Evanston pitches water deal to Park Ridge

Evanston may be willing to foot some of the costs of a needed transmission line that would carry water to Park Ridge and two other communities.

The city is targeting Park Ridge in a deal that would include Morton Grove and Niles as new customers, Evanston Utilities Director Dave Stoneback told the City Council June 21.

The city is looking at financing some of Park Ridge’s debt service to build a $115 million transmission pipe, or paying for a portion of the transmission main to make the project more attractive, he said.

Under the plan, Park Ridge would foot roughly $50 million of that cost.

The next move would be to hire a financial advisor, he said.

Evanston officials believe they can package deals with substantial savings over Chicago, Wilmette and Glenview, which are pursuing water deals of their own with the communities.

Evanston could sell water to all three towns with existing capacity while Wilmette and Glenview would barely be able to serve Morton Grove and Niles with their existing capacity, Stoneback told council members.

Morton Grove would save more annually with Evanston – $627,000 compared to $450,000 going with Wilmette-Glenview; Niles would save less with Evanston – $291,000 to $374,000 with Wilmette-Glenview, Stoneback said, citing the findings of a Gewalt Hamilton Associates study issued a few months ago.

However, if Park Ridge were to become involved, “everyone could save significant dollars by purchasing water through Evanston,” which has the existing capacity to handle such a project, said Stoneback who, with City Manager Wally Bobkiewicz, has been visiting neighboring communities, pitching them on the advantages of joining Evanston.

Starting year one, Morton Grove and Niles would each save $1.45 million, while Park Ridge would see a $1.274 million in annual savings compared to staying with Chicago, Stoneback said, again citing the study.

Question of savings

Park Ridge Public Works Director Wayne Zingsheim said the city is interested in the potential cost savings; however, officials wants to review the completed study and examine the financial feasibility of the different proposals and their capital costs.

Gewalt Hamilton gave Park Ridge, Morton Grove and Niles more than a preview in a presentation to the Park Ridge Village Board in May.

Bob Hamilton, the firm’s president, told Park Ridge trustees that the three communities stand to save more than $338 million over 30 years.

Park Ridge currently spends roughly $5.5 million a year on its water purchases from Chicago, and with two lines coming in, there is some redundancy in the system, Zingsheim said. The city is also dealing with a sewer issue now, as Evanston formerly did, and has water system improvements to consider.

Evanston officials saw an opening to expand wholesale water sales in 2011 after Chicago announced it would hike its rate from $2.01 per 1,000 gallons to $3.82 per 1,000 gallons by 2015.

At a 10 percent return on rate, Evanston identified water sales as a lucrative source of new revenue.

At the July 21 meeting, Stoneback noted that Hammond, Ind., which sells water to a number of municipalities, has not had to raise water rates in 40 years.

Other customers

Evanston received promising news a few weeks ago from Lincolnwood officials who indicated interest in restarting negotiations, Stoneback told council members. Though a relative small user at 2 million gallons a day, Lincolnwood would generate roughly $350,000 in yearly revenues for Evanston.

Meanwhile, Evanston faces uncertainty with existing customers. The city recently notified Skokie, a customer since 1944, that its contract wouldn’t be renewed in 2017, and any new rate would be higher than its current $1.02 per 1,000 gallons.

The Northwest Water Commission, which includes Arlington Heights, Palatine, Buffalo Grove and Wheeling, and has been an Evanston customer since 1985, is looking for a water source other than Evanston, Stoneback said.

Even after paying half the cost of the $155 million transmission line from Evanston, after 20 years of debt service were paid off, Park Ridge would realize close to $4 million savings annually. Over a 30-year contract, Park Ridge’s savings would approach $120 million, according to the Gewalt Hamilton study.

Stoneback said the savings are driven by the lower water rate Evanston would charge compared to Wilmette-Glenview once the debt service was paid off.

He said Evanston would charge its wholesale water rate of 92 cents per 1,000 gallons, starting in 2018, in any long-term water deal.

Meanwhile, Wilmette now sells water to Glenview at a $1.76 per 1,000 gallons rate, and Glenview then tacks on 81 cents for the water to go through its pipes to Niles and Morton Grove, bringing the total rate to $2.56.

After the debts were paid off, the difference would be $1.38 per 1,000 gallons of water for Evanston compared to $3.73 per 1,000 gallons for Wilmette-Glenview, Stoneback said.

Evanston is also addressing infrastructure issues, such as the need for new clear wells and an expanded reservoir and heated intake system. Stoneback maintains the Wilmette-Glenview plan does not include all the capital improvement costs that would be needed to deliver water on an expanded basis.

He said Wilmette also has not resolved the winter icing issues that almost shut down the Evanston system several years ago, before improvements were made.

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