Recovery funds to replace lead service lines

By Kevin Elliott

Birmingham will use more than $2 million in federal recovery aid related to the coronavirus to help replace some 700 lead service lines throughout the community, city commissioners determined at their meeting on Monday, June 28.

The city is eligible for $2.2 million of recovery funds available from the $350 billion American Rescue Plan Act. The funds can be spent in any of four categories: public health and economic impacts; premium pay; revenue loss; and investments in water, sewer and broadband infrastructure.

Birmingham Finance Director Mark Gerber told commissioners that the recovery funds could be used to replace lead service lines. He said there are about 700 lead service lines in Birmingham that must be replaced, as mandated by Michigan’s new lead and copper rules. The total cost of the lead service line replacement project is about $5 million.

“It’s clear we can use these funds for lead service line abatement. Some of the other uses aren’t so well defined, yet,” Gerber said. “The problem with all of this is that the money is coming in … and there are still a lot of questions as to what you can use this money for… lead service lines are allowable.”

Gerber said the $5 million project is currently being funded by about $500,000 in property taxes each year. By using recovery funds to hasten the program, the city could free up funds for other uses or lower the annual tax levy. 

Commissioner Clinton Baller questioned whether federal funds specifically allocated for lead service line replacement could be forthcoming, and if so, whether using recovery aid funds could impact that possibility. 

The previous week, President Biden announced his support for a $1.2 trillion Infrastructure framework that includes eliminating the nation’s lead service lines. 

Birmingham City Manager Tom Markus pointed out that $2.2 million is less than the $5 million estimated for the total project. Further, requirements for future federal money isn’t yet known. 

“What happens is, the legislature passes a bill to what they want it allocated to, then the agencies of the federal government decide what the rules and regulations are,” Markus said. “There’s a lot of speculation as to how they will be administered. In fact, the very program we are discussing this evening continues to be refined as we speak. This is a constant checking of the federal record as to what the regulations are going to be, but we have a lot of infrastructure needs, like most communities.”

Looking at lead service lines at a per capita basis, Markus said there are communities that have significantly more need than Birmingham. That’s likely due to the amount of reconstruction in the city, which requires that lead service lines are replaced. Older, urban areas that have had less redevelopment are likely to have greater needs.

Under the American Rescue Plan Act, half of the recovery funds will immediately be available to the state for distribution, with the other half distributed a year later. The funds must be obligated by December 31, 2024, and spent by December 31, 2026. 

Commissioners unanimously approved a resolution to use the funds toward the city’s lead service line abatement program.