Cities have wide discretion in setting billing practices for water and sewer. Most villages in Illinois have their municipal code, which includes the billing practices online, but for whatever reason, Danvers doesn't at the present time so I can't tell if they followed their own stated practices. Still, it sounds like they gave you adequate notice and you need to make arrangements to make payment. If you really didn't get a bill, you could go to a city council meeting and ask them to waive the late charges. The comment about arsenic has nothing to do with whether you need to pay a water bill. Good luck.
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