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Industrial support for utility sale to cost $1.5 million

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The price to get big industrial firms to support the sale of the city’s water and sewer utilities to Citizens Energy Group: at least $1.5 million.

Documents the city and Citizens filed Friday with the Indiana Utility Regulatory Commission show that the city agreed to make the one-time payment to resolve concerns of the so-called Water/Sewer Industrial Group.

The group consists of Eli Lilly and Co., National Starch LLC, Rolls-Royce Corp. and Vertellus Agriculture & Nutrition Specialties.

A letter sent to the industrial group by city and Citizens officials noted the big wastewater customers were concerned with increases they pay in the form of an “excessive strength surcharge” that amounts to more than $11 million annually.

Besides the one-time, $1.5 million payment to industrials, which will come out of a $40 million escrow fund the city set up last year for the deal, Citizens agreed to work with industrials on a cost-of-service study to be presented in an upcoming rate case.

“I believe it is a reasonable resolution of the issues the industrial group raised regarding the proposed acquisitions and a fair outcome for the [Citizens Water Authority] and ratepayers, especially in light of the fact the payment it contemplates will be made by the city from the escrow account to be funded with cash the city receives as a result of the wastewater acquisition,” Citizens CEO Carey Lykins said in a prepared statement.

Citizens and the city on Friday filed testimony with the IURC supporting a proposed settlement announced earlier this month involving industrials, the Office of Utility Consumer Counselor and suburban communities served by the utilities.

Among terms of the settlement, Citizens agreed to document savings generated by the transfer.

The IURC is expected by the end of summer to OK the sale of the water and sewer utilities to Citizens—a deal worth $1.9 billion.

Citizens said it expects the sale will bring $60 million in annual savings, and combined water and wastewater rates 25 percent lower than currently projected.

The city plans to use $425 million in proceeds to make infrastructure improvements and to tear down abandoned houses.

The proposed deal is turning out to be a moneymaker for several local professional firms. For example, Indianapolis law firm Ice Miller LLP has billed more than $3.4 million for legal services to Citizens – the bulk of the $7.1 million in profession fees Citizens has incurred so far.

The city has incurred more than $9 million in transaction costs, including more than $2 million to local law firm Baker & Daniels LLP. Citigroup Global Markets will pocket at least $5 million.

Also, the city is paying current Indianapolis Water operator Veolia a contract breakup fee of $29 million.


 

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  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.

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