Yorkville plans $11 million bond issue for water projects

The water tower in Yorkville's Bristol Bay subdivision

YORKVILLE – As plans move forward to bring Lake Michigan water to Yorkville, the city is facing up to the monumental challenge of how it will pay for the $120 million project.

Last year, the city hiked water rates and more increases in the coming years are likely. The city budget for this fiscal year includes $10 million for work related to the water system.

These projects include almost $4 million to replace leaky water mains and about $3.5 million to rehabilitate a well.

There also is about $2 million for other work directly related to the plan to connect the city with the DuPage Water Commission’s pipeline. The new pipeline will extend from the current terminus in Naperville to bring Lake Michigan water to Oswego, Montgomery and Yorkville.

To pay for this year’s work, the city of Yorkville is planning to issue bonds, for a maximum of $11 million.

Finance Director Rob Fredrickson told the Yorkville City Council on May 30 that the city will need to produce about $625,000 a year in revenue to pay off the bonds over 30 years.

The city administration has recommended aldermen approve a 1% “places of eating tax,” which would include drinks in restaurants and taverns along with delivered meals, that is expected to produce about $700,000 a year.

However, under the current budget which started May 1, the tax would not be implemented until six months into the fiscal year, producing about $350,000, or aldermen could continue phasing in water rate increases, with the administration budgeting that proposal at $350,000, as well.

In order to make the $11 million bond sale, the city will need to pledge revenue sources for the repayment schedule, Fredrickson said.

As currently written, the bond sale tentatively includes the restaurant meal tax, but this could be changed.

“Even though this tax is specified as a revenue pledge for the proposed bonds, the passage of the authorizing ordinance does not require the city to adopt a places of eating tax,” Fredrickson said.

However, the council will need to decide whether it wants to impose the meal tax or make another round of water rate increases before approving the bond issue on July 11.

“The actual implementation of the places of eating tax could be deferred to a later date” in the current budget year, Fredrickson said.

Last year, the city increased its base water rate for the first 350 cubic feet of water consumed from $17 to $24.

A “volumetric” rate for every 100 cubic feet of water over the first 350 was increased from $4.30 to $4.80.

The typical residential household uses about 1,200 cubic feet of water for each 60-day billing cycle, for a total cost of about $64.80.

The precise increase in the water rate this year, if aldermen choose that option, has yet to be determined.

The goal of the water main replacement project is to get the city’s water loss rate down to less than 10%, which is a requirement for communities getting their water supply from Lake Michigan. The city currently loses about 14% of its treated water supply through aging pipes that date from the 1970s.