The northern Ontario City of Thunder Bay has approved a $1.3-million community loan program to help residents replace lead service pipes on private property.
The funding was initially intended to be a grant program; however, in June 2020, it was reconfigured as an interest-free loan program in order to have a wider reach for residents. The city approved the loan program at its January 11 council meeting as officials estimated that Thunder Bay still has about 8,700 properties with lead service pipes.
“It’s a golden opportunity to improve your home at no interest cost, which is a good deal,” said Councillor Mark Bentz.
The loans are available now and come in five and 10-year terms, the latter being for those who qualify for the city’s tax and water rebate programs.
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There are currently 24 active loan applications for the Private Lead Water Service Replacement Program, 18 of which have been completed at this time, and six of which are being finalized, according to the city’s central support officials.
The city began putting sodium hydroxide in the water supply in 2018 in an effort to reduce lead levels, and the new loan program comes as it faces a $350-million class-action lawsuit filed by residents over that decision, which has been blamed widely for pinhole leaks in pipes.
Using current interest rates, it is estimated that, if $1,350,000 in interest-free loans were issued under the lead pipe replacement program, the resulting loss of investment income over the life of the loans would be $100,000.
While the cost of removing a lead service pipe on private property depends on a number of factors, including the length of the pipe, city officials estimate that the average replacement is going to cost about $3,000 per property. City documents suggest that, if all loans are for approximately $3,000, the city can issue 450 loans.
“Changing the lead on their side will benefit the next household owner, and the next one, so there will be generations of households that will benefit from this program,” Councillor Andrew Foulds told city council when the program was proposed in the spring. “We’ll see where it goes in terms of the success,” he added.
City administration is set to report on the program in the fall of 2021 and annually thereafter. They will provide recommendations on the status of loans issued, along with any demand not met by the existing loan envelope.
Thunder Bay approved its 2021 budget earlier this month. This year’s budget provides an increase in the municipal tax levy after growth of $4 million or 2%. The proposed 2021 capital financed by the tax levy budget of $16.5 million represents an increase of $1.3 million over 2020 levels, increasing the investment in infrastructure renewal.