Bad news down the pipeline – Lake Michigan water project costs may rise by $100M for towns like Yorkville

Yorkville residents recently received 20% increases on their water bills to help pay for the $100 million Lake Michigan Water sourcing project. The 20% hikes are projected annually for at least the next five years.

There’s just one problem.

The figures for the project are coming down the pipeline and costs are ballooning, with some projections $100 million over initial estimates.

That leaves Yorkville in a sticky situation. The city has already received federal loans to help cover a big chunk of the costs. If engineers can’t get the costs down, the city may need to re-examine the water rate hikes with possibly higher increases.

The DuPage Water Commission put out bids for the first section of the pipeline project that is connecting Yorkville, Oswego and Montgomery to pipelines currently under Naperville. The estimated cost of the first section of construction was $41 million, but the lowest bidder came in at $69 million.

With just the first part of the project $28 million over budget, when extrapolated out to all parts of the project, the total $300 million project between the communities is now projected at $400 million.

The engineers can come up with some solutions to chip away at costs, but ultimately the final price tag will still be much larger than the communities anticipated.

“It is a double digit percentage increase on what’s been previously communicated to us and to the public,” Yorkville city administrator Bart Olson said. “Those figures are cost estimates. In the next couple days, we’ll be sitting down with the Oswego and Montgomery staff trying to figure out if we agree with those cost estimates for future contracts or not.”

What’s next?

The next section on the project is bidding out in September. The project is divided into six different parts, all needing to be bid out to contractors, beginning under Book Road in Naperville.

Through value engineering, the designers of the project have taken the $69 million figure and chipped it down to around $49 million. A couple clever engineering solutions could reduce a couple more million dollars, but the numbers are still over original estimates.

To meet the project’s operational deadlines, construction in Yorkville will need to start within the next few weeks. That leaves the project managers little time to figure out potential cost-saving solutions.

“The reasons for the costs are between what they think is contractor availability with other construction projects in the region, the Joliet project specifically, and the nature of construction inflation in general,” Olson said. “Hopefully, we can figure out something or we’re going to have to start communicating different numbers.”

Joliet is looking to also link onto Lake Michigan water in 2030.

For the more than $100 million federal Water Infrastructure Finance and Innovation Act program (WIFIA) loan, the city has to cover 125% of the debt and the 3.5% interest rate.

As of now, the previously approved water rate hike schedule has not been changed. Olson said the city is waiting to see what savings the engineers are able to create before discussing any possible changes to the town’s water bills.

Olson expects more clarity on future projections in the next month.

Costs for residents

Yorkville joined the other communities on the Lake Michigan water project because the underground aquifer the town currently sources water from can no longer sustainably accommodate the region’s booming population.

Under the current approved plan, the average Yorkville home experienced a 21% increase from a $106 bi-monthly rate to $128. In five years, they will pay a $210 bi-monthly rate. Over a five-year period, the average home will pay an average annual bill of $926, for a total of $4,630 over that five years.

Over the five-year period, restaurants will have an average annual bill of $6,987, for a total of $34,936. Large commercial users will have an average annual bill of $47,394, with a total of $236,968.

All rate hikes combined, the city is projecting a 25% increase in collected water revenues from $5,6000,000 to $7,000,000 over the next year. The following year also would see a 25% increase in revenue, followed by three consecutive years of 20% increases, for a total of $15,200,000 in fiscal 2030.

After all pipes are constructed and connected, the first Lake Michigan water should reach Yorkville residents by 2028.