January/February 2018 Issue

Also in this issue: Court of Appeals Addresses the Disciplinary Process for Police and Fire Commissions     |     New Law Exempts Religious Organizations from Paying Property Taxes when a Church Burns Down

Legislature Approves Options for Providing Financial Assistance for Private Lead Service Line Replacements

Lawrie J. Kobza | 02.08.18

The Wisconsin Legislature has approved legislation (2017 Senate Bill 48) which creates two new options for assisting private property owners with the replacement of their privately-owned lead service lines. These two new options are in addition to existing municipal programs which may be funded with DNR grant proceeds or other municipal monies. The Governor is expected to sign the bill.

One option is for the municipality to establish a loan program that is paid back by special charges placed on a property owner’s tax bill. A municipality may provide a loan to a property owner to replace that property owner’s private lead service line, or it may facilitate owner-arranged financing from a third party for that purpose. Loan repayments would be collected in installments over time through special charges included on the property owner’s tax bill. An unpaid installment payment would become a lien on the property. This option, which will be included in Wis. Stat. § 66.0627, is similar to loan programs allowed for energy and water efficiency improvements. If a municipality establishes this type of program, the legislation provides that it must require every property owner with a private lead service line within its borders to replace that line.

Another option is for the public water utility to establish a program that would allow revenue from water utility rates to be used to provide property owners with financial assistance in replacing their private lead service lines. This option has previously been unavailable in Wisconsin.

In order to establish this type of program, the city, town, or village in which the water public utility provides service must first enact an ordinance that permits the water public utility to provide financial assistance. It must also enact an ordinance that requires every property owner with a private lead service line within its borders to replace that line. Finally, the Public Service Commission of Wisconsin (“PSC”) must approve the water utility’s program. 

In order to obtain PSC approval, a water public utility must submit an application to the PSC. The application must include a description of the proposed financial assistance to be provided to property owners and a description of the method for funding the financial assistance. Financial assistance may be provided in the form of a grant, a loan, or both. The application must also include a description of the customers served by the public utility that would be eligible for financial assistance, and any other information that the PSC requests. 

Once the PSC has received a complete application, the PSC is required to investigate the application. The PSC may, but is not required to, hold a public hearing on the application. If there is no public hearing, the PSC must complete its investigation within 90 days. If there is a public hearing, the PSC must complete its investigation within 180 days, unless the PSC chairperson extends the review period for good cause. The PSC must grant its approval if it finds that a public utility’s proposal is not unjust, unreasonable, or unfairly discriminatory, and if the program satisfies the conditions set out in the legislation.

The legislation establishes numerous conditions on financial assistance programs funding with water utility revenue:

• The amount of any grant provided by a water utility may not exceed one-half of the total cost of replacing the owner’s portion of the water service line.
• Any loan provided may not be forgiven by the water public utility or the municipality. A delinquent loan replacement may be placed on the property owner’s tax bill, just like delinquent utility charges.
• If a water public utility proposes to provide financial assistance as a percentage of the cost of replacing the property owner’s portion of a water service line, the percentage must be the same for each owner in the customer class.
• If a water public utility proposes to provide financial assistance as a specified dollar amount, the dollar amount must be the same for each owner in a customer class. 
• If a water public utility provides retail water service in multiple political subdivisions (cities, villages, or towns), the utility may only fund financial assistance in an individual political subdivision with utility revenue collected from retail water customers located in that individual political subdivision.
• The amount of utility revenue collected from a class of customers to fund financial assistance under the program may not exceed the amount of financial assistance received by that class.

A water utility with an approved program will only be allowed to provide financial assistance for private lead service line replacement if the utility-side water service line and the water main pipe that are connected to the customer-side water service line are lead-free or are replaced at the same time as the customer-side water service line.

The intent behind this legislation has had broad support, but there have been challenges in developing a consensus on whether and how to provide financial assistance for private lead service line replacement with utility revenues. The legislation is the result of this consensus building process. With this legislation, Wisconsin continues to be at the forefront of efforts to replace lead service lines.

— Lawrie Kobza