Water / Sewer Options Systems Viability Act Illinois Municipal League Conference Friday, September 18th 3:30 p.m. Stevens Salon A-4   Jim Bilotta Aqua Illinois Bob Johnson Illinois American Water

Illinois Overview and Challenges 6,994 forms of government – Ranked #1 Nationally, 1,299 municipalities (19,492 nationally) – Ranked #1 102 Counties 1,432Townships Source: National League of Cities Website Illinois is $164 billion in debt (per usdebtclock.org) Municipals struggling to meet pension funding liabilities Diminishing municipal revenue streams (LGDF, sales tax, EAV) Utility and other grant dollars decreasing, replaced with loans EPA enforcement actions and regulatory changes, especially sewer Qualified utility labor and certified operators harder to find Municipalities commonly not charging true cost of service for water or wastewater, subsidizing from other funds which are increasingly difficult to generate Lack of necessary rate increases (political)

Illinois Water Utilities Overview PWSIDs Population Range Number of Systems 17 – 499 665* 500 – 999 318* 1,000 – 1,999 269* 2,000 – 2,999 96 3,000 – 3,999 66 4,000 – 4,999 49 5,000 – 9,999 120 10,000 – 19,999 100 20,000 + 113 1,796 total * 70% of all Public Water Suppliers serve less than 570 customers (Per IL EPA) Investor Owned Utilities in Illinois serve approximately 1.2 million people November 17, 2018

Systems Viability Act House Bill 1379 Public Act 98-0213 Signed by Governor Quinn in August 2013, expires June 2018 Illinois Commerce Commission regulatory oversight Rates Customer Service Prudency of Investment Option for municipalities 7,500 connections (meters) or less IOUs must have 30,000 connections or more (economies) Original cost vs. Appraisal valuation (RCNLD) Contributed property Depreciation rates Capital investment incentives Consolidation into existing service area creating greater economies of scale for capital investment and rates

Although many are similar, no two municipalities are alike Systems Viability Act Although many are similar, no two municipalities are alike Allows for municipalities to focus on core function Police Fire Roads Social Services Economic Development Shift liabilities Maximizing value of assets - hidden cash to reinvest into community This is an OPTION which did not exist until 2013 and expires in 2018