The politics of the Aqua takeover

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While campaigning through neighborhoods on Fort Wayne’s southwest side in 2011, I heard one resounding sentiment from residents: “We need water relief!”

The city can provide better water than Aqua Indiana to residents on the southwest side. We proved it during the drought in 2012 by coming to the rescue when Aqua failed to provide an adequate water supply.

Mayor Henry has asked city council for power to condemn and purchase the private utility company, Aqua Indiana. With flashy press releases and passionate rhetoric coming from all sides, it may be difficult to understand what is really happening with the Aqua Indiana water utility takeover. If we ignore the political motivations and focus on the process, it can be easier to grasp.

In December, the Mayor sent an ordinance to council asking them to approve both the “necessity for takeover” and the “condemnation” phases of the Aqua Indiana utility takeover. This ordinance is set to be discussed by council on January 22nd.

During the necessity for takeover phase, the city would make offers to Aqua Indiana, and follow other “negotiation” steps, to agree on a price tag to purchase the company. City council should give the Mayor this authority to negotiate, and by doing so would signal agreement that an attempt to takeover the utility should be made. This first phase (necessity and negotiation) triggers a chain of events, likely to include multiple independent appraisals of the utility and it’s assets, giving council a better understanding of what the utility might cost in the future. For the sake of transparency, this phase should be carefully looked at by city council before proceeding.

Then, if and when an agreement cannot be reached, (agreement is unlikely because Aqua Indiana has little incentive to sell) the second phase is condemnation. During condemnation, a judge would decide the value of the entire utility company and the city would then have the ability to takeover by purchasing the company. (IC 8-1.5-2-15 & IC 32-24)

City council could pass the ordinance as written this month, then, in some amount of time (the process could take years) city council will be asked to approve financing for the condemned utility. If city council passes the ordinance as is, they would be giving the Mayor power to condemn Aqua Indiana before having any estimates as to what it may cost to purchase the utility in the future. City council would be surrendering all of their oversight power until the very end of the process, after a judge has determined a price.

Optional paragraph, remove if space requirements dictate its removal. [By then, it will be too late for oversight on cost, council will be all but forced to approve. They could of course vote “no” to financing the purchase and the takeover would fail. After years of negotiation and thousands in legal fees from both sides, the residents on the southwest side would be the big losers, and council would certainly be painted as the “bad guys” by the Mayor’s office.]

Negotiation and condemnation authority should be granted separately by city council. By asking for both powers now, the Mayor is asking for a blank check from the city’s fiscal body. While it may make the process more expedient from the city’s perspective, it certainly undermines the value of the peoples voice on city council and regard for taxpayer dollars.

At the risk of being politically demonized, city council should use their constituent given power to control the final price tag as much as possible.The entire city, which this council represents, will no doubt be forced to pay for the takeover in some fashion, further expanding the need for transparency.

Most agree the utility should be taken over by the city, but we should not write a blank check to the Mayor for acquisition of a poorly performing utility. City council should approve necessity and negotiation only, and if no agreement on price can be found, the Mayor can return to council and ask for condemnation approval. At that point, council will have a much better estimate of cost. The council will be portrayed as trying to slow the process, but by splitting the ordinance into two parts, city council can proceed retaining the most oversight and acting responsibly on behalf of all city taxpayers.

The Mayors strategy to combine the two phases is both for efficiency and political good standing. If the council prudently chooses to split the two processes in order to have more say in the final cost, they will no doubt be painted as “impeding progress.” No matter what, it presents a unique and difficult decision for councilman Mitch Harper, who has said he plans to run for mayor in 2015. Nearly all of Harpers constituents are served by Aqua Indiana. This southwest part of the city, Harper’s district, is a must win for any Republican candidate in Fort Wayne, and a sought after district for Democrats.

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