Ballard’s Billion Dollar Deal
Indianapolis Mayor Greg Ballard this hour is announcing a nearly $2 billion partnership deal with Citizens Gas over the city’s water and sewer treatment facilities which he says will generate more than $400 million for infrastructure improvements.
If all goes according to plan, Citizens Gas would assume operational control of the city’s water and wastewater utilities and in exchange would pay Indianapolis $426 million in cash and assume the $1.5 billion in debt associated with the both entities.
The plan would need approval by the City-County Council, Board of Waterworks, Board of Public Works and Indiana Utility Regulatory Commission.
City officials also say that with Citizens Gas at the helm rates will be 25% lower in 2025 than they would be under their control. The city’s water and sewer system face $4 billion in upgrades as part of a 2006 consent decree with the U.S. EPA. And locals have expressed outrage over recent rate increases.
In 2002, the Peterson administration bought the water company from NiSource for nearly $550 million. Critics say the city paid too much to the tune of $250 million. French-based Veolia Water and United Water have both manged the water and sewer facilities respectively.
The City plans to file an ordinance next month transferring control of the utility to Citizens Gas. Officials say they plan to hold several public hearings on the deal. Full approval is expected later this year.
The way the payment breakdown is expected, Indianapolis would receive a $262 million payment. $171 million at closing and another $92 million in October 2011. The City would get an addition $50 million from the wastewater fund. And an increase in payment in lieu of taxes totaling $140 million. And since Citizens Gas is a not-for-profit public trust, it can assume the $1.5 billion debt without having to refinance its own debt.
