There is a new funding option for replacing private lead service lines (LSLs). The main advantage of this option is that it does not require approval from the Public Service Commission (PSC), unlike if the water utility would be funding the loan to a customer.

This option allows municipalities to create a new program utility that is completely separate from their water utilities. This new utility would loan money to property owners to fund replacing their LSLs. The new utility would be repaid by placing the loan payments on the owners’ individual tax bills each year.

The municipality can set the conditions, interest rate, and term up to 10 years on the loan. Presumably, the municipality is acquiring its funding from a Safe Drinking Water Loan Program (SDWLP) loan. It can add to the interest rate to create a way to fund the administrative cost of running the new utility. The water utility or the municipality would provide a short-term loan to the new utility to enable the new utility to begin its work of making loans to customers.

As part of a SDWLP loan, the municipality would need to submit evidence that it had passed two ordinances: one that mandated replacement of private-side LSLs and another that established this new program utility. The municipality would also need to submit the agreements it would use between the municipality and property owners for the loan, including repayment schedules and interest rates.

The Department of Administration (DOA) and the Department of Natural Resources (DNR) created this option in collaboration with Andy Galvin of the PSC, Lawrie Kobza of Municipal Environmental Group (MEG) – Water, and Rebecca Speckhard of Quarles & Brady.

Stay tuned because the DOA and DNR will be providing more information in the days to come! If you have questions in the meantime, please contact an expert at R/M today!