Vermilion officials say federal talks may lower sewer project cost as residents face big rate hikes

Vermilion — City officials on Monday described ongoing negotiations with federal regulators and consultants over a multiyear wastewater project that prompted a recent large sewer-rate increase for residents.

Mayor Fortover and Finance Director Amy Hendricks told the Vermilion City Council they are pursuing adjustments to the project schedule and funding after work by the city’s consultant, CDM Smith, laid out a plan that led to higher projected rates. "We estimate that about $732,000 or more dollars per year in additional taxes from the residential portion of the development components," Mayor Fortover said during council discussion.

The council's discussion centered on whether the city can renegotiate project scope and the assumed cost used to set rates. Hendricks said the city has a draft 2025 budget and is continuing to refine energy and labor cost projections while auditors complete a review. She confirmed the city hired CDM Smith for planning and design and that the $6.9 million figure paid to CDM Smith covers planning and design phases, not the full construction cost.

Council members pressed administration to keep pressure on federal regulators. One councilor asked whether renegotiation was possible and cited optimistic scenarios discussed in the meeting: "It will depend on structuring of the final estimates of the project, how that can be timed out, and, hopefully, the total price will be decreased," Fortover replied.

Councilors also raised the question of using newly collected real-estate tax revenue to offset immediate rate increases while negotiations continue. Finance committee chair Jeff Lucas summarized preliminary tax-rate impacts presented to council: "The estimated trend ... would be around $1,067,000 annually," he said, referencing the combined county and local assessment changes the administration provided to the committee.

Several council members urged caution about reallocating funds without finalized cost estimates from regulators and engineers. One council member said pausing to await EPA and USDA responses before changing rate schedules would be more responsible than committing reserves now. Others countered that short-term relief for residents might be appropriate while the city renegotiates.

Background presented to council indicated the larger wastewater project the city is planning was initially sized in engineering reports at tens of millions of dollars; during the meeting some councilors speculated informally about possible reductions in that estimate. The administration told council it is seeking extensions and clarifications from the U.S. Environmental Protection Agency and federal funding partners and is pursuing redesigned options to reduce the ultimate cost.

The meeting did not produce a formal vote on changing rates or reallocating tax receipts. Council members asked administration to continue negotiations with regulators and to provide a clear accounting of how collected funds will be applied if project costs decrease.

City staff said they would return with updated budget figures and a timeline of renegotiation outcomes once federal responses and consultant estimates are resolved.

The council scheduled follow-up budget and finance committee meetings; no final decisions on refunds or temporary rate relief were made Monday.