A 30-year-old agreement leaves Northwest Cook County residents footing the bill for the up-to $73 million costs of relocating a massive pipe carrying Lake Michigan water that's in the way of the Illinois tollway's I-90 widening project.
Options for paying for the project range from a rate increase to issuing bonds, officials said.
About 16½ miles of the pipeline are adjacent to the Jane Addams Tollway (I-90) and six miles need to be moved. Terms of a 1984 easement agreement between the toll authority and the Northwest Suburban Municipal Joint Action Water Agency require the agency to take financial responsibility for any relocations.
The Joint Action Water Agency represents Elk Grove Village, Schaumburg, Rolling Meadows, Hoffman Estates, Hanover Park, Streamwood and Mount Prospect.
The tollway, however, will fund the project upfront and is not charging any interest through 2020. Interest payments of 3 percent go into effect in January 2021. The entire amount is due Jan. 1, 2024, or higher interest rates will go in effect.
Water Agency Deputy Director Kevin Lockhart said the agency will use its reserves to pay $1 million a year until 2021 when the interest rates kick in.
During the zero interest period, "we have the option of paying as much or a little as we want," Lockhart said, adding the $1 million a year will not affect rates currently.
As far as paying the balance of the $73 million and interest, raising water rates or issuing long-term debt with the intent of keeping rates stable are both options, officials said.
"We have reserves now but we don't have $73 million in reserves," Lockhart said. However, he noted it's possible the project may cost less than $73 million.
Decisions on repayment will be up to the water agency's executive committee and its board, which is comprised of mayors and village presidents, Lockhart said.
Schaumburg Mayor Al Larson, chairman of the water agency, said the original project was estimated at more than $100 million.
"We've been negotiating with the tollway for some time and they've been very accommodating," he said.
"No one anticipated when we first signed the agreement the tollway would be adding an extra lane," he noted. The agencies also agreed that the NSMJAWA won't be responsible for future relocations related to adding rail transit on the I-90, Larson said.
The water pipe conflicts with the Jane Addams widening project in several ways, including encroaching on new pavement and sound walls plus not fitting in with grading changes.
Relocating the water pipe requires a high level of expertise to ensure service is not interrupted, tollway deputy chief of project improvements Peter Foernssler said.
"It's not conventional construction," he said.
Among the techniques the tollway expects to use is a "hot tap" on the widest sections of the pipe measuring 90 inches in diameter.
A hot tap "makes a connection to existing piping without interrupting or emptying that section of pipe," engineers said. The hot tap means service is continuous and offers the lowest risk of problems.
Work on the water pipe will likely begin this fall and continue through 2014. Activation of the hot tap is expected to occur in autumn 2015 or spring 2016, which are periods of lower water use, planners said.