City Government and Greg Ballard and Privatization and 2010 Year in Review

Ballard to raise millions through utility, meter deals

December 24, 2010

Two controversial transactions Mayor Greg Ballard pushed through in his third year in office are designed to provide millions of dollars for roads, bridges and sidewalks.

In the spring, Ballard, a Republican, introduced a proposal to sell the city’s water and sewer utilities to Citizens Energy Group, the public charitable trust that owns Citizens Gas. About six months later, he rolled out a deal to lease the city’s parking meters to a private operator for 50 years in exchange for an upfront payment and ongoing operating revenue. That plan includes installing new parking meters that accept credit cards.

The utility deal was approved by the City-County Council in late summer and is awaiting support from Indiana utility regulators. The council gave the parking meter lease its final nod this fall.

If the water and sewer transaction gets final approval, it will free up $435 million for city infrastructure and transfer $1.5 billion in utility debt to Citizens. City leaders said the deal would curb projected rate increases and remove politics from utilities management by transferring authority to Citizens, a not-for-profit with a board whose appointments aren’t political.

But the deal has drawn critics, particularly those who question Citizens’ ability to generate the $60 million in annual savings the company has pledged it can produce to pay off the debt for the purchase.

The parking-meter lease to Dallas-based Affiliated Computer Services Inc. has stirred even more controversy. Arguments that the city is tying its hands with a long-term lease—and criticisms that Indianapolis’ deal resembles a controversial Chicago parking lease—prompted the city to change the terms of the lease to get a smaller upfront payment of $20 million and more money, an estimated $363.2 million, over the life of the deal. That money will be spent on roads and other infrastructure near the meters.

City leaders also added a clause that gives the city the right to terminate the deal, though termination would come with a penalty of at least $19.8 million. The changes didn’t appease some critics, who said the city could operate a revamped meter system on its own.•

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