CSO Strategies & Financial Management

1. CSO Strategies & Financial Management Mayor Gregory A. Ballard City of Indianapolis December 9, 2010

2. 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 solution Note: All dollars in 2004 $ values 2

3. Infrastructure Challenges Consent Decree/Wastewater Facilities $3.5 billion in wastewater costs $300 millionin overruns Water utility was $916 millionin debt Streets, sidewalks, bridges and culverts $1.5 billionneeded in repairs Stormwater flooding Sustainable solutions an afterthought Property tax caps in place; income tax revenues declined in 2010 by $50 million 3

4. 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 4

5. 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 5

6. 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 6

7. 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) 7

8. 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 million 8

9. 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 9

10. 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 10

11. Indianapolis: Leading the Way Sustainable Solutions National Recognition 11