Town Hall Meeting Q & A

Purpose of This Effort
As part of the Village's commitment to community improvements, capital infrastructure, and maintaining safe and reliable utility services, the Village President and Board of Trustees approved adjustments to water and sewer utility rates, effective July 1, 2024. This was the first step towards addressing the Village’s aging infrastructure, with a subsequent comprehensive utility rate study to be done by an outside professional group to ensure the necessary funding is available to continue addressing these critical infrastructure needs.

The Village Board approved a contract with Baxter & Woodman, Inc. to complete this rate study in October 2024 to provide the Village options on additional rate adjustments to continue funding capital improvements and fund financial stability. These rate adjustments are necessary due to two primary factors: aging infrastructure and the Lead Service Replacement Mandate. There have been several discussions, meetings, and communications since February 2024 regarding this topic.

How Does Water and Sewer Service Work?
The Village purchases water from the Broadview Westchester Joint Water Authority (BWJWA), who purchase water from the City of Chicago. The water purchased from the BWJWA is just for obtaining water for the Village. Once purchased, the Village is responsible for all costs to operate, maintain, repair, and, if needed, replace the water system infrastructure throughout the Village.

Furthermore, sanitary sewer treatment and stormwater runoff is handled by the Metropolitan Water Reclamation District of Greater Chicago (MWRD). While MWRD treats sewage and manages stormwater runoff downstream when it discharges into waterways, the Village, like the water system, is also responsible for all costs related to the sanitary and storm sewer systems throughout the Village, including reservoirs, creeks, etc. Revenues and expenses related to the Village’s operations of the water and sewer infrastructure in Westchester are accounted for in the Utility Fund, which is classified as an enterprise fund for the Village.

What is an Enterprise Fund?
An Enterprise Fund (also known as a Business Fund) is a type of government fund to account for revenues and expenses related to “business-type” activities a municipality conducts, and are very commonly used for accounting for public provided utilities. Enterprise Funds are intended to be self-sufficient, with the primary revenues generated via user charges (billed every two months in Westchester) sustaining the operations, maintenance, and capital improvements of the system. In Westchester’s case, revenues currently being generated fall short of the significant underground capital infrastructure costs, which are necessary to update of our overall aging infrastructure and replacement of lead water service lines (as mandated).

Why Are Additional Rate Increases Needed?
Utility Fund revenues can only be used to fund the operations, maintenance, and improvements of the Village’s Utility System. Our community is facing a pressing challenge of aging underground infrastructure, with a significant portion of our water mains (49%), storm sewers (60%), and sanitary sewers (27%) dating back to the 1920s-1930s. This century-old infrastructure, over 75 miles of main in total, requires urgent attention and an ongoing improvement plan to ensure the continued delivery of safe and reliable water and sewer services to our residents. Funds received from increased utility rates directly support the capital improvements needed to bring this underground infrastructure up to date, reducing the frequency of service interruptions due to main breaks and emergency repairs. This plan is anticipated to be a 16-year effort, and is estimated to cost approximately $120 million.

The Village is at a critical juncture for our underground infrastructure. Over the last five and a half years, there has been 227 water main breaks, 35 of which have been since the start of 2025, and continue a trend of the number of breaks increasing year over year. There have been 102 service leaks in the same time frame. In addition, the Village recently experienced an emergency water main replacement on Windsor Drive, which cost approximately $250,000.

For the current fiscal year, approximately $5 million in underground capital infrastructure improvements are being directly funded through the Utility Fund. However, this desperately needed work will almost entirely deplete the reserves in the Utility Fund, and without subsequent rate increases, further capital improvements will not be possible. As stated previously and communicated extensively in 2024, the most recent increase in July 2024 was the first step towards funding this capital effort, with a subsequent rate study to determine subsequent rate adjustments to continue funding capital improvements. 

How was the Rate Study Conducted?
Village staff has worked closely with the Baxter & Woodman team over eight months to provide an array of information about how our utility system is operated and maintained, what the challenges the Village is facing or foresees with our system, and review the capital improvement plan for the next seven years and take into account the lead service line replacement mandate. This process required staff to evaluate, fine tune, and prioritize capital projects to the bare minimum. Furthermore, to stretch funding further, watermains are being replaced with PVC instead of iron, water service lines are being replaced with PEX instead of copper, and sanitary and storm sewers are being lined instead of replaced (unless absolutely necessary). These changes alone saved approximately $150,000 for work being completed in 2025. As part of the rate study, several approaches were evaluated to address the Village’s funding shortfall for our utility system to ensure every option and approach was considered, then subsequently critiqued to determine which approach minimizes the impact on Village residents and businesses.

