CSO Strategies & CSO Strategies & Financial ManagementFinancial Management

Mayor Gregory A. Ballard City of Indianapolis

December 9, 2010

Combined Sewer Overflow Consent Decree

• Background– In 2006, Consent Decree costs were at approximately

$1.7 billion– Other system needs (Septic Tank Elimination Program,

rehabilitation and expansion): $1.8 billion– Total original need totaled approximately $3.5 billion– By 2007 costs had escalated to approximately $3.8 billion– Began pursuing amendment through EPA Region 5 for

alternative solutionNote: All dollars in 2004 $ values

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Infrastructure Challenges

– Consent Decree/Wastewater Facilities• $3.5 billion in wastewater costs• $300 million in overruns

– Water utility was $916 million in debt– Streets, sidewalks, bridges and culverts

• $1.5 billion needed in repairs

– Stormwater flooding– Sustainable solutions an afterthought– Property tax caps in place; income tax revenues declined in

2010 by $50 million

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Combined Sewer Overflow Consent Decree• Value Engineering (started in

2008):– Identified better, more cost-

effective design with sustainable solutions

– Needed EPA and IDEM approval– U.S. Conference of Mayors

opened national EPA dialogue– Final negotiations allowed for

eventual savings of more than $740 million – Removes more than 5 billion

gallons of sewer overflows annually

Note: All dollars in 2004 $ values

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– New deep tunnel storage systems

– Expansion and flexibility of two Advanced Wastewater Treatment plants

– Remote satellite storage facilities

– Separation of storm water and sanitary sewers• Green roofs • Rain gardens• Bioswales

Combined Sewer Overflow Consent Decree

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Utility Transfer Background• REI Process

– July 21, 2009: Indianapolis issued a Request for Expression of Interest (REI)

– Goals:• Reduce future utility rates • Take politics out of the

management of water and wastewater utilities

– 26 firms responded to the REI– Established the Infrastructure

Advisory Committee (IAC)• IAC: Evaluated responses and

shortlisted to 8 proposals• IAC: Evaluated 8 proposals and

recommended Citizens Energy Group

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Citizens Energy Group• Citizens – A public charitable

trust that operates like a nonprofit for community benefit– Citizens has a 123-year history

of:• professional management• operational excellence• high customer satisfaction

• Citizens governance structure– Two non-partisan groups:

• Board of Trustees• Board of Directors

– Regulated by the Indiana Utility Regulatory Commission (IURC)

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Utility Transfer Agreement• Total Value of Assets– Value of water system $916 million– Value of wastewater system $789 million

Total value of assets $1.7 billion

• Existing Debt Assumed by Citizens– Water system debt $916 million– Wastewater system debt $527 million

Total existing debt to Citizens $1.44 billion

Net value of systems after debt totals $262.6 million8

Utility Transfer Agreement

• Total Proceeds to City of Indianapolis–Cash to City from Citizens $262.6 million*–PILOT bond issue $153.8

million–Wastewater general fund $60 million

Maximum proceeds to City$476.4 million*

*Equals value of assets less existing debt. Paid in two installments: $170.6 million at closing and $92 million on Oct. 1, 2011.*Contingencies prior to closing could reduce amount to $425 million

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Utility Transfer Agreement• Transparent public

outreach campaign was crucial– More than 60 meetings:

• Public meetings• Neighborhood groups• Key stakeholders• Advisory groups• Faith-based leaders• City-County Councilors

– Garnered support from numerous community organizations

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Indianapolis: Leading the Way• Sustainable Solutions

• National Recognition

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