Water Infrastructure Committee Report - Extension of Water Mains

The Water Infrastructure Committee was formed in 2021 in response to continuing resident inquires in order to facilitate a broader open discussion on a community level regarding the extension of water mains, and a more detailed review of the financial impact to residents in the areas that do not have access to the water system. The Committee divided its work into three distinct areas of research as described below: 

• Civil engineering: is it possible to construction water main extensions to unserved areas, and what are the estimated costs of construction?
• Legal issues: can we construct larger SSAs through contiguous properties therefore creating a financial mechanism to spread (and so lowering) construction cost across a larger base
• Financial engineering: how can costs be allocated without creating material financial hurdles to participation and without undue reliance upon Village Capital Reserves?

In May of 2022, the Board approved work by the Village Engineer on a phase 1 topographical study of existing conditions, and a water supply modeling study. Further, the Board authorized the Committee to conduct a survey of hypothetical Special Services Areas (SSAs) of the groups of residents without access to municipal water.

The Survey

The Committee focused first on the survey to understand the views of residents in order to determine how best, or whether or not, to move forward with additional phases of engineering.

The survey was constructed by Dr. Michael Baumann, a former Trustee with extensive professional credentials in data collection and analysis.  The targeted groups of residents – the hypothetical SSAs - were determined by identifying those properties without access to the Village water system and determining contiguous groupings as required to construct an SSA. The hypothetical SSAs were given names based on the general geographic area:

• Indian Trails
• Vernon Woods
• Duffy

The Indian Trails and Vernon Woods delineations were fairly evident. The construct of the Duffy area was more challenging as it spans neighborhoods off Duffy Lane to properties further south along Saunders Road. For purposes of this exercise, however, these 3 areas provided insight into where resident desire for municipal water exists.

The survey was originally sent only to residents of the 3 hypothetical SSAs using randomized codes to ensure confidentiality of response. As a result of resident comments, the survey questions were published on the Village website, and made widely available. Responses received as a result of this publication were not part of the confidential coding system. A copy of the survey is attached to this memo.

Without Village participation, a communication was anonymously sent to residents in the Vernon Woods area that contained some incomplete and erroneous information. Dr. Baumann controlled for these events in his analysis. It should also be noted that during this time, residents of the Indian Trails area were present at Board meetings to voice their sentiments against municipal water, or any “forced” connection to municipal water mains, indicating that they had a petition signed by a majority of properties in the area. No petition was filed with the Board.

Survey Results

The analysis of the survey results was completed and received by the Committee in January, 2023. Generally, the findings were:

• There was a high degree of participation, and so a high degree of confidence in the survey results.
• There was no majority of opinion taking all 3 areas together.
• When taken individually, the responses indicate that a majority of Duffy residents were likely open to receiving municipal water; in Vernon Woods, the views on municipal water were more evenly mixed, between those interested and those not interested; and Indian Trails showed a majority of residents likely to oppose municipal water. Dr. Baumann discussed the nuances of inferring degrees of support and statistical levels of confidence in a presentation to the Board.
• Cost emerged as the largest factor in the municipal water decision.

The Committee engaged in discussion regarding various aspects of a water infrastructure project to include:

• Fire Safety. The survey supported the fact that residents were aware of the distance to hydrants and that despite fire district plans to fight residential fires, there could well be serious loss incurred.
• “Forced” Connections. The Committee assured residents that no one would be compelled or forced to connect to municipal water.
• Community Expense. Given that survey results indicated cost emerged as a critical factor in the decision regarding municipal water, financial estimates to include use of Village funds should be explored as such information could well have a material effect on main construction.
• Timing. The time to form an SSA, complete engineering plans, bidding for services, and weather all point to the fact that installing water mains will usually require a year or longer to implement, depending on the size and location of the SSA.

Survey results presented by Dr. Baumann to the Committee in January of 2023 were also presented to the Board at their meeting in February of 2023 where community comments could also be heard. The Committee was of the opinion that the results of the survey indicated that it may be most useful to focus on the Duffy area for continued action of the formation of an SSA and financing options given the expressed interest in connecting to municipal water.

