & Sewer Fund would be approximately $607,500.
This initial cost would be funded through the Water & Sewer Fund balance, subject to a budget amendment prepared by Village staff and presented to the Village Board for consideration later this year. The program is structured as a low-interest installment loan, with participating property owners repaying the cost over 72 months through their water bills. As repayments are collected, funds would be returned to the Water & Sewer Fund and could be used to support future lead service line replacements.
Because participation levels are not yet known, the final financial impact may be lower than the maximum amount identified above. The primary near-term impact is the upfront use of Water & Sewer Fund balance, while the longer-term impact will depend on participation, repayment performance, and the Village’s ability to revolve collected payments into future program years.
The financial implications of this pilot program should also be considered within the broader context of the ongoing water and sewer rate study being prepared by NewGen. While this pilot program is limited to properties impacted by the 2026 Water & Sewer Improvement projects, future decisions regarding lead service line replacement funding, affordability mechanisms, and cost recovery may intersect with the rate structure and long-term revenue requirements currently under review.
Staff is also aware that other communities, including Skokie, have implemented or evaluated different approaches to lead service line replacement funding and customer assistance. Given that the proposed action is limited to a 2026 pilot program, a broader comparison of program models, funding strategies, and long-term rate impacts would be more appropriately addressed as part of future policy discussions, particularly if the Village Board considers expanding the program beyond the current pilot scope.
Operations Impact
Additional time will be needed by Public Works, Law, and Finance staff to disseminate the details surrounding the affordability program, develop the agreement between the Village and property owners utilizing the affordability program, and create the pathway within the BS&A finance system to invoice residents that choose to participate in the program.
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 have the potential to 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 is essential to consider potential barriers that might exist in the implementation of service line replacements. These challenges can include financial constraints for homeowners or a 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.
Community Input
There has been no community input given in relation to this item.
Staff Recommendation
Approve the resolution for the lead service line replacement pilot program.
Advantages:
• This action meets an affordability requirement of the Lead Service Line Replacement and Notification Act.
• Offers assistance to property owners who may not have the means to otherwise afford the replacement of the lead service line.
Disadvantages:
• This action requires a substantial upfront investment from the Water & Sewer Fund.
• Potentially puts the Village in a risky position regarding default of the loan, which could result in additional legal fees to collect the balance.
Alternatives
Alternative 1:
The Board can delay action to gain additional information.
Advantages:
• Village Board members would be presented with the additional information they requested to make a more informed decision.
Disadvantages:
• Depending on the length of the delay, this could leave property owners impacted by the 2026 Water & Sewer Improvement projects without a mechanism for financial assistance.
Alternative 2:
The Village Board could reject the proposed Lead Service Line Replacement Pilot Program.
Advantages:
• This action can result in initial investment cost savings for the Water & Sewer Fund.
Disadvantages:
• Property owners impacted by the 2026 Water & Sewer Improvement projects will be left without a mechanism for financial assistance.
Anticipated Future Actions
Should this Lead Service Line Replacement Pilot Program be successful, Village staff would return to the Village Board in future years to request approval of the necessary funds to cover lead service lines anticipated to be impacted as part of the Water & Sewer Improvement projects for that calendar year.
Prepared By: Erin Duffy, Deputy Public Works Director
Reviewed By: Jack Malec, Assistant to the Village Manager
Approved By: Kevin J. Jackson, Village Manager
Attachment(s):
1. Resolution