Indianapolis officials on Wednesday proposed selling off the city's water and sewer utilities in a $1.9 billion deal that they said would hold down rate increases while providing millions of dollars for street repairs and other projects.
The plan from Mayor Greg Ballard would transfer those utilities to Citizens Energy Group, which provides the city's natural gas service. Indianapolis-based Citizens Energy is organized as a public charitable trust that operates as a nonprofit company.
The city says it would receive more than $425 million from Citizens in the deal, with the company taking over about $1.5 billion in debt obligations.
Citizens estimated that the combined water and wastewater rates would be 25 percent less than would be expected under city management by 2025 because of savings through its combined utility operations.
"Only Citizens has the long-term experience to care for the critical systems, and only Citizens could leverage tax-free debt to save us all even more money," Ballard said.
The city expects it would receive more than $425 million from Citizens in the deal, with the company taking over about $1.5 billion in debt obligations.
Ballard said the upfront proceeds would be a bonanza for road improvements, bike lanes and other capital projects and called it "the equivalent of a massive jobs bill."
The plan from the Republican mayor needs approval from the City-County Council and the Indiana Utility Regulatory Commission, which would then have final say over rate changes, rather than local officials.
Some council members, however, said they were concerned about the city giving up the utilities.
"There's just no oversight by us," Democratic councilwoman Angela Mansfield said. "We lose control over setting (sewer) rates and priorities as to what projects would be done."
The city's water system has more than 300,000 customers in Marion County and the six surrounding counties. The wastewater system serves more than 230,000 households, mostly in Marion County.
The proposal comes eight years after Ballard's predecessor, Democrat Bart Peterson, led a $515 million city buyback of the water utility from Merrillville-based NiSource Inc.
Ballard said the city "flatlined" rates for five years "while simply taking on more debt than the system is worth."
