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Can Evanston Turn Water Into Dollars?

Evanston officials are considering expanding water sales to more suburbs. Building the infrastructure, however, could cost $160 to $260 million--a figure that would factor into rates.

City officials are looking into a deal to sell Lake Michigan water to several northwestern suburbs in hopes that Evanston could turn a profit—but the initial capital outlay could be very expensive.

According to a recent study commissioned by the city of Evanston and several other northwest suburbs, expanding the city’s water sales could come with a price tag as high as $260 million. Evanston already supplies water to the village of Skokie and to the Northwest Water Commission, composed of Arlington Heights, Buffalo Grove, Palatine and Wheeling. 

Evanston started pursuing the option to sell its water to more communities three or four years ago, when Chicago hit the suburban municipalities it supplies with back to back water rate hikes, according to Dave Stoneback, utilities director for the city of Evanston.

Water Sale Is ‘Wild Card’ in Evanston’s Economic Future

But when Mayor Rahm Emmanuel came into office and announced four rate hikes over the next four years, Evanston’s water rates started looking very competitive. 

Speaking at Monday’s city council meeting, utilities director Dave Stoneback presented the results of a recent study detailing the potential costs of expanding water sales to several suburbs around the area.

The city commissioned the study along with Lincolnwood, Niles, Park Ridge and Des Plaines, as well as a coalition of seven suburbs called the Northwest Suburban Municipal Joint Action Water Agency, which includes the suburbs of Elk Grove Village, Mount Prospect, Rolling Meadow and Schaumburg, among others. Those municipalities are all interested in buying water from Evanston, and helped pay for the costs of the study.    

Depending on which communities participated and what route was taken, the study’s authors estimated that an underground tunnel or open channel would cost between $158 million and $263 million. 

“It is a staggeringly large price,” Stoneback told council members. “Please don’t be afraid of it right now.”

City officials would allocate the cost of constructing the transmission infrastructure based on a community’s distance from Evanston and how much water it uses, according to Stoneback. The city would also have to expand its own treatment plant, which is rated at 108 million gallons per day, to at least 132 million gallons per day and as much as 214 million gallons per day if the Northwester Suburban Municipal Joint Action Water Agency chose to get involved.

Stoneback said that Evanston residents would not probably not see their own water rate go up. That's because the price of expanding the plant and building the pipeline would be factored into the rate charged to the other communities, over a period of several years. According to guidelines from the American Waterworks Association, the city would also set rates based on the risk it took in building the increased capacity, and based on the depreciation of the equipment—two factors that could allow the city to turn a profit, according to Stoneback.

Another portion of the rate will be based on the percentage of water used, he added. 

“As we add more wholesale customers, the percentage of water that Evanston customers uses gets smaller and smaller,” Stoneback explained—meaning residents’ rates could even go down. 

So far, the city has is close to closing a deal on water sales with Lincolnwood. The plan is to construct a pipeline directly from Evanston to Lincolnwood, because the costs of doing that are significantly cheaper than linking Lincolnwood to any other pipeline heading farther northwest.

City officials are also set to meet soon with representatives of the Northwest Suburban Municipal Joint Action Water Agency, which is still considering the costs and benefits of the project. Because the agency is so large and the suburbs included are so far northwest, its participation would significantly impact the plans. 

“We have gotten phone calls from Niles and Des Plaines, they’re asking us what the next steps are,” Stoneback said. “I said, ‘I have to figure out what’s going on with the big fish.’”

Mayor Elizabeth Tisdahl noted that she had heard interest from a representative of Prospect Heights while attending a brunch for legislators from the northwest suburbs.

“Chicago raising their rates has made me quite popular at these meetings,” she said. “Go forth and make us a lot of money, Dave.” 

Jim February 14, 2013 at 03:14 PM
Northwestern has an endowment of 7 Billion dollars. If they have a return of 5% per year, that would be 350 Million dollars per year. Rather than tying yourselves in a knot about selling water to western suburbs by building a Roman style aqueduct for 200 Million dollars, try to get Northwestern University to give the city 50 Million dollars per year for 10 years. That would be 14% of their return on their endowment per year and .7% of the endowments value per year. Well, maybe it is more important that Northwestern build a 250 Million dollar football stadium on the lakefront so that they can recruit better football players. I guess it is what you consider important in life.
DL February 14, 2013 at 05:05 PM
How about lowering OUR rates?
Tony February 14, 2013 at 10:37 PM
Isn't there a treaty with Canada that restricts use of Great Lakes water? Is this even possible. Not to mention the Great Lakes are extremely low now due to drought and increased evaporation due to our milder winters. I like the idea of getting some money from NU. They've been like a barnacle on the town forever and all we've got to show for it is a firetruck.
Jennifer Fisher (Editor) February 15, 2013 at 01:01 AM
Tony, you're right that there's a treaty with Canada, called the Great Lakes Water Quality Agreement (http://www.epa.gov/glnpo/glwqa/). It's my understanding that Evanston's increased usage wouldn't interfere with the treaty's terms.
Tony February 15, 2013 at 02:16 AM
Thanks for the link, Jennifer. Here's a link to an article concerning the historic low water levels the Great Lakes are reaching. I believe the WQA deals with what's in the water but as water levels sink and a host of problems arise, I think other treaties are in place that would have an impact on Evanston's decision to spend millions on a water-carrying infrastructure that might be of use for a short time if at all. Pretty risky proposition if it's being counted on for decades of revenue.
Tony February 15, 2013 at 02:16 AM
Sorry, forgot the link. http://newswatch.nationalgeographic.com/2012/11/20/climate-change-and-variability-drive-low-water-levels-on-the-great-lakes/
Jim February 15, 2013 at 02:39 AM
Federal laws and Supreme Court decisions also affect Illinois’ water supplies. After 30 years of controversy over Illinois’ diversion of water out of Lake Michigan and down the Illinois River, in 1930 the Supreme Court set a limit on the amount of water Illinois could divert out of Lake Michigan. After another major controversy involving Illinois and other states around the Great Lakes and Canada, the Court reset the diversion limit to 3200 cfs (the 1967 Level of Lake Michigan Act).

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