Issue:
Funding for the City of Lexington, Illinois Wastewater Project

OVTF Position:
The OVTF endorses the proposal by the City of Lexington to support funding of the wastewater project.

Request directed to:
Federal government for $1.5 million

Background:
The City of Lexington, population 1,920, has never had a municipal wastewater collection and/or treatment system. It is the largest community without a wastewater collection and treatment system in the state of Illinois. Currently, the residents have septic systems, owned and operated by individual property owners, and a "wild cat" type of sewer system. Each home has been responsible for its own sewage system and/or direct piping of their wastewater to the "wild cat" system which merely transports the wastewater through an existing drainage tile system to various unpermitted discharge locations. The Illinois EPA has noticed the City of violations of environmental statutes, regulations and/or permits found in the Environmental Protection Act. The existing conditions (lack of space and unfavorable soil conditions for septic systems, inadequate septic systems and "wild cat" sewer system effluent contributing nutrients to surrounding creeks and the Mackinaw River) warrant immediate action.

The City has considered the probable development costs and has analyzed various means of paying for the project. An important consideration in the development of the various financing models is to maintain a competitive cost of living for residents of Lexington as compared to the cost of living in surrounding communities. The various sources of local revenue that have been analyzed include: fixed and variable user fees, municipal utility taxes, non-home rule sales tax, tax increment finance (TIF) district and property taxes. The property tax rates a barometer for cost of living, ranks No. 6 out of 21 McLean County communities. Increasing property taxes will deteriorate the attractiveness of living in the community. Similarly, user fees must be comparable to surrounding communities. Lexington has the fifth highest water fee out of 100 communities surveyed. The City has taken steps to capture revenue from all other sources. The yield of all the options combined, in consideration of the City's objective to maintain a competitive cost of living, falls short of the necessary resources to build the project and respond to the IEPA violations.