Can Evanston Turn Water Into Dollars?

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.”