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Council embraces Aqua deal

$63 million loan to buy water utility gets first nod

– Fort Wayne City Council members voted unanimously Tuesday to give preliminary approval to the $67 million purchase of Aqua Indiana’s southwest water utility.

The council also voted unanimously to borrow $63 million to pay for the purchase and cost of connecting the two systems.

“We’re now reaching a point where we can see that the end is in sight,” Aqua Indiana President Tom Bruns told the council.

City Utilities Director Kumar Menon praised Bruns for his role in bringing a decade-long battle to an amicable close.

“It wasn’t until Tom came on board that we started having meaningful dialogue,” Menon said.

The $67 million deal includes $16.9 million the city already paid Aqua for the purchase of its north water and sewer system in 2008 – a price that has been in dispute for a decade. The agreement settles that case and transfers the southwest system to City Utilities.

It also sets up agreements to provide job opportunities for displaced Aqua workers and to control sewer rates on the sewer utility Aqua will continue to own and operate; meter reading services so Aqua can bill its sewer customers; and a deal for Aqua’s sewer system to treat up to 1.5 million gallons of City Utilities sewage a day.

Officials said customers will begin switching to City Utilities water within days after the closing – which could occur by October – but all Aqua customers will immediately move to City Utilities billing and pay City Utilities rates, which are expected to save the average household $100 to $140 a year.

Aqua customers have been complaining about water quality, pressure and rates for years.

“Water quality in Aboite has been an oxymoron,” resident Adie Baach said. “We’ve been fighting this for 23 years. I look forward to washing my hair in city water.”

Officials have promised that the purchase would not be paid for by existing City Utilities customers. City officials had considered a surcharge but now say it does not appear that will be necessary, as the revenue from 12,500 new customers will cover the cost at current rates.

According to city documents, officials estimate that the new customers will pay about $5 million a year in water bills, but serving them will cost only $4.1 million in higher operating costs and debt payments.

Menon said that while rates for water, sewer and stormwater will increase in coming years, those rate increases will be for infrastructure investments such as replacing old water mains and preventing sewage overflows into the rivers, not for the Aqua acquisition.

“Let me by crystal clear: Rates will be going up, but not because of this purchase,” Menon said. “In fact, rates will be flatter because of this acquisition. … These customers coming in will pay 100 percent for their system, plus contributing to the entire system.”

Menon added that while area taxing bodies, such as Southwest Allen County Schools, will lose some revenue because Aqua pays property taxes on its assets while City Utilities does not, the amount they save will make up for it. Officials say customers will save as much in indirect costs – longer-lasting appliances, clothing and glassware that’s not ruined and not having to soften water – as they do by paying lower rates.

Tuesday’s approval was preliminary; the measures could get final approval next week.

The purchase must then be approved by the Indiana Utility Regulatory Commission, and the sewer agreement must be approved by the Indiana Department of Environmental Management.

If the deal closes as expected, officials said all customers will be transitioned to City Utilities water by the end of summer 2015.