After months of negotiation and a deal in principle being reached, only to be sent back, the town of Sellersburg has agreed to purchase Riverside Water Co.
What to do about a cellular service tower atop one of the utility’s water towers had stalled talks, but it has since been resolved. With the purchase of the water company and a future water utility rate increase moving forward, the impact of the purchase on rates for the town’s 3,400 water customers is still being defined.
According to the deal reached last week, Riverside Water Co. will be given an additional $40,000 credit at closing and Sellersburg will be able to collect the revenues from the cell tower — estimated to total $138,238 through 2020 — with the total purchase price being $2.5 million.
The purchase of the water company was approved by a 3-2 vote, with council members Brian Meyer and Mike Lockhart voting against.
The cellular service deal in the contract — the tower was first brought up July 8, surprising some council members and stalling the purchase — is what changed Lockhart’s mind.
“I was teetering back and forth on the benefit to the town as far as the financial impact,” Lockhart said. “What pushed my vote to no was ... we had an agreement [and when the cell tower was added] that was the first that I had heard anything of it. I don’t think it was fair that was thrown in at the last minute.”
Lockhart also voiced his concerns about the condition of the water utility — the reason Meyer pointed to in voting against the deal. Both said with the water lines underground there are a lot of unknowns in the actual condition of the utility the town agreed to purchase.
However, the benefits that the Riverside Water Co. purchase will bring to Sellersburg includes adding about 1,200 new customers, added water capacity, it will increase future bonding capacity for the town and it will also allow Sellersburg to set up a capital improvement fund for future utility repairs and improvements. The town currently serves 3,400 water customers.
The exact rate impact the water utility purchase will have on those customers is unknown.
According to an Umbaugh and Associates water-rate study, in order for the town’s existing customers to pay a $5 million bond sought for improvements to its existing water system — based on 5,000 gallons of water usage per month — rates would increase from $13.25 to $27. The town council asked Umbaugh to take another look at the change in rates after it was presented with the purchase offer.
According to a revised water rate study presented at the town council’s June 24 meeting, the rate increase would still total $27. However, the inclusion of Riverside Water Co. would allow the town to set up a capital improvement fund to protect against future rate increases.
The purchase price for Riverside Water Co. would be amended into the $5 million bond sought by the town.
Even with Sellersburg’s approval, the deal will still have to be given the OK by the Indiana Utility Regulatory Commission.
Town Attorney Jake Elder said the town will file a petition with the Indiana Utility Regulatory Commission and if an approval is granted, closing on the company could occur in about 90 to 120 days.
“I do anticipate approval by the IURC,” he said. “I know Riverside was under review ... . We already provide water service to Riverside [and] the transition should be very smooth.”