IBJOpinion

EDITORIAL: Citizens' utility deal is smart move

 IBJ Staff
March 13, 2010
Back to TopCommentsE-mailPrintBookmark and Share
IBJ Editorial

Much work remains before the city’s water and sewer utilities are sold to Citizens Energy Group, but the general outline of the deal makes sense and deserves support—not political posturing—as final terms are hammered out.

The deal, announced March 10 by Mayor Greg Ballard, calls for Citizens to assume the city’s $1.5 billion in utility debt and pay $425 million in cash to gain control of the water and sewer systems.

Citizens has been a good steward of the city’s natural gas utility for more than 100 years. We see no reason the company wouldn’t be equally careful with the city’s water and sewer utilities.

Indeed, Indianapolis has a unique opportunity to place these vital assets in friendly hands. Citizens’ status as a public charitable trust means ownership is essentially public, but without the political ramifications and bureaucracy usually associated with government ownership.

The biggest advantage to the deal, of course, is the $425 million in sale proceeds that will flow to the city for infrastructure repairs and upgrades. Securing that money would be huge for a government that has blocks of crumbling sidewalks and miles of bumpy roads to contend with.

The infrastructure cash wouldn’t matter if the deal were a loser in other respects, but it’s a major benefit that can’t be overlooked. Where else would the money come from to fix these festering problems? Taxing our way out of trouble isn’t realistic, politically or economically.

Early opposition to the deal has focused on the perceived lack of public control over rate increases if the utilities aren’t government-owned. Rate increases are a legitimate concern, but hand-wringing about the city’s political class’ relinquishing control isn’t justified.

The water utility has only been owned by the city since it was purchased from Merrillville-based NiSource Inc. in 2002 for $515 million. The city’s ownership of the sewer utility predates that, but ownership shouldn’t be confused with control. Federal mandates mean costly upgrades regardless of who owns the sewer system.

The state’s Indiana Utility Regulatory Commission will continue to vet requests for rate increases, as it does with all utilities. Under city control, the local water utility has shown up on the IURC’s docket frequently in recent years.

The commission is weighing a request for a 35-percent rate increase for capital improvements and approved an emergency 11-percent hike last year.

Rates will go up under Citizens, but by 2025 the amount consumers pay is projected to be 25 percent less under Citizens’ watch than under other scenarios.

Supporting the deal doesn’t mean hard questions shouldn’t be asked. Citizens will have to quell fears that taking on extra debt won’t impair its bond ratings, which would drive up the cost of borrowing and future projects.

On balance, though, it’s difficult to see a better scenario for the city’s water and sewer utilities and its deteriorated infrastructure. City and state officials should approve the deal as quickly as possible.•

__________

To comment on this editorial, write to ibjedit@ibj.com.

ADVERTISEMENT

  • There is no freelunch
    Where do you clowns think this money is going to come from? It will come out of the pockets of the citizens. With this deal, we are guaranteed to have $425 million more extracted from our pockets than before. Meanwhile, the Mayor and his cronies can hand out a plethora of wasteful contracts that will result in more improperly paved and constructed streets, more improperly located and constructed sidewalks, badly designed bike lanes, and other short- and long-term boondoggles.

    While I have no doubt that Citizens Gas can more efficiently bill its customers, etc., there will be no great savings to be garnered because of the massive mismanagement of this asset over the last half-dozen years or so.

    Maybe, if the Mayor and the Council would engage in real long-term thinking (but that would take a brain) and stop handing out contracts and sanctioning the theft of taxpayer money or just simply stealing it themselves, there would be adequate money to fund critical city services. Instead they use the city resources to bestow favors and build empires instead of actually delivering city services.

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. I am not by any means judging whether this is a good or bad project. It's pretty simple, the developers are not showing a hardship or need for this economic incentive. It is a vacant field, the easiest for development, and the developer already has the money to invest $26 million for construction. If they can afford that, they can afford to pay property taxes just like the rest of the residents do. As well, an average of $15/hour is an absolute joke in terms of economic development. Get in high paying jobs and maybe there's a different story. But that's the problem with this ask, it is speculative and users are just not known.

  2. Shouldn't this be a museum

  3. I don't have a problem with higher taxes, since it is obvious that our city is not adequately funded. And Ballard doesn't want to admit it, but he has increased taxes indirectly by 1) selling assets and spending the money, 2) letting now private entities increase user fees which were previously capped, 3) by spending reserves, and 4) by heavy dependence on TIFs. At the end, these are all indirect tax increases since someone will eventually have to pay for them. It's mathematics. You put property tax caps ("tax cut"), but you don't cut expenditures (justifiably so), so you increase taxes indirectly.

  4. Marijuana is the safest natural drug grown. Addiction is never physical. Marijuana health benefits are far more reaching then synthesized drugs. Abbott, Lilly, and the thousands of others create poisons and label them as medication. There is no current manufactured drug on the market that does not pose immediate and long term threat to the human anatomy. Certainly the potency of marijuana has increased by hybrids and growing techniques. However, Alcohol has been proven to destroy more families, relationships, cause more deaths and injuries in addition to the damage done to the body. Many confrontations such as domestic violence and other crimes can be attributed to alcohol. The criminal activities and injustices that surround marijuana exists because it is illegal in much of the world. If legalized throughout the world you would see a dramatic decrease in such activities and a savings to many countries for legal prosecutions, incarceration etc in regards to marijuana. It indeed can create wealth for the government by collecting taxes, creating jobs, etc.... I personally do not partake. I do hope it is legalized throughout the world.

  5. Build the resevoir. If built this will provide jobs and a reason to visit Anderson. The city needs to do something to differentiate itself from other cities in the area. Kudos to people with vision that are backing this project.

ADVERTISEMENT