2026-14 Ordinance Authorizing the City of Decatur, Macon County, Illinois, to Borrow Funds from the Public Water Supply Loan Program through the Illinois Environmental Protection Agency for the Galvanized Water Service Line Replacement

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Council Memo Public Works Department No. 2026-30 DATE: 3/16/2026 TO: Honorable Mayor Julie Moore Wolfe and City Council Members FROM: Melissa Hon, City Manager Matt Newell, Director of Public Works SUBJECT: Ordinance Authorizing the City of Decatur, Macon County, Illinois, to Borrow Funds from the Public Water Supply Loan Program through the Illinois Environmental Protection Agency for the Galvanized Water Service Line Replacement, City Project 2025-20 SUMMARY RECOMMENDATION: It is recommended that the City Council adopt the attached Ordinance authorizing the City to borrow up to 56,500,000 from the Public Water Supply Loan Program. which is administered by the Illinois Environmental Protection Agency (IEPA). The proposed loan will cover engineering and construction costs associated with the 2026 Galvanized Water Service Line Replacement Project. BACKGROUND: Illinois Environmental Protection Agency (IEPA) State Revolving Loan Program The IEPA Wastewater and Drinking Water loan programs provide low-interest loans through the State Revolving Fund (SRF). The SRF includes two loan programs: the Water Pollution Control Loan Program (WPCLP) which funds both wastewater and storm water projects, and the Public Water Supply Loan Program (PWSLP) for drinking water projects. The galvanized requiring replacement (GRR) and lead service lines are a separate funding source within the PWSLP and have an interest rate is 0.0% with many loans receiving principal forgiveness. Project Funding through the Public Water Supply Loan Program Although the lead service line replacement (in our case, GRR) laws represent an "unfunded mandate". the IEPA has been actively encouraging water utilities to seek funding from the State Revolving Fund (SRF) for the lead service line replacement program. The program heavily prioritizes funding for low-income census tracts in terms of"principal forgiveness loans" (in effect, grant funding) for replacement projects in the most eligible census tracts. The City applied for the program in 2024 which included a five-year replacement program starting in the IEPA's FY 2026 (July 1. 2025-June 30. 2026). The City was approved and listed in the IEPA's Intended Use Plan, published July 1. 2025, for 54,029,413 with $2,000,000 as principal forgiveness and the remaining at 0°o interest for 30 years. The passage of an ordinance authorizing a loan agreement to borrow funds from the Illinois Public Water Supply Loan Program is one of the final steps in securing an IEPA low interest loan. The ordinance addresses the funding for the project and assures that the City is able to repay the loan over a 30-year period beginning at the substantial completion of the project. The funds included in the loan request are summarized in the following table: