An Objective, Fact-Based Analysis

by Tom Fliege
CEO Council

A committee is reviewing the costs and benefits associated with the City of Peoria pursuing its option to purchase the local water company.

The CEO Council (CEOC) has a history of examining some of the most vexing issues facing the Tri-County Area and initiating actions to address those problems. In recent years, the CEOC helped create the Downtown Development Corporation to spearhead growth in the Warehouse District, served as the project manager to establish the Cancer Research Center at the University of Illinois College of Medicine, advocated for the referendum to create the Peoria Riverfront Museum, and most recently, launched Greater Peoria Works to encourage employers to provide work experience to young people. All of these actions—and many others—were pursued in an effort to help the Peoria area be more economically secure and culturally vital.

Background
For 125 years, various private enterprises have provided water to residents and businesses throughout the City of Peoria and some surrounding communities. The 1889 Franchise Agreement allows the city to consider purchasing the water system every five years.

Most often, this five-year window passes without much notice. The last time that window opened, in October 2013, the Peoria City Council voted not to pursue its option to determine the value of the Peoria District of the Illinois American Water Co. (IAWC). The Council examined some of IAWC’s financial statements in executive session, but due to proprietary concerns, none of those documents were made public.

With the next window in 2018 fast approaching, the CEO Council decided to undertake a thorough, objective review of the issues that will face the City Council when the option is available again. Upon forming the CEOC Water Infrastructure Objective Study Committee more than a year ago, our first effort was to clarify our purpose with this mission statement: “To complete an objective, fact-based analysis to determine the costs and benefits associated with the City of Peoria exercising—or not exercising—its repurchase provision of the 1889 Franchise Agreement.”

We established five subcommittees: Best Practices, Information Gathering, Labor Relations, Legal/Legislative and Pro Forma/Bonding. Well-known, respected community leaders then assumed chairmanships of those subcommittees, including Brent Eichelberger, Commerce Bank; Diane Oberhelman, Cullinan Properties; Mark DeSantis, WEEK-TV; David Ransburg, retired mayor of Peoria; and Joe Glawe, CliftonLarsonAllen. Invitees have included Peoria Mayor Jim Ardis, City Council members, and organized labor representatives, and we have regularly updated CEO Council members on our progress.

Findings to Date
The Committee has received monthly updates from each of the subcommittees, including ongoing legislative efforts and a comparative analysis of best practices and financial and operational results from communities across Illinois and the nation. Guest speakers have also provided background information, including State Rep. David Leitch, Greater Peoria Sanitary District Manager Stan Browning and water supply expert Don McCauley. All have provided significant insight into the pros and cons of operations of municipally-owned water companies.

One difficulty inherent in the study is the inability to segment the Peoria District’s specific revenues and expenses. By law, Illinois American Water is allowed to group information of this nature by zones, which makes obtaining Peoria-only data a challenge. However, the Pro-Forma/Bonding subcommittee is making progress at interpolating that data from multiple sources.

Expected Outcomes
It is the Committee’s mandate that this study be performed as an objective, due-diligence examination that should be done in considering any business proposition. The CEOC felt that the nature of its membership lends itself well to this type of endeavor. Business people routinely analyze purchase opportunities on such a basis, with the goal being to make a “buy/no buy” recommendation to leadership.

Such is the same with this endeavor. As a project of the CEOC, the Water Infrastructure Objective Study Committee will report its findings to the full CEOC. At that point, the CEOC will vote on what disposition is to be made of the study and its conclusions. Certainly, a primary option is that the results and recommendations will be shared with the ultimate decision-makers: the mayor, the City Council and the community at large.

Our objective is to assist city leaders in making a fully informed, fact-based decision, as the result of intensive due diligence performed by professional business people, who have dispassionately gathered and analyzed all relevant information.

Although the next vote on this issue will not come up until Fall 2018, the Committee expects to complete its analysis and make recommendations by Fall 2016, to allow city leadership the time necessary to consider the recommendations and engage in any pre-vote preparations that might be deemed necessary. iBi

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