Wausau's lead pipe replacement program will be more expensive than let on
Diving deep into the differences between how a program was sold and how it's actually working
There’s something about the lead service line program that many might find a bit surprising.
Nobody technically knows where the money to pay for it is coming from yet.
The program was presented in a press release in October from then-Mayor Katie Rosenberg as groundbreaking, and in subsequent media appearances implied that it would take advantage of funding from the Bi-Partisan infrastructure bill. Even White House Adviser Tom Perez in a Wausau appearance in November said the city would get $5.8 million toward replacing lead service lines in 2024. And signs that are required to be posted say the projects are paid for through the infrastructure bill.
But it wasn’t made super clear to the public that the funding for the project — which will completely replace the city’s roughly 8,000 lead service lines with copper lines within the next five years because lead lines lead to a number of health issues in humans — isn’t entirely a grant. Some of it is a loan.
Instead, the funding for this year includes $3.4 million in grants (or technically, forgivable loans) and $2.1 million in loans that do have to be paid back.
Where is that money coming from? I asked Eric Lindman that question, and he said that hasn’t been figured out yet, and that’s a frustration. “There wasn’t a specific direction that we were going to pay it out of general obligation funds or out of TIF or anything,” Lindman says.
And that’s just this year. In each of the future years, the funding will come in the form of a mix of grants and loans. The city finds out each October how much it will get in the form of loans and grants for the next year through the DNR’s Clean Water Fund. The DNR was designated by the state to doll out the federal funding for the lead pipe program. Lindman says the city expects to get a better mix next year than it did this year. (Meaning more grant money as opposed to a loan.)
The city through its partnership with CIP is on track to replace 553 lead pipes this year and hopes to jack that total up to more than 1,500 next year. Compliance has been pretty good so far, and this year no homeowner will pay anything for the replacement of their side of the pipe.
Lead exposure leads to all kinds of health problems, in the brain and nervous system, according to the Center for Disease Control. It can cause developmental issues in children and numerous negative health outcomes in adults and children.
The program aims to replace all lines within the next five years. The city had already been working on this replacement on its own, Lindman told The Wausonian. The city would replace lines as it reconstructed streets, a process that would have taken about 40 years. This new program would accomplish that about eight times quicker.
This year the city’s program contractor, CIP, is working on Eau Claire Boulevard in the city’s Southeast Side, and on spots in the Southwest Side south of Thomas Street.
But based on the latest conversations, there is a good chance it’ll take longer than five years to mitigate the costs to individual property owners. And that it will cost the city more than most residents were led to believe in the early days of the project.
How it works
Essentially there are two sides to the pipe leading from the main line to someone’s home. There is the portion leading from the main line to the curb stop that the city is responsible for. Then there is a portion leading from the curb stop to the meter. That’s the homeowner’s line. City workers need permission to access that portion of the line.
It’s a pretty quick process, Lindman says. Seeing the holes in person helps it make more sense. Workers dig a hole by the sidewalk, and then another near the meter. Pulling the old line out also pulls the new line through. Then the pipes are connected at the meter and to the city’s line, and everything is covered and landscaping replaced.
The whole thing takes a few hours.
I asked contractor John Czweronka what the worst complication they’d seen was. He said there was one situation that required an additional couple of hours because of complications. Still done all in one day.
People had a lot of questions about the process, he told The Wausonian, but most once they had a sense of how it would work were ok with it.
There are three agencies involved in the lead line program: The DNR, the EPA and the Public Service Commission or PSC. Since there was at least initially the possibility of using water utility money to help pay for the replacements, the PSC required an ordinance in order to do that. And having an ordinance in place helps get the city extra points with the DNR on their application (which means a better chance of more money). And eventually the EPA will ban partial replacements. In other words, the city will have to replace both the city and private side of the pipes at once.
So an ordinance is needed because one homeowner could hold up a project. But when the ordinance came out, people went ballistic.
The blowup
Two things have freaked out residents because they weren’t made very clear from the get-go. One is that the project isn’t fully funded by the Bi-Partisan Infrastructure Bill. The $2.1 million this year is not a forgivable loan, but a regular loan that has to be paid back. That brought about the possibility of residents having to pay for at least some of the cost of replacement - not something they were prepared for based on earlier messaging from city hall.
The other is an ordinance that mandates homeowners and business owners to get their lines replaced when it’s their time, and it comes with penalties for not doing so, at least as it’s currently spelled out. (Under its current wording, $50-$1,000 per violation, and each day might be considered a separate offense. The ordinance was tabled last week in order to give the public (and the council itself) more time to understand what is going on. Public meetings are scheduled for August.