What About Lead Water Services?
The Lead Service Replacement Act, mandated by the federal government, requires the identification and replacement of all lead service lines in our water system. This unfunded mandate reinforces the critical need for proactive investments in our infrastructure to uphold public health standards and meet regulatory obligations. Currently, there are approximately 1,000 “resident-side” (from the outside valve to the water meter) lead water services, and approximately 3,600 “Village-side” (from the water main to the outside valve) lead water services throughout Westchester. Under this mandate, the Village must remove all lead services from the water system by 2040.

While municipalities have the option to devise a funding strategy that could entail individual residents bearing the burden of lead service line replacements, which can cost upwards of $15,000 per service line, the Village has instead chosen to incorporate and fund lead water service line replacements as part of these adjusted utility rates. By covering the cost of lead service line replacements, this makes the Village eligible to apply for additional funding opportunities via grants, no-interest loan programs through the Illinois Environmental Protection Agency - IEPA (which is provided through the State Revolving Fund), and even for IEPA loan forgiveness for economically disadvantaged areas of Westchester. However, these programs require the municipality to cover the entire lead service line replacement cost. If the Village required a cost-share from residents for lead service line replacement, the Village would not be eligible for these funding opportunities. Furthermore, “resident-side” lead service lines only account for 22% of the lead services in the Village, the remaining 78% are “Village-side” lines, which under any replacement funding model are the responsibility of the Village to replace. The Village is always searching for grants, but as time goes by, any grant funding opportunities are becoming more and more competitive to secure.
 
These utility rate adjustments enable the Village to absorb these costs as part of the overall underground infrastructure program, without separate additional cost to Village residents. This approach ensures that lead service line replacements are seamlessly integrated with the Village's community-wide infrastructure projects, at more competitive rates due to utilizing economies of scale.

Is Westchester the Only Municipality Paying for the Entirety of Lead Service Lines?
Every municipality is unique on the challenge they face with their lead service line problem. Municipalities surrounding Westchester that are covering the entire cost of lead service line replacement include Berkeley, Brookfield, La Grange Park, and Western Springs (to name a few). Others are offering a cost share with residents, which include Villa Park and Lombard. Other municipalities are still debating their approach to this issue, which include Downers Grove and Clarendon Hills, whereas some (like Elmhurst) have taken the position it is 100% the responsibility of the residents. Finally, there are municipalities (such as Oakbrook) that already replaced their lead service lines over the last several decades, so it is not an issue for them.
 
Once again, for a municipality to qualify for some of the previously mentioned funding opportunities, these programs require the municipality to cover the entire lead service line replacement cost.

Alternative Funding to Address Capital Improvement
Village staff, the Village’s engineering firm, and grant writing consultant are extremely diligent in pursuing and mining for grants for projects to reduce the financial burden on Westchester residents and businesses. Due to this extreme effort, for the last three fiscal years, the Village has applied for approximately $17.2 million in grant funding. We have been awarded approximately $6.8 million, denied $6.7 million, and have $4.3 million currently pending, with no determination yet. Of the above amounts, $2.4 million has been awarded, $2 million denied, and $500,000 is still pending specifically for utility infrastructure capital funding.

Anytime a grant is available that the Village is even remotely eligible for, the Village applies for that grant. It is important to note that several grant opportunities require projects to be “shovel ready”, meaning if the grant is awarded, the project is already designed, engineered, and ready to be sent out to bid. As such, the Village tries to stay one construction season ahead of anticipated future projects so if a grant opportunity arises, the Village is more likely to obtain that grant.
 
Unfortunately, a lot of the current grant and loan (with forgiveness) programs available for underground infrastructure have median household income (MHI) limits. Recently per the IEPA, the MHI for our area is $72,563, and Westchester’s MHI is $94,151. As such, the Village is frequently denied grant opportunities due to Westchester’s MHI exceeding grant and loan forgiveness eligibility requirements.

What About Revenue Generated from Development to Address Capital Improvement?
The current capital improvement plan for the next seven years includes approximately 70,560 feet of water main replacement, 1,477 lead service line replacements, and 100,885 feet in sanitary and storm sewer lining along 41 roadway sections in the Village, benefiting 1,662 households. The cost for this work is an average of approximately $8.9 million per year for construction and engineering costs.
 
