A recent study suggests Highland water rates need to be raised each year for the next 17 years to fix part of the water distribution system.
Last year, the engineering firm Hurst-Rosche preformed a study to evaluate Highland’s aging water distribution system, which has many cast-iron pipes and undersized mains. The study found that 25 percent of the entire system required replacement. Estimated cost would be about $14.5 million, equaling $750,000 per year over a 20-year period, said Scott Hunt, the municipal utility chair of Hurst-Rosche.
Hurst-Rosche conducted a similar study for city in 2015. At that time, the firm recommended two, 16 percent annual increases, followed by 3 percent annual increases for the next 18 years. The firm said the extra revenue would cover the $330,000 needed each year for water main replacements.
After the 2015 recommendation, the city did implement the two 16 percent increases and one 3 percent increase. However, the council did not commit to any further rate increases without further study on the scope of major projects in the system, including the replacement of three “critical” mains.
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The three mains are:
▪ the main on Broadway from Illinois 160 to Poplar Street, now estimated to cost $650,000
▪ the main on Illinois 143 from U.S. 40 to Troxler Avenue, estimated to cost $643,000
▪ the “White City” mains along Deal, Cedar, Beech, and Monroe streets, estimated to cost $390,000
Most of the city’s water main problems come from the cast iron mains, according to Director of Public Works Joe Gillespie.
“They’ve been in the ground 60 to 80 years,” Gillespie said.
In 2017, Gillespie said the city had 25 water main breaks, and 50 percent of the breaks happened on the previously mentioned critical mains. Gillespie estimated that each break costs, on average, $1,500 to repair in labor and materials.
“That doesn’t account for loss of water and inconvenience to the customer,” Gillespie said.
City Manager Mark Latham also said many of the breaks occur in commercial areas, which he said is a huge disadvantage for business owners, especially restaurants trying to operate during boil orders.
The rate options
In its most recent study, Hurst-Rosche updated its 2015 work, which was based on the city receiving a 20-year Illinois Environmental Protection Agency loan.
The firm re-evaluated the replacement project based off of two different annual rate increases over the next 17 years. Hunt said the firm looked at both 1.5 percent and 3 percent annual increases.
According to the study, a 1.5 percent annual increase would:
▪ support $500,000 in annual debt service for water main replacements
▪ support about $8.15 million worth of total project costs
▪ replace 50 percent of the total replacements recommended in 2017
A 3 percent annual increase would:
▪ support $690,000 in annual debt service for water main replacements
▪ support $11.2 million of total project costs
▪ replace 70 percent of the total replacements recommended in 2017
Hunt provided two averaged monthly water bill estimations based off of the rate increases. He said current monthly water bill average about $31.39, based on the residential usage of 3,500 gallons. Based on that estimation, a 1.5 percent would raise utility bills about $9 over the 17-year period. A 3 percent increase would bring the average bill to about $52 in 17 years.
“But neither option addresses the whole 112,000 lineal feet,” Hunt said.
Questions asked to the city
Hunt said City Council members needed to ask themselves two questions:
▪ What size of project and rate increase would they be comfortable with?
▪ And how quickly does the city want to pursue the critical mains?
“It really, truly boils done to what everyone is comfortable with,” Hunt said.
Hunt relayed that IEPA projects usually take about 18 months to get to bidding. That could mean construction might not start until at least summer of 2020.
He recommended that, if the council does not want to wait, they could to raise rate and/or sell bonds to pay for construction — or at least begin construction while they waiting on IEPA funding.
Councilwoman Peggy Bellm said she would like to see all three critical areas addressed immediately and would like to pursue the loan afterward.
Councilman Rick Frey agreed with Bellm. He liked the loan because of its “attractive” interest rate.
Councilman Aaron Schwarz also agreed, though he said he wanted to be careful about raising the rates.
“I don’t want to preemptively increase it more than we need to,” Schwarz said.
On direction from the council, Latham said he will present alternative methods of funding for discussion at a future council meeting, and the loan will be discussed later.
“We will come back and probably see where the council wants to go,” Latham said.