Lake Zurich village officials approved new measures last week for a $154 million project that will transition the town’s water source to Lake Michigan, but it comes at a price for its residents.
The project will be the most expensive infrastructure project in the village’s history.
Lake Zurich currently gets its water from deep underground aquifers via six wells.
The village has been discussing and analyzing the water transition since at least 2011 when they were granted a conditional Lake Michigan water supply allocation from the state.
“Studies and evaluations performed at that time determined the deep well aquifer might not be sustainable, or be able to meet anticipated water needs within the next 30 to 40 years. The study recommended that the Village consider switching to Lake Michigan as its primary source of water,” the village said on its website.
Low-interest loans are available through the Illinois Environmental Protection Agency (EPA), allowing the village to finance the improvements for up to 30 years.
“This approach would require $7.5 million annually to meet the loan payments, which would likely start in 2027-2028,” the village said.
The village announced in November 2023 that they will raise water rates to cover two-thirds of the annual loan payments and – if voters approve it – increase the local non-home sales tax rate by 0.5% to cover the remaining one-third.
In December 2023, the village approved a five-year schedule to increase water rates for the Lake Michigan water transition.
Rates will increase annually by $3 per 1,000 gallons used to eventually reach $15 per 1,000 gallons in 2028.
The deep well water has naturally occurring radium in the aquifer, the village said.
The village has historically been pushing the radium down sanitary sewer pipes to a Lake County treatment plant, but future EPA regulations are forcing an end to the county accepting Lake Zurich’s radium, prompting the transition to Lake Michigan’s water, which doesn’t have radium.
Those regulations, along with environmental and sustainability factors, are influencing the village’s decision to transition to Lake Michigan.
In a March 18 Lake Zurich village board meeting, the board unanimously voted for the village to become a member of the Central Lake County Joint Action Water Agency (CLCJAWA) – a local water treatment organization – to bring Lake Michigan water to the village.
The membership agreement commits Lake Zurich to paying all of CLCJAWA’s costs of bringing the water to the village.
The agreement also establishes the capital contribution of $21,857,496 based on CLCJAWA’s established formula and the 7,352 housing units currently on the village’s water system.
CLCJAWA will offer the village a 30-year, no-interest payment plan to fulfill the capital connection obligation.
“Now that’s a deal,” Lake Zurich Village Trustee Marc Spacone said.
Nearly 300,000 residents from 19 communities in the county currently rely on CLCJAWA to deliver drinking water from Lake Michigan, according to their website.
Lake Zurich Village Manager Ray Keller said that the village has conducted an “exhaustive evaluation” of what it would mean to stay on the current deep water aquifer system and to transition to Lake Michigan water.
“We found that they were relatively scaleable, that you’re in the same ballpark of spending quite a bit of money in order to achieve the same quality in dealing with the environmental side of staying in the deep water aquifer or transitioning to a much more reliable, sustainable source of water long-term for the village,” Keller said.
Keller said that there are no viable options to stay with the aquifer and added that many communities are waiting on Lake Zurich to make a move towards or against Lake Michigan water.
Village officials had a lot of confidence in CLCJAWA after touring their Lake Bluff facility in August 2021, with Lake Zurich Village Trustee Beth Euker calling it “well-maintained.”
“You can eat off the floors in this facility. It is that spotless when you’re in there,” Spacone said. “I truly do believe that this is the right decision to make in this point in time.”
In response to the high-cost concerns, Lake Zurich Village Trustee Roger Sugrue said, “I understand it’s going to hit people, but we have no other choice.”
The project is estimated to cost around $154 million.
Lake Zurich Director of Public Works Mike Brown said he was happy that the village unanimously voted to join CLCJAWA.
The membership allows Lake Zurich to have voting rights equal to CLCJAWA’s existing members.
The board also unanimously voted to approve an agreement with CDM Smith, an engineering company, for a Lake Michigan water source route study not exceeding $300,000.
The study will analyze various corridors and identify a preferred route for the water supply.
In addition, the board unanimously voted to put a referendum on the November 2024 general election ballot asking Lake Zurich voters to increase the local non-home rule sales tax from 0.5% to 1% (half a cent on a $1 purchase).
The increased tax revenue would be used to fund one-third of the costs of the Lake Michigan water transition, while increased water bills would fund the rest.
“If voters decide to approve a referendum increasing the local non-home rule sales tax to 1%, the village would be substantially less reliant on increasing water usage rates for Lake Zurich households, as the annual sales tax revenue generated would cover $2.5-$2.7 million each year of the annual financing costs,” Lake Zurich Mayor Thomas Poynton said.
“Approximately 40% of current sales taxes are generated by nonresidents, contributing toward infrastructure investments that benefit the entire community,” Poynton added.
“When we were looking at our evaluations as a non-home rule municipality, our options to raise funds are very limited. Looking at water rates themselves are user-based, that is how our current water operations are funded,” Keller said.
“Putting those together and looking at the remaining half-cent capacity that we have under statute as a non-home rule municipality, we evaluated that approximately a third of the total financing costs could be funded if that rate increase were adopted by voters,” Keller added.
The village is expected to continue discussing the project. The next board meeting is on April 1.