After costs ballooned for the Lake Michigan water sourcing project, Yorkville had to go back to the drawing board.

To cover the costs, the city recently approved borrowing a $170,000,00 loan from the U.S. Environmental Protection Agency through the Water Infrastructure Finance and Innovation Act (WIFIA).

The city had previously received a WIFIA loan of $139.2 million, but it turned out to be far less that what the city needed to cover the project as prices grew due to contracting issues.

As it currently stands, the city is eyeing about $224.4 million in total project costs.

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

The city also previously approved increasing the WIFIA borrowing cap to $225 million, which city staff believe will enable the city to cover any future cost hikes for the project.

To help offset the costs for the water infrastructure, the city recently approved higher water rates for users. Residents will face about 20% annual increases for at least five years.

“This is the final step in the process of the WIFIA loan approval,” Rob Fredrickson, the city’s finance director, said during the Jan. 13 City Council meeting. “It will be sent to the EPA and closing is anticipated to occur in the next 30 to 60 days. After that, we’ll fully be able to borrow up to $170 million for eligible project costs related to the project.”

Fredrickson said the loan has a 35-year payback from the time of substantial completion, which will take it through 2065.

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.

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.

Infrastructure needs

The city is in a hurry to finish all water infrastructure necessary for the Lake Michigan water sourcing project to receive the first water down the pipeline in the summer 2028.

To make this happen, all parts of the project need to be completed by 2027.

The Lake Michigan water sourcing project is a joint venture with costs shared between Yorkville, Oswego and Montgomery hooking up to existing water mains near Naperville owned by the DuPage Water Commission.

City officials have said the project is necessary because the region’s underground aquifer is being used at an unsustainable rate from the region’s booming population.

As part of the project, Yorkville is constructing new water towers, receiving stations, and working on extending and updating piping and water mains.

This includes the North Receiving Station and Storage Tank Project running up a $18.63 million price tag, which will significantly increase the city’s water intake capacities.

This project includes constructing the Grande Reserve Water Treatment Plant and a two-million-gallon water tank on Eldamain Road, north of Corneils Road.

To begin construction on next year’s legs of the northern project, the city applied for and received a $5.39 million IEPA loan, at a fixed interest rate of 2.16% over 30 years.

The construction also includes a $6.8 million project north of Route 126, east of Wing Road, and south of Illinois Route 71. The site will house the South Receiving Station building and the DuPage Water Commission metering station.