One year later, South Elgin still keeps former Otter Creek District above water
By Janelle Walker For Sun-Times Media October 17, 2013 7:00PM
South Elgin's Thornwood sprawling subdivision was targeted as a "self-sufficient" residential development — including having its own water reclamation district. | File~Sun-Times Media
Updated: November 19, 2013 6:06AM
SOUTH ELGIN — Residents of the sprawling Thornwood subdivision and other development west of Randall Road probably haven’t noticed any differences to their public utilities in the past year.
Their water is still coming through the same water pipes, and waste is going out through the same sewage systems and being treated by the Fox River Water Reclamation District, just as they have been since Thornwood was first developed.
For the past year, however, the water reclamation district that was formed to service those residents has been gone. South Elgin took over the Otter Creek Water Reclamation District — also known as OCWRD — on Aug. 31, 2012. Otter Creek ceased to exist, as did its board.
In that year, South Elgin public works has not only taken over operations and management of what once was OCWRD, but has been performing maintenance on the equipment that has not occurred since wells and sanitary lift stations were installed — some more than a decade ago.
Last week, contractors began pulling the pumps to a deep well in the Otter Creek system — one of two well pumps that have not been serviced since they were installed 10 to 13 years ago.
The Otter Creek District was formed “well before any of the property west of Randall Road was annexed into the village,” said Village Administrator Larry Jones.
At that time, the Thornton family owned a sod farm in the area and intended to develop the land for housing themselves.
OCWRD was formed to provide water and sewer services to the area, Jones said.
“They had no facilities, and no board, when it was first created,” Jones said. The Kane County Board appointed Otter Creek’s first board.
Then, Crown Development approached the village in the late 1990s about developing Thornwood.
South Elgin’s water and sewer infrastructure did not reach that far west, however.
“There were a great deal of costs for the project. There was no way for the village, with water and sewer capacity, to support a development of that size,” Jones said.
The Thornwood development plans included nearly 1,500 residential units and 1 million square feet of commercial space when completed.
“That called for a 2 million-gallon water tower, two wells — which would have to be very deep wells — two lift stations and a water treatment facility,” Jones said.
“It was … well over $10 million in infrastructure to support the development,” he added.
The decision was made to use the Otter Creek District “as the funding and operating source … that was what was decided with approval of the village,” Jones said.
Otter Creek then sold bonds needed to put the water and sewer systems into place, without providing additional burdens to South Elgin’s existing residents and taxpayers, he said.
“The village board felt it was less risky for the existing entity to do that,” added Steve Super, director of community development for South Elgin. He was an assistant in the development office at that time.
The original annexation agreement, however, allowed South Elgin to take over Otter Creek at any time — presumably once the bonds were paid off and the district was profitable.
But problems developed.
When the village assumed control of the district, it covered 770-plus acres with 1,468 residential and 215 commercial customers. However, the district never grew to its original expected boundaries, as several developments anticipated for the district either never materialized or were annexed by surrounding communities and not South Elgin.
As expected additional western development failed to occur, businesses that wanted to tap into the existing Thornwood water and sewer lines saw those fees escalate dramatically.
“Their recapture costs for tap-on fees started to escalate over time,” Super said. “The the non-residential commercial rates were really, really high. Ours were thousands of dollars — vs. tens of thousands (for Otter Creek rates.) Their rates were 10 times ours for a one-time fee to tap into the system.”
While the high tap-on fees did not thwart developers during the booming early 2000s, Super said, they became an issue for those developers when the economy soured in 2008.
Fees continued to escalate, he said, as more money was needed to service OCWRDs bond debt.
At the same time, a firm was being paid by the Otter Creek board to administer the water reclamation district, even though South Elgin was doing all of the billing as part of the annexation agreement.
“The point, it seemed to us, is they would not be able to continue to pay the bills if they didn’t keep upping the fees,” Super said. “Otter Creek had one source of revenue, was built for a single purpose, and had limited ability to get additional funds.”
If Otter Creek had been able to include 300 to 500 more residential units, the math may have worked, Super said.
“Why it didn’t work, when we did our financials, is they had to pay consultants to operate the system. We were able to absorb that without additional cost,” Super said.
With incoming water fees going to consultants and bond costs, money was not being spent by the Otter Creek board on maintaining the equipment either.
“When we took it over, we were operating it for them. They were paying our staff to run it, but they had their own engineer and management team,” Super said.
South Elgin did its own review of the wells and lift stations once the village took over the district. “There had not been a lot of maintenance in 10 to 12 years,” Super said.
In early spring 2013, the sanitary lift station at Brookside Park failed.
“One pump wasn’t working properly … and then a second pump failed,” he said. “What we found was the pumps were not designed properly. They vibrated loose.”
Portable pumps were brought in to send the sewage on down the line. The lift station was completely drained with tankers brought in by the nearby Fox River Water Reclamation District, and all three pumps were re-engineered and reset.
The work was paid for with $3 million in set-aside funds from the Otter Creek district — required by investors and part of the district’s original bonding.
The 350-horsepower well pump recently pulled is at the bottom of a 1,950-foot well.
Typically, Super said, pumps are pulled every seven to 10 years for inspection. The second well pump will be pulled and inspected in 2014.
South Elgin’s public works employees also have performed other maintenance on the former Otter Creek offices on McDonald Drive, including painting and other neglected upkeep.
In the end, Super and Jones said, the changeover happened just as it was supposed to, with residents noticing no differences.
There could be changes coming, however, as South Elgin looks at a water rate study for the entire village.
In the end, Jones said, the village took over a system that was serving its residents, without negatively impacting the older sections of the community.
“If it were to fail, we couldn’t ignore it.” Super said. “We had to step in.”