The city council made clear it was not interested in making residents pay for their lines. City Council President Lisa Rasmussen at the last city council meeting put forth an amendment that stated that the city wouldn’t move forward with the program in a given year unless there was enough money to make sure residents don’t have to pay for the replacements.
Rasmussen said that the loan/grant mix was made clear at several meetings:
The mayor was on the finance committee the last two years and discussed the borrowing component during his campaign. His discussion sometimes centered around the assumption that the full amount of removals and the maximum level of borrowing would be approved, which is never a foregone conclusion, but there was also discussion of the grant/loan mix in the utility commission and the finance committee and at council as we considered the programming. There was discussion I believe as to future voting action being needed to approve the actual borrowing, but that is the case with all borrowing. It usually happens summer/fall. If the program was approved after November 2023, there would not have been borrowing planned on the front end, the item would have to be added after by amendment. I would have to go see when the program got approval to know for sure.
But the program publicly wasn’t really presented that way. When leaders talked about it, the framing was that the city was getting this benefit from the Bi-Partisan Infrastructure Bill (the signs posted on the sites suggest as much). It wasn’t presented as some grant, some loan. Lindman explained to the council that the city isn’t allowed to take one or the other from the DNR; it must take the grant and the loan together. This year that’s a couple of million the city needs to find.
I listened back to my interview with Tom Perez, White House senior advisor, back at the photo opp in November. In the short interview, he mentioned the city was getting a $5.8 million grant to start replacing lead pipes.
Grant, not a loan. Other news stories published Nov. 9 either didn’t talk about the money or implied they were funded by state and federal grant monies (technically, as we said, funded from the federal government to the state. Some stories at the time mentioned there would be no cost to the homeowner.
But a loan isn’t “no cost.” Whether it’s ratepayers, taxpayers or individual homeowners, Wausonians are paying for it if there is a loan component.
Mayor Doug Diny told The Wausonian that the grant/loan mix was discussed when CIP was approved as a contractor (who performed the demo replacement in November and was named as a city partner in the press release in January). Diny, then a council member, said he asked about funding for the loan portion and said then-Mayor Rosenberg didn’t give a clear response.
(This was likely overshadowed by the controversy around the fact that CIP is composed of former employees of a company that was accused of building substandard student and military family housing.)
Likewise, the LSL ordinance issue should have been taken up long before we launched an 8,000-household accelerated effort. It’s impossible to expect a methodical replacement plan that affects nearly 50% of all households and not have an ordinance defining the process. Additionally, the grant point scoring system is affected by the ordinance, that should have been explained. If we are not interested in maximizing grant offsets, the ordinance mandate is not required. If we want an all-expenses city-paid “free” installation for the homeowner, an ordinance is NOT required. If we want to be honest with residents, the ordinance should have been front and center. Residents will pay a portion of the installation, either through special assessments or debt service from the property tax levy.
Rasmussen told The Wausonian that the borrowing source will still need to be determined. That, along with the ordinance, is among the many things likely to be discussed next month as the city figures out how to run this program which is already underway. 1
The Wausonian reached out to Rosenberg and did not receive a response in time for press.
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When I first became aware of the lead service line replacement program, it seemed like generally a good thing but a bit confusing, and it got more confusing as I asked questions. By the end of reporting this story, honestly, I’m still confused as multiple sources seem to all be saying somewhat different things. It reminds me of reporting on a hemp legalization bill. Asking three different people gave me three different interpretations of how the bill would actually work. I’ve learned to recognize that as a sign that either A) The underlying thing that the story is about is confusing, or B) Everyone is confused about what that thing is.
One thing that occurred to me as I moved this to press: the city has to take both the grant and the loan, but does it need to spend both? In other words, could it take the grant and the loan, put the loan in an account somewhere and then use that to pay it back when it’s due? That seems unlikely, since it would be easy to take a loan at the incredibly low interest rates municipalities get, keep it in a bank account earning 5%, and pay back the loan for a profit. Plus, the government generally doesn’t want to shell out money for it to go unused. This is definitely a question that will hopefully get answered in the meetings next month.
The funding "wasn't made super clear"??!! They lied. That's it. No gift wrap, no pretty bows on it. They straight up lied and if the signs are still there, they continue to lie. Bidenomics and an incompetent or disingenuous former mayor are behind this fraud.
Thank you x Mayor Katie and staff. Surprise!