Hammond and Chicago Heights — two communities that once duked it out over water rate disagreements — ushered in a new era Wednesday night as officials reached a deal in which Hammond will supply more drinking water to the Illinois community for resale.
The two communities have come a long way since 2012, when Hammond and Chicago Heights met in federal court to battle it out over rate disagreements.
“We’ve gone from federal court to shaking hands,” Hammond Mayor Thomas McDermott said Wednesday after appearing before the Chicago Heights City Council, where he, staff and Chicago Heights Mayor David Gonzalez received applause for leading the charge in the long-negotiated agreement.
Under a new 20-year contract approved by the Chicago Heights City Council, Hammond will sell up to 10 million gallons of Lake Michigan water supply per day to Chicago Heights at a rate of $2.05 per 1,000 gallons, of which the community will sell to neighboring south suburban communities. During the first few years, Hammond will sell 5 million gallons per day to Chicago Heights, but will ultimately sell as much as 10 million gallons per day once the city finishes water infrastructure expansions and improvements.
Hammond stands to benefit to the tune of $2 to $3 million annually in the first few years — with the likelihood of that revenue doubling as Chicago Heights pulls more neighboring communities into the mix.
“We’ve been working very hard with Hammond trying to bring additional Lake Michigan water to the south suburbs. We’ve been on this for a good four, five years now,” Gonzalez told council members Wednesday night.
Unlike other contracts in which Hammond charges municipalities at 88 percent of the rate the city of Chicago charges, the rate under this contract is based on consumer price index.
“Hundreds and hundreds of hours went into this deal,” McDermott said. “Mayor, you stressed a lot of things from the very beginning, including independence from Chicago … saying that once we get the water from Hammond, it’s got to be marketable to the communities that the mayor wants to hook up to.”
Gonzales said that’s “the beauty of this contract,” noting the CPI will have a floor of 1 percent and a ceiling of 3 percent. “These future municipalities looking to control costs, they don’t have to be worried about what the Chicago rate will be 5, 10 years from now.”
The two communities remain under a separate contract in which Hammond sells to Chicago Heights, which in turn supplies water to Glenwood, Thornton and south Chicago Heights.
Under the new, second contract, Chicago Heights will ultimately supply to Illinois communities like Homewood, Flossmoor, Olympia Fields, Matteson, County Club Hills, Hazel Crest East Hazel Crest and Sauk Village, documents show.
Just a few short years ago, the two communities were battling it out in federal court due to disagreements over negotiations as a 30-year-old contract with Chicago Heights expired. The contract did not contain any clause that allowed for the rate to be modified, and under that contract, Chicago Heights was paying only 57.5 cents per thousand gallons for the water it was getting from Hammond.
McDermott said the new rate is fair and reasonable for both parties.
The contract must be approved by both municipalities before it becomes official. The Hammond Board of Works is slated to take it up for a vote at its Sept. 13 meeting.