Ferndale begins process to replace lead service lines

By: Mike Koury | Woodward Talk | Published July 21, 2020

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FERNDALE — The Ferndale City Council unanimously approved a request from its Department of Public Works to submit an application to the state for a $10 million loan to conduct lead service line replacements.

At its June 22 meeting, the council held a public hearing to discuss a possible loan from the state of Michigan’s Drinking Water Revolving Fund, which comes from the Michigan Department of Environment, Great Lakes and Energy, known as EGLE.

As DPW Deputy Director Dan Antosik put it during the meeting, the state adopted in 2018 the most “stringent” Lead and Copper Rule in the country. Requirements from the LCR include additional water sample testing for lead and copper, the identification of water service line material across the community by 2025, and the replacement of all lead and galvanized service lines at an average rate of 5% per year over the next 20 years.

Antosik said Ferndale has been in compliance with all state reporting when it comes to lead levels not exceeding EGLE’s action level of 15 parts per billion.

“To date, what we’ve found is about 55% of what we’re seeing on the inside of the homes are copper, pex, PVC, something that’s non-lead or galvanized,” he said. “Overall, what we’re seeing is  … 1,900 copper water service lines in the inside of the house, 1,887 lead, 209 galvanized, 13 either pex or PVC, and then we got about 50 that we need information on.”

Ferndale would look to replace lead and galvanized water lines with new copper services, as it was considered the most feasible option.

In its preliminary distribution system materials inventory survey, Ferndale found that 90 service lines that had no lead or galvanized material, 1,606 that contained lead or galvanized material and 8,335 that are unknown.

“What that means is that we know maybe a portion of it’s copper, maybe a portion of one of those three places within that service line is possibly lead, but we don’t know all three portions of that service line,” Antosik said of the 8,335 that are unknown.

On the topic of funding the project, Antosik said Ferndale has joined with other Southeastern Oakland County Water Authority communities on a request for proposals to help achieve an economy of scale for lead service line replacements. The city would replace an average of 5% of service lines per year over 20 years, paying as it goes.

With EGLE’s Drinking Water Revolving Fund loan, Antosik noted they potentially could replace 75% of known lead service lines within the first few years of the program while they finalize material verifications prior to 2025.

While it’s something they still have to look into, Antosik said the city can explore bonding against the water and sewer fund to replace lead service lines as soon as possible, adding that if they were to explore that route, they would likely go with the SOCWA RFP.

In response to the funding options, Councilwoman Kat Bruner James has “definitely gotten input from residents that the minimum requirement of 5% replacement over 20 years is not desirable. I’m glad that we’re looking into options to increase that.”

Ferndale’s project cost estimates for the replacement material verifications and a 6% contingency came to $10 million. With a salvage value at 20 years to be $6,154,000 and interest during construction marked at $600,000, the city’s present cost for construction is $4,446,000.

Antosik said they don’t expect to raise water rates on residents “right now” to pay for the lead service line replacements, but did note they “could have to raise rates in the future.”

In response to a question from James about principal forgiveness, Antosik said there might be some, adding that after the application is submitted, the state will then score it.

“If we get a good enough score and the funding is there to do so, there’s a possibility of 10% forgiveness,” he said. “I believe in the past you’ve seen something somewhere around the lines of 10% principal forgiveness. Now it’s hard to say whether we’ll actually see that principal forgiveness or not. That’s really up to the state and the resources they have.”

When asked by Mayor Melanie Piana if bonding had been ruled out from the project plan, Antosik said it had not, but that they had not fully explored the option because of the additional costs and how feasible it would be for them to issue a bond with the water and sewer fund.

Piana said that avenue should be explored to some extent, as it could accelerate the replacements rather than completing 5% a year over 20 years.

“I don’t know what our bonding flexibility is given that we have a bond out for ‘The dot’ project, as well as a couple others that are expiring soon,” she said. “To me, that would be something to take a look at as well, but given the very narrow parameters the state has enabled cities to actually pay for their unfunded mandate that the state created — an important mandate for the public health and safety of our residents — but at the same time, the state has made it very difficult and challenging for cities to actually pay for this replacement with the few options they’ve provided already.”

Antosik stated during the meeting that the topic will come back to council before the final loan terms are approved. For the entire discussion, the public hearing can be viewed under the council’s June 22 meeting on the city of Ferndale’s YouTube page.

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