The city of Fort Wayne has reached an agreement to purchase area Aqua Indiana drinking water facilities in a $67 million deal. The agreement must still be approved by the Fort Wayne City Council, Aqua America's board of directors and the Indiana Utility Regulatory Commission.
July 2, 2013
Fort Wayne, Ind. — The City of Fort Wayne and Aqua Indiana today announced a letter of intent has been signed to move the process forward for the City to purchase Aqua's water utility in southwest Fort Wayne and resolve the dispute over the purchase price of Aqua's former north system.
Leaders from the City and Aqua today expressed optimism that a final contract agreement could be reached by the end of August.
“This is a tremendous step forward as we work collaboratively to serve residents with reliable and high quality water at an affordable price. Public-private partnerships as extensive as this are rare, and we commend Aqua for staying committed to the Fort Wayne area and continuing to invest in our community,” said Fort Wayne Mayor Tom Henry. “This is a win for our community. Our efforts in the north have already reaped over $10 million in savings for residents over the past five years, and this effort in the southwest will save residents over $2 million annually as a result of lower rates and reduced or avoided expenses in water softening. This partnership will enhance our quality of life and position Fort Wayne for future growth and success.”
“The letter of intent is an important step that establishes the framework for a final definitive agreement which must be submitted for review and approval by Aqua's Board of Directors,” said Tom Bruns, President of Aqua Indiana. “We're particularly happy that the proposed agreement offers the opportunity for Aqua and the City of Fort Wayne to work together on utility issues in southwest Allen County. By working together on water and wastewater issues we believe we have set the stage for continued growth and economic development.”
The City will pay Aqua an additional $50.1 million to the $16.9 million paid to Aqua by the City in 2008 (for a total cost of $67 million) for the completion of the sale of all of Aqua's drinking water facilities located in and near Allen County. Current Fort Wayne City Utilities customers would not see increased water rates as a result of the transaction.
Aqua currently serves 12,600 water customers in southwest Fort Wayne, with 70% of those customers residing inside City limits. Aqua will continue to provide sewer services in southwest Fort Wayne.
The final contract would need approval from Fort Wayne City Council, Aqua America’s Board of Directors, and the Indiana Utility Regulatory Commission (IURC). The completion of the transaction is expected during the first quarter of 2014. Within days of City Council and IURC approving the closing, many former Aqua customers will receive City water in their homes. A more precise schedule for the complete transition of all former Aqua customers located in the City is expected to be finalized by the time of closing but is not expected to be longer than a year.
Letter of Intent highlights:
*The City and Aqua will end all existing litigation involving the valuation of Aqua’s previous northern system and the condemnation effort pending for the southwest area system. The City will pay Aqua an additional $50.1 million to the $16.9 million paid to Aqua by the City in 2008 (for a total cost of $67 million) for the completion of the sale of all of Aqua’s drinking water facilities located in and near Allen County. Aqua will remain the sanitary sewer provider in southwest Allen County.
*Aqua will invest $25,000 annually for 20 years in sanitary sewer infrastructure improvement projects providing for economic development or septic system relief. Aqua will become a member of the Fort Wayne-Allen County Economic Development Alliance, now part of Greater Fort Wayne Inc. This type of increased involvement will provide the community more tools when retaining or attracting new businesses or addressing long-standing environmental and public health hazards resulting from failed or failing septic systems.
*The City will become Aqua’s largest customer in Allen County by agreeing to a ten-year wholesale contract allowing the City to send more than half a billion gallons of sewage each year to Aqua for treatment. As a result, the City will avoid or delay certain construction projects but still provide improvements to the service levels of City customers and opportunities for growth in the community.
*Aqua commits to freezing sewer rates for the southwest Fort Wayne area customers in 2013, 2014, and 2015. After 2015, Aqua agrees to first present rate increases to City Council before the normal IURC review process begins. The City agrees to not pursue a condemnation of Aqua for five years as long as Aqua remains financially healthy and performs within state, federal and other regulatory requirements.
*The City and Aqua will work together on future sanitary sewer issues in an unprecedented manner. The City and Aqua will cooperate on sanitary sewer master planning, establishment of efficient boundaries, assist in billing and other selected areas of customer service. In addition, Aqua field staff, managers, engineers and other leaders will remain available to City to consult on transition issues related to the transfer of Aqua customers to City water.
*The City has committed to offering employment for all potentially displaced Aqua employees affected by the sale of Aqua’s remaining drinking water operations in Allen County. These employees will still be subject to City hiring procedures, collective bargaining, budgeting and disciplinary procedures. The City and Aqua will collaborate and agree upon an employment transition plan for those Aqua employees directly affected by the sale.
*There are 10-11 Aqua employees expected to be offered positions within the City because they are affected by the sale. All Aqua employees that switched to City employment with the northern transition in 2008 remain employed by City Utilities today.
*Current Aqua Southwest customers inside City limits are expected to save $100-$140 per year on their utility bill after ownership by City Utilities.
*Customers of City Utilities receive water that has been “pre-softened” and as a result, most customers do not use a water softener in their homes. Savings can be an additional $10-$20 per month and more importantly, can also extend the life of major water-using appliances such as dishwashers, washing machines and ice makers by as much as 30%.
*After the completion of the purchase of Aqua, the City will provide drinking water to more than 100,000 Allen County households, which is more than 9 out of every 10 households in all of Allen County that are served by a public water system.
Source: City of Fort Wayne