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Fort Wayne to try takeover of Aqua's southwest water utility

Friday, November 16, 2012 - 7:56 am

The city of Fort Wayne will move forward by the end of the year with a plan to take over Aqua Indiana's water utility in southwest Allen County, Mayor Tom Henry said Thursday.

Henry said he does not believe Aqua Indiana has the ability to keep providing service to southwest-side customers. The perceived problem was highlighted by Aqua's struggles to provide enough water during this summer's extended drought conditions, Henry said in a news conference.

"We have been patient with Aqua Indiana, but now is the time to take action," Henry said in prepared remarks. "City Utilities is in much better position to provide reliable and quality water to customers at an affordable price."

Henry said his office will bring an ordinance to City Council before year's end to start the process of condemning Aqua's southwest assets. The private utility serves about 12,000 customers in southwest Allen County, 70 percent of which live in Fort Wayne, said Ted Nitza, a special consultant to City Utilities.

Aqua Indiana President Tom Bruns said he was disappointed in Henry's decision and thought the two sides were close to finding a better solution for providing southwest customers with better service.

"There were a number of options the city and Aqua had discussed and that we felt would be win-wins," Bruns said.

One of those options, which both Bruns and Henry mentioned, would be for Aqua to buy water at a wholesale rate from the city and sell it to customers at a retail price. But Henry said Aqua officials had rebuffed offers by the city.

Bruns also said he did not learn of the decision until he was contacted by reporters Thursday and was disappointed that Henry did not contact Aqua before announcing the decision publicly at the news conference.

Aqua's water quality and pressure have long drawn complaints from southwest Fort Wayne residents, and the company's rates are about twice as much as City Utilities. Bruns said Aqua's quality is on par with the city's water, but many of the utility's customers disagree.

"The water quality, you have to see it to believe it," said Hank Mazzola, who lives in the Falls of Beaver Creek neighborhood. "It's atrocious."

Mazzola's neighborhood was one of at least 20 whose residents, accounting for 30 percent of Aqua's customers in Allen County, have signed petitions asking for the city to take over the utility, Nitza said.

If council approves the takeover, it could still take years for the city to get control of the utility and even longer before the full price becomes clear, based on the city's previous buyout of Aqua's north-side assets.

Eight years after the city first announced its intent to take over Aqua's north side customers, the two parties are still locked in a court battle over the correct price. The city paid about $17 million, but Bruns says the assets were worth twice that.

Henry did not say at the news conference exactly how he planned to pay for the takeover, which would be of similar size and scope to the Aqua north buyout. City Utilities is financing the north takeover through $18 million in borrowing funded by ratepayers.

City spokesman John Perlich said the southwest takeover would not include Aqua's 12,000 sewer customers. That means none of the new City Utilities customers would be on the hook for an estimated $240 million of sewer improvements the city must do through 2025 under an order by the Environmental Protection Agency.

City Council President Tom Smith, R-1st, said that he believed council would respond "warmly" to the proposed takeover.