Ball State professors poke holes in Mounds Lake study

March 9, 2015

A state-funded feasibility study for creating a reservoir on the White River underestimates the cost of the project and lacks data to support the conclusion that the cost can be covered through the sale of drinking water, according to a group of Ball State University professors who conducted a peer review of the study.

The Ball State peer review, released March 4, was signed by 14 faculty members in biology, anthropology, geology, archeology and economics.

The Mounds Lake Reservoir study underestimated the cost of private-land acquisition alone by $56 million, which would be enough the render the project impracticable even if there were no other unexpected mitigation costs, the Ball State review said. The proposal calls for a seven-mile-long body of water that would extend from the Mounds Mall area in Anderson to Yorktown.

The feasibility study, released in February, pegged the cost of building the reservoir at $440 million. Cleaning up a polluted industrial site in the Anderson flood zone would cost $35 million, and building a new water-treatment plant to facilitate the sale of drinking water would be another $120 million.

Bonds for those costs would be covered by selling drinking water, up to 40 million gallons a day, according to the feasibility study. The study didn't go into detail about the impact to the environment or Native American cultural resources—points the Ball State review said could add significantly to the cost.

“We agree a lot more work needs to be done,” said Rob Sparks, executive director of the Anderson Corp. for Economic Development, which is advancing the idea of damming the White River.

Sparks hopes county commissions and city and town councils in Madison and Delaware counties will agree to form a new 12-member board to oversee the project. More information could be uncovered in the design phase, “where the project advances or falls away,” he said.

Sparks added, “I don't believe we're going to find any differences in the pricing.”

One of the goals of the feasibility study was to determine whether the reservoir could supply enough drinking water to cover the cost of a bond issue. The study estimates that the reservoir would hold the equivalent of 60 million gallons a day in the most severe drought conditions, and that it could supply central Indiana utilities with up to 40 million gallons a day while storing enough to protect against drought.

The study assumes the water would be sold for $2.85 per 1,000 gallons, generating enough revenue to cover a 30-year bond, if up-front costs were covered through grants and zero-interest loans.

The Ball State review said there's no evidence to suggest central Indiana will demand 40 million gallons a day. Even with a large-scale commercial user in the mix, the study said, the reservoir might not generate enough revenue to back the bonds.

“We're going to have to have demonstrated need for that water and demand for that water,” Sparks said. “I think the needs are far greater than anyone wants to admit,” he said.

The reservoir plan has been controversial since it was made public in early 2013. Several environmental groups said they would prefer to see an expanded riverside trail system rather than a reservoir.


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