To illustrate the amount of development needed to completely offset these needed improvement costs, the entirety of the sales-tax generating development in the Village of Hillside is $6.5 million per year and the Village of Broadview is approximately $6 million year. To completely offset Westchester’s anticipated capital needs, we would require one and a half times these amounts in additional economic development. Increased development of this size is simply not possible in Westchester, as after decades of direction to maintain Westchester as a bedroom community with minimal commercial and retail development, the Village is “landlocked” and unable to expand our boarders further as our boundaries are constrained by our neighboring municipalities boundaries.    

What About Using Money from the General Fund Revenue to Address Capital Improvement?
The General Fund is the main operating fund for the Village, covering the majority of the Village’s operating expenses. These expenses include the majority of salaries and benefit expenses for the Village’s approximately 100 employees, professional and contractual work, as well as commodity purchases. These expenses allow the Village to provide public safety to the community, to maintain our non-utility infrastructure with our roads, sidewalks, and parkways, and finally to handle the majority of the administrative aspects of the Village.

For Fiscal Year 2025-2026, the Village’s total budgeted expenditures in the General Fund are $23.2 million, which required extensive cost reductions (including forgoing funding a few of the current vacancies across multiple departments to balance the budget).  To support the $8.9 million in capital work for the Utility Fund would result in approximately 40% further reduction in operational spending, which would require a similar reduction in staffing, leading to the elimination of public services, most significantly in public safety and public works, as those departments comprise 88% of the Village’s staff.

Utility Bill Impact
Under rate option 1B, the water usage rate will be $19.21 per 1,000 gallons used, and the sewer usage rate will be $4.03 per 1,000 gallons used, and the water infrastructure fee would increase to $44 per billing cycle ($22 per month) and the sewer infrastructure fee would increase to $30 per billing cycle ($15 per month) in the first rate adjustment, which will take effect on July 1, 2025. These rates will be seen on the September utility bills, and water and sewer charges are billed in arrears. It is important to note that individual usage is notated on utility bills as units, where each unit equals 1,000 gallons. For example, if your utility bill says 5 units of water usage, that equates to 5,000 gallons used.

The provided rate adjustments under Option 1B prevent the entirety of the cash reserves in the Village's Utility Fund from being depleted, though will fall well below the fund reserve goal of $1 million for the near future, and provides for the continue funding of underground capital infrastructure improvement moving forward.
 
In addition, historically, the Village has received higher costs to purchase water than what was charged to users. For example, in 2023, the BWJWA received a 22.55% water rate increase to the cost of water purchased from the City of Chicago, which was passed on to the Village. In the same year, Village water rates increased 3%. This has resulted in costs outpacing revenues in the Villages Utility Fund.

Estimates used in Village Staff analysis during the multiple meetings the Village Board reviewed and discussed recommendations for rate adjustments follow the EPA average individual consumption rate of 82 gallons per day. However, many Westchester residents use substantially less than 82 gallons per individual per day. As part of the communications and information about the rate adjustments, an updated utility bill calculator tool will be made available on the Village website following rate adoption. This calculator, along with additional information about the rate change, will be available on the Village website so residents can enter their most recent usage from their utility bills to see an estimate of their September utility bill.

Other Efforts to Help Residents Manage Increased Utility Bill Costs
In June 2024, the Village revised the utility bill hardship program to be easier for residents struggling with utility costs to participate in the program and introduced the Water Fixture Efficiency Reimbursement Grant Program for low-income residents to reduce their consumption. Since these changes went into effect, the Village has seen a significant reduction in delinquent accounts, a small increase on average of approximately three account holders at any given time on a hardship payment plan, and have had zero applicants for the Water Fixture Efficiency Reimbursement Grant Program.
 
In August 2024, the Village Board approved a contract with Veregy Central, LLC to establish a customer portal for utility account holders to monitor their consumption, set alerts for when excessive water flow is occurring, and receive water saving tips to reduce their consumption. This portal is in the final stages of quality control, and is expected to be released to the public in June or early July 2025. 

Do These Proposed Increases Pay for Accounts Currently in Delinquency?
No, they do not. Proposed rate increases are to support the continued underground capital infrastructure improvements. During the COVID-19 pandemic, water-shutoffs due to non-payment were suspended. However, the Village resumed water-shutoffs for delinquent customers back in February 2024 to reduce the number of utility accounts previously in delinquency. Since this effort was reestablished, it has brought hundreds of accounts back into payment compliance.

Overall Objective
The fundamental objective of the Village remains to deliver safe and dependable services to our residents. Remember, from the day-to-day motions of turning on a faucet or flushing a toilet, to the sudden emergencies that require firefighting efforts, our goal is to ensure that these essential services are always readily available, without compromise.
 
Your understanding and support are crucial as we work towards building a safer and more resilient community for generations to come.