When bad news came down the pipeline that costs for the Lake Michigan water sourcing project are running around $100 million over projections, Yorkville went back to the drawing table.

While engineers are still devising ways to bring costs down, a larger loan is needed to help the city cover their end of the project. The city shares costs for the near $400 million project with the partnering towns of Montgomery and Oswego.

Before finding out about the cost increases, Yorkville approved water rate hikes for residents of around 20% for five years. City officials are currently “re-evaluating the plan” to determine if larger increases are necessary.

In the meantime, Yorkville is likely applying for a larger Water Infrastructure Finance and Innovation Act (WIFIA) loan from the U.S. Environmental Protection Agency.

Yorkville is currently eyeing $224.4 million in project costs, including all eligible projects, up from previous estimates of around $170 million.

A WIFIA loan can support $179.5 million of those costs, leaving the remaining 20% to be financed through Yorkville’s bond issuance and Illinois E.P.A. loan proceeds.

The city previously received a WIFIA loan of $139.2 million, far less than what is currently needed.

The city council is being tasked with increasing the WIFIA borrowing cap to $225 million, which city staff believe will enable the city to also cover any future cost hikes for the project. However, city staff currently project only $170 million in borrowing will be necessary.

City staff favor using WIFIA loans to cover the project’s costs because they carry low-interest rates. They also allow deferred repayment, with interest payments postponed during construction and up to five years after, according to city documents.

In consideration of any future water rate hikes, the city must cover 145% of the WIFIA loan debt and the 3.5% interest rate to meet the obligations of the loan.

Under the current approved water rate 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 those five years.

City council is discussing the more expensive loan and possible water rate hikes at the Sept. 23 meeting at City Hall.

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