ESCANABA — Escanaba residents have seen the effects of water rate hikes on their utility bills, but the state-mandated line replacement project the hikes were meant to help pay for have not yet begun.

“Full-scale activity will begin the year 2021. That’s been my message — even though people may not have heard it — for the last two years,” said Water/Wastewater Superintendent Jeff Lampi.

Even on paper, the scale of the water system project is far from small. A draft plan put together by C2AE, an engineering and architecture firm based in Escanaba, earlier this year spans four volumes and nearly 300 pages. That plan is available in its entirety on the city’s website under “Water System Improvement Project” on the water department page.

The two major parts of the improvement plan are upgrades at the city’s water treatment plant and the service line replacements the Michigan Department of Environment, Great Lakes, and Energy (EGLE) has mandated in an effort to eliminate lead contamination in the wake of the Flint water crisis.

Under EGLE’s mandate, any service line connected to a main using a lead gooseneck or that was once connected by a lead gooseneck is considered contaminated, regardless of the amount of measurable lead present in the property’s water. EGLE is further requiring cities begin replacing lead service lines at a rate of at least 5 percent per year starting in 2021 and is leaving the city responsible for all work and costs associated with line replacements up to the property’s water meter, which is typically located inside a basement.

EGLE’s replacement schedule means the city has 20 years to complete the replacement of all of the affected service lines in the city. While the state has not given any leeway on the schedule — even with the COVID-19 pandemic, which can impact the hire of third-party contractors — that doesn’t mean the city hasn’t asked for leniency.

“We asked for forgiveness on things and they said, ‘No, you have to follow the rules,’ and there was no forgiveness on anything. COVID doesn’t matter when it comes to water quality,” said Lampi.

While the city has secured funding through the rate increases, there are functionally two plans for how to pay for the line replacements project. One is to use the revenue from the rate increases over a period of time, and the other is to utilize a $20 million loan from the state to get more work done in a shorter period of time.

The city has been approved for the loan with a 12% forgiveness rate, which is less than Lampi had hoped the state would be willing to forgive.

Assuming the city spends $15 million on lead service line replacements and no other changes are made to the loan’s terms, the 12% forgiveness rate would include $600,000 in forgivingness for lead service line removal and $1,800,000 in forgiveness because Escanaba has been designated a “disadvantaged” community.

Under the current loan terms, the city could use $3 million to $4 million for plant improvements, but the amount forgiven for lead service line replacement would be reduced by about $90,000.

Regardless of the forgiveness rate, the city would be able to pay back the loan using the current water rates. The city council will ultimately decide if the city accepts the loan or works solely with the money it is currently raising.

“We can take the $20 million loan and go through the project plan and slam out major areas of the city relatively fast, or we can go the slow and steady route, utilizing our funds that we are collecting based off of the water usage and do about a million dollars a year — and we would somewhat follow that project plan, but we would incorporate that plan with street work so that we’re working in conjunction with DPW’s paving efforts,” said Lampi, adding he did not have the Escanaba Department of Public Work’s paving schedule for 2021 and therefore couldn’t predict where line replacements were most likely to occur.

If the city does not take the loan out to inject cash into the project, Lampi said he would seek an extension for the project.

“If we don’t (take it), I’m going to ask for 25 or 30 years, or even 40 years, to do this work instead of 20, because if we can get 30 years to do this work, that means the difference between doing 200 services a year versus 150 or 130,” said Lampi.

At this point, Lampi is functioning as if the loan were not an option so the funds are available regardless of the council’s choice.

“The last years (have) been a fund-building process to get cash on hand to fund the construction. We’ve had an empty piggy bank, and two years is what I’ve taken to get the money in the piggy bank to do that work,” he said.