Chicago Mayor Rahm Emanuel is backtracking on his plan to offer free water to nonprofits in Chicago. The mayor’s office released a proposal Sunday night that would give free water to organizations that have less than $1 million in net assets.

For decades, nonprofit organizations like churches didn’t have to pay for water, as it was provided by the city. But in 2011, Emanuel said the city would phase out that service as part of his budget-balancing plan. The City Council then passed the mayor’s budget unanimously.

Now, the mayor’s office is proposing free water for nonprofits with net assets less than $1 million dollars, and discounted water for nonprofits with net assets between $1 to $250 million. Groups that have over $250 million in assets would not be eligible for the exemption.

Which leaves Jimmy Lago, chancellor of the Archdiocese of Chicago, asking: How does the city define net assets?

“My understanding of net assets includes land, property, church buildings and most of our churches have to be insured at their replacement value,” Lago said. “I don’t know of any one of our institutions that has a water meter whether they’re social service agency, or a parish hall that has services out of that - gang interruption services - would even receive the exemption.”

Alderman Howard Brookins (21) was one of the architects of the mayor’s proposal. He told WBEZ that the measure was “still a work in progress.”

“I think this is a counter offer,” Brookins said. “I think that details will be worked out in committee, but this is a good change in policy for the Emanuel administration.”

Brookins said the measure could be taken up by the budget committee as soon as next week.