Funding and Financing Options for Full Lead Service Line Replacement

waterresources
Written By Palencia Mobley, P.E.

By Palencia Mobley, P.E., and Denise Schmidt

EPA’s 2024 Lead and Copper Rule Improvements (LCRI) require the replacement of all public and private portions of lead service lines (LSLs) by 2037—spurring urgent action from municipalities and utilities. 

While the federal Infrastructure Investment and Jobs Act (IIJA) allocated $15 billion for lead pipe replacement, the estimated national cost of replacing between 4 million and 9.2 million LSLs may exceed $40 billion-$90 billion. Bridging that gap will require additional funding, especially for under-resourced communities that have long faced barriers to traditional infrastructure financing and have not received their fair share of federal resources. 

Our policy brief synthesizes practices and policies from cities and utilities that are creatively combining traditional and non-traditional funding and financing mechanisms to overcome legal, financial, and logistical barriers to covering LSL replacement costs. 

Key takeaways include: 

  • State policies that clearly authorize the use of public funds for private side replacements reduce legal friction and facilitate efficient project delivery; 

  • Cost-sharing programs are often less effective in high-poverty areas, prompting cities to absorb the full cost to ensure participation; and 

  • Layered capital stacks—strategically blending federal, state, and local resources—can create scalable, resilient models for LSL replacement.

We also present a menu of creative funding and financing tools that can be tailored to fit the fiscal, legal, and political realities of different jurisdictions and address the unique challenges posed by LSL replacement, including:

  • Environmental Impact Bonds

  • Pay for Success contracts

  • Utility revenue leases

  • Local sales taxes

  • Value capture mechanisms 

Ultimately, achieving full LSL replacement nationwide will require not only federal support but also bold, innovative action from states and localities to expand the pool of eligible resources, remove statutory barriers, and deploy capital in ways that prioritize public health, affordability, and environmental justice.

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Palencia Mobley, P.E.

Palencia Mobley, P.E. is EPIC’s Midwest Funding Navigator Manager. Palencia has built an extensive career in planning, designing and constructing drinking, waste and stormwater infrastructure. A graduate of Detroit Public Schools, the University of Michigan (Bachelor of Science in Chemical Engineering), and Wayne State University (Master of Science Civil Engineering), Palencia was one of the youngest minority women to ever attain licensure as a Professional Engineer in the State of Michigan in 2006. In 2016, she was appointed by Mayor Mike Duggan and approved by the Board of Water Commissioners as the Deputy Director and Chief Engineer of the Detroit Water and Sewerage Department (DWSD) where she was responsible for the field service operations, engineering, facilities, fleet, capital construction, and regulatory affairs of the department. Under her leadership, DWSD increased investment in green stormwater infrastructure from $2 million from 2010-2016 to more than $21 million by 2020. She also increased the renewal of water and sewer infrastructure fivefold, meeting industry standards of 1% infrastructure renewal annually and previously led negotiations on behalf of the city to establish the Great Lakes Water Authority (GLWA).

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