How federal funding fiasco could impact Kendall municipalities' Lake Michigan water project

With construction expected to begin later this year on its Lake Michigan water project, Yorkville is depending on federal funds to help cover it share of the costs for the colossal infrastructure project. The project is a joint one between Yorkville, Montgomery, and Oswego, and the DuPage County Water Commission to bring Lake Michigan utility water to their residents.

However, after a memo from the Office of Budget and Management paused – then unpaused – the dispersal of federal grants and loans, that funding is less certain. Before the Trump Administration rescinded the memo on Jan. 29, Yorkville city officials discussed the ambiguity surrounding the water project’s future.

City Administrator Bart Olson said on Jan. 28, that both the city’s federal WIFIA loans and their IEPA low interest loans for the project were at potential risk. The loans are distributed from the Environmental Protection Agency.

WIFIA loans are expected to cover up to $126.732 million of the $158.165 million phase I and II of the infrastructure project. Low interest IEPA loans will contribute another $18 million to the project. The city is responsible for the rest of the tab, including an $8 million connection fee.

“We were able to confirm mid-morning that both our WIFIA loans and our IEPA low interest loans that are federally backed are in jeopardy, at least according to the executive order,” Olson said at the Jan. 28 City Council meeting. “A lot of things are in flux. EPA staff weren’t able to confirm the actual impact.”

While the memo has been rescinded the office still wants by Feb. 10 detailed information from programs and projects that were subject to the initial funding freeze.

With the ambiguity regarding federal funding expected to continue, Olson said it’s important to have a game plan in place.

“We’ve already been awarded the loans, and so there’s checklists and things that have to be done that are going to occur weeks or months into the future,” Olson said after the meeting. “We will continue to work on both documents and interface with staff from both agencies.”

The project currently is scheduled to be completed with Yorkville residents first sipping on Lake Michigan water in 2028. It was deemed necessary because the region’s underground aquifer was being mined at an unsustainable rate, especially with the area’s booming population.

Olson said he does not believe any of the extra steps will impact the project’s lengthy timeline, and the city is not even expected to close on the WIFIA loan until September.

“The implication would be that at some point they would do their checklist, compare it against the executive orders, and then say this program is good or this program needs to be fixed,” Olson said. “But right now, there are a lot of unknowns.”

Olson said the city expects more guidance on the status of their federal loans by mid-March, and it will continue notifying the public as it receives updates.

He said the city’s other large infrastructure projects are not affected because they are mostly city and state funded. This includes things like road reconstructions, water main projects, and the revitalization project on Yorkville’s downtown district.

Oswego and Montgomery, the other municipalities part of the project, are keeping an eye on the funding as well.

Oswego Village Administrator Dan Di Santo is optimistic the village will receive the funding needed for the project.

“We know that the Water Infrastructure Finance and Innovation Act has been a program with bipartisan support and was well funded during the first Trump administration, so we have reason to be optimistic about this funding coming through,” Di Santo said in an email. “For Oswego, approximately 50% of our connection to the DuPage Water Commission system will come from low interest WIFIA loan funds. The application for WIFIA funding has been submitted, but not yet approved.”

The total project cost is estimated at $249.2 million. Oswego will be picking up 35.36% of the costs related to bringing Lake Michigan water to the area. Yorkville’s share will be 40.22% and Montgomery’s share will be 24.42%.

At this time, Oswego’s proportionate costs to extend the transmission mains and install the metering stations for the project are estimated at $88.1 million. In addition, Oswego will have to pay the DuPage Water Commission a $11 million buy-in cost.

Mongomery Communications Manager Kristina Nemetz said the village has not received an update on the status of the funding.

“We have not heard anything officially, but obviously when you hear about federal funding freezes, it is concerning as a community,” she said in an email. “At this point in time, Montgomery was approved for $96 million in WIFA funding. This is a loan program that will be essential to the project in years 2027 and beyond.”