Lead Service Line Replacement Program Copyrighted
September 18, 2023
City of Dubuque Action Items # 03.
City Council Meeting
ITEM TITLE: Lead Service Line Replacement Program
SUM MARY: City Manager recommending approval to apply for this program in 3
phases to complete replacement of lead service lines in 575 homes,
maintaining the FY25 budget projection of a 5% water rate increase, but
other factors might impact this rate increase, however, that would be
determined through the FY25 budget process conducted in April of
2024.
SUGGESTED Suggested Disposition: Receive and File;Approve
DISPOSITION:
ATTACHMENTS:
Description Type
MVM Memo City Manager Memo
Dubuque
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TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Lead Service Line Program
DATE: September 15, 2023
At budget adoption, the City contemplated a total of$32.2 million in lead service line projects
to benefit 3,300 homes in low income Dubuque neighborhoods. At that time, loans issued by
the lowa Finance Authority under the Drinking Water SRF (DWSRF)/ Federal Bipartisan
Infrastructure Law Program for such projects were thought to be 90% forgivable, resulting in
$3.2 million in permanent financing for the City. A summary of rates, projects, coverage, and
cash projected at that time through the Fiscal year 2024 City of Dubuque budget process is
provided below.
.
Rate Increase 8.��°r6 5.00°r6
Total �RF Lead Lines 5,348,15� 1�,727,5�� 32,196,000
Forgivable Portion {9�°r6� 4,813,335 9,654,75� 28,976,400
Permanent Portion {1�°r6� 534,815 1,�72,75� 3,219,600
Annual Debt �overage 1.65 1.45
Estimated �ash Balance 31°r6 27°r6
Recently, the City has been informed by the State of lowa that the amount of loan
forgiveness has been reduced from 90% to 49%. To reduce the chance of the rate
increasing more than 5% in FY25, the City could fund lead service line replacement for 575
homes instead of 3,300 homes in a total amount of $5.7 million, including a City share of $3.2
million. The Engineering cost of$616,000 is not eligible for loan forgiveness.
The project would be broken into three phases over three years with final completion of all
575 homes by December 2026. Each phase of approximately 195 homes will be separate
applications by the City and there is no guarantee of any approvals from the State.
While I am not recommending this course of action the City Council could stay with the
original plan of 3,300 homes. Rather than reduce the scale of the project, the City could
revise user rates to fund the increased debt service costs that result from reduced debt
forgiveness. If the City instead chooses to keep the original 3,300-home scope of the project,
rates will need to increase to accommodate $17.5 million in permanent debt resulting in an
additional 3% rate increase in FY25.
The City of Dubuque has a combined 5,756 lead service lines (2,451 service lines for full
replacement and 3,305 service lines for partial replacement) serving properties throughout
the community. The lowa Drinking Water State Revolving Fund (DWSRF) Program
administers the Lead Service Line Replacement Fund available through the federal
Infrastructure Investment and Jobs Act (IJJA), otherwise known as the Bipartisan
Infrastructure Law (BIL). This funding provides an opportunity to replace lead service lines
that are in low-income neighborhoods with the federal government forgiving 49% of the
money borrowed by the city. While these lead service lines do not generally present a health
hazard because the city treats water with phosphates to coat the pipes it is in the best
interest of the community to take advantage of this forgivable loan program to eliminate some
lead service lines.
I respectfully recommend Mayor and City Council approval to apply for this program in 3
phases to complete replacement of lead service lines in 575 homes. This will maintain the
FY25 budget projection of a 5% water rate increase. Other factors might impact this rate
increase but that would be determined through the FY25 budget process conducted in April
of 2024.
�
Mic ael C. Van Milligen
MCVM:sv
Attachment
cc: Crenna Brumwell, City Attorney
Cori Burbach, Assistant City Manager
Chris Lester, Water Department Director
Anderson Sainci, Director Office of Shared Prosperity and Neighborhood Support
Gus Psihoyos, City Engineer
Jennifer Larson, Chief Financial Officer
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