Kildee introduces bill to help communities replace lead pipes

WASHINGTON (WNEM) - Congressman Dan Kildee introduced new legislation that would help more communities remove lead service lines.

The Financing Lead Out of Water (FLOW) Act would allow bonds that are issued by public water utilities to finance the removal of private lead service lines to bypass the IRS’ private business use test.

By removing this barrier, as Kildee states, the tax code will help more communities access low-cost financing for lead service line replacement and comply with federal drinking water standards.

“What happened to my hometown of Flint is not an anomaly; it is a warning to other communities across America. We need to get serious about removing every lead pipe to ensure everyone has access to clean, affordable drinking water,” Kildee said. “My new legislation would cut through federal red tape to make it easier for communities to support water infrastructure projects removing lead service lines that threaten public health.”

Lead service lines are often owned by both local government and private entities. Removing lead service lines can be costly. However under current law, if a drinking water utility issues bonds to finance the replacement of lead service lines that are buried on private property, the utility must prove the bond proceeds will not mainly benefit private businesses.

Kildee notes proving this to the IRS requires an extensive and costly analysis of the utility’s service area.

“There are many barriers utilities face in replacing lead and galvanized services for customers. The ability to fund these replacements in a way that is affordable for customers is one of those barriers,” said Paul Reinsch, director of the city of Saginaw’s Department of Water and Wastewater Treatment Services. “The passing of the FLOW Act, as we understand it, would greatly reduce the complexity and cost of issuing bonds for lead service line replacements.”

The FLOW Act is endorsed by the Association of Metropolitan Water Agencies, American Water Works Association, Children’s Environmental Health Network, National Rural Water Association, National League of Cities, Government Finance Officers Association and the National Association of Counties.