Further it was determined that the proposed and approved topographical and water supply modeling study was not needed as a conceptual study done earlier, and recently updated, was sufficient for current purposes.

Committee Meetings: July 25, 2023, October 11, 2023 and January 19, 2024

The Committee continued to meet to focusing their attention on the so-called Duffy area. From the notes of the October meeting, cost estimates provided by the Village Engineer of a likely amount to be shared among all the 64 properties in the proposed SSA was (at that time) roughly $7,100 per year for 15 years (the term of a possible SSA bond) which amount did not include the additional cost of individual property connection. The Village’s ability to share in the cost rose as critical issue.

Generally, the meeting of January 19 was called to review the status of the project given recent Village financial projections. Key discussion points from that meeting were:

• Construction costs for water main extensions (for the entire unserved area of the Village) increased from an estimated $12 million to $20 million, including “soft costs” as of June, 2023.
• The engineering estimate used approximately $400 per lineal feet.
• The original 3 broad groupings of unserved areas could be redivided to some extent based on interests of owners. The different groupings have different cost structures due to geographical differences that arise when greater lengths of water main are needed to serve fewer homes. The nature of this disparity means that certain portions of the Village will always be more costly to serve. Relying solely on the owners within an SSA to fund costs means that certain owners will be at a disadvantage when trying to assemble a consenting majority. One idea that was explored was having each SSA owner commit to a fixed contribution for the water expansion, with the Village picking up and smoothing out the differences between different areas. If SSA owners were asked to commit $36,000 each toward water, the Village share would be the remaining cost. According to current estimates, the Village-funded share of the project (across the entire Village) would be $10-12 million, and even with that contribution, resulting property owner expenses may well be past the point at which residents still desire municipal water.
• Communication with property owners to test interest given estimated costs was deemed a critical step in moving forward with the project.
• Financing has emerged as the single most critical feature both in terms of the ability or interest of the property owners in moving forward as well as the Village’s ability to share in the cost given recent budget projections.

The Committee discussions continued to focus on the key issues surrounding extension of municipal water to the roughly 1/3 of the unserved Village properties. First would be the financial issues. Setting aside the view of municipal water as a community issue rather than an individual property owner issue with respect to cost sharing, there remains the concern of the ability of the Water Fund, which is funded through current municipal water fees, to support the necessary maintenance required on the current system.

Further research into available grants was not promising. Recent budget projections include or consider certain road, sanitary replacement, water main replacement and stormwater management projects – all part of maintaining existing Village infrastructure. The Committee felt that more insight is needed into how the Village will manage the existing infrastructure capital needs before embarking on major self-funded municipal water cost sharing on the part of the Village.

The concern regarding the future of allocation of Lake Michigan water and the ability of residential wells to support future demand as well as the various safety issues continue; however, there does not appear to be a clear path forward given financial considerations presented in this memo.

Committee Consensus and Board Recommendations

The Committee has come to a consensus that at this point the extension of water mains should be suspended for the following reasons:

• There needs to be an in-depth review of the ability of the Water Fund to support the current system. The risk of a failure to the current system due to improper or delayed maintenance is a considerable health and safety issue.
• Overall Village budget projections trend toward deficits as a result of infrastructure and maintenance issues relating to existing water and sewer systems.
• Research for other sources of financial assistance is needed, including consultation with a municipal financial advisor and Federal and State representatives for grants or other financial assistance programs.

The Committee recommends:

• That at this time its work on extending the water mains to the un-served areas of the Village be delayed until there is a sustainable financial plan developed to support the maintenance and planned repairs for the existing water system.

If the Board agrees with this recommendation, then the Committee further recommends:

• That the Board communicate to property owners in the affected areas that the Village has no current plans for Village-wide water expansion projects but will remain open to water main extension projects when sought by interested residents who are able to overcome financial obstacles in their respective areas to pay the costs of such extension.