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City plans purchase to provide water for Aqua Indiana customers

Wednesday, July 3, 2013 - 8:18 am

Leaders of Aqua Indiana and the city of Fort Wayne say they're close to finalizing a deal for Fort Wayne City Utilities to take over water service in and near southwestern Fort Wayne.

“The city of Fort Wayne and Aqua Indiana are coming together for the betterment of the community,” Mayor Tom Henry said Tuesday afternoon in a press conference at a Fort Wayne Fire Department station at Covington and Scott roads. “This is a win-win for our community and for Aqua Indiana.”

The city and the private utility have signed a letter of intent and hope to seal the deal by the end of August. City officials say some residents now served by Aqua Indiana could be getting city water within days of the agreement being approved by state utility regulators.

Under the deal, current Aqua customers would save at least $100 a year by paying City Utilities rates instead of Aqua rates, said Kumar Menon, director of City Utilities. If the city lands low enough interest rates on financing for the deal, Aqua customers may pay the same rates as other City Utilities customers, in which case they would save about $140 a year, Menon said. If available interest rates aren't low enough, customers in the Aqua Indiana territory might have to pay a surcharge of $2-$4 per month, but for no longer than five years, Menon said.

The city would pay Aqua Indiana $50.1 million for the drinking water systems. Combined with $16.9 million paid to Aqua by the city in 2008, that makes a total cost of $67 million for 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, city officials said.

Aqua currently serves 12,600 water customers in southwest Fort Wayne. About 70 percent of those customers live inside the city limits. Aqua will continue to provide sewer services in southwest Fort Wayne.

Officials said that if regulatory review goes smoothly, the transaction likely will be completed during the first quarter of 2014. A schedule for extending city water service to all Aqua customers hasn't been developed yet, but city officials said that should happen within a year of the sale's final approval.

Menon said rates aren't the only place where Aqua customers would benefit. Using softened city water will extend the life of appliances such as dishwashers and washing machines. “The only people who are going to be upset are the Culligan Man, Sears and Best Buy,” he said, laughing.

Other key points covered in the letter of intent announced Tuesday:

*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 increased involvement is intended to 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 10-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 review process by state regulators 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 cooperate on transition, sanitary sewer master planning, establishment of efficient boundaries, assist in billing and other selected areas of customer service.

*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. There are 10-11 Aqua employees expected to be offered positions within the city because they are affected by the sale.

*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.