Chicago Federal Reserve Outlines Potential Funding and Financing Strategies for Replacing LSLs

The Federal Reserve Bank of Chicago (Chicago Fed) has released a summary from a November 2022 convening discussing the issues of lead service line (LSL) replacement. For the meeting, Chicago Fed brought together municipal water system officials, philanthropists, and innovative leaders who work in public finance or with private capital markets. The convening stemmed from Chicago Fed’s Lead Service Line Replacement project, “an initiative that has leveraged [Chicago Fed’s] expertise in public policy, finance, and community economic development under the Federal Reserve’s broader mission to foster a strong and inclusive economy and promote an efficient financial system.” The summary outlines potential funding and financial strategies for LSL replacement, including:

• Low-cost federal funding sources such as the Bipartisan Infrastructure Law, Drinking Water State Revolving Funds, and Water Infrastructure Finance and Innovation Act (WIFIA) loans;
• Municipal debt markets;
• Community Reinvestment Act for low- and moderate-income communities; and
• Attracting environmental, social, and governance (ESG) investors.