Elgin receives $10.8 million interest-free loan for lead service line replacement

Elgin got some cost-saving news in its ongoing lead service line replacement project.

The city has been awarded more than $10 million in interest-free loans from the Illinois Environmental Protection Agency. The amount is more than double what city officials expected.

City Manager Rick Kozal told Elgin City Council members this week that the loans will allow the city to borrow less money for the project through a bond issue. As a result, the city will save money on interest payments.

Kozal said the city planned to borrow $14.5 million through general obligation bonds this year at 4.5 percent interest. That was assuming the city would receive $4 million in IEPA interest-free loans.

But the IEPA gave Elgin $10.8 million in loans. The city now plans to issue only $5.2 million in bonds.

“Deb (Elgin Chief Financial Officer Debra Nawrocki) will tell you all day that zero percent is better than four and a half percent,” Kozal joked.

Kozal said the funds were available because other municipalities were not as aggressive as Elgin about pursuing the loans.

The city also recently received a $2 million state grant that will allow another 150 homes to have their lines replaced.

Kozal thanked state Sen. Cristina Castro and state Rep. Anna Moeller for their work in helping to secure the grant.

Lead is not present in Elgin's source water or in the city's treated drinking water. But it can seep in through lead service lines in older homes.

Elgin has 10,107 remaining lead service lines to replace, according to the city’s lead response webpage. A total of 1,579 service lines have been replaced since 2018, including 78 this year.