Umbaugh It's all about experience

(888) 516 9594

A Long Wait Followed by Rapid Action:  Fort Wayne Purchases Investor-Owned Water Utility Assets

It took ten years of protracted negotiations and litigation, but Fort Wayne City Utilities completed its acquisition in December 2014 of assets owned by an investor-owned water utility in north and southwest Fort Wayne in a negotiated transaction. The acquisition also settled ongoing litigation regarding the price Fort Wayne paid for the assets it acquired in the northern part of Fort Wayne.

Umbaugh was hired in 2013 to assist Fort Wayne with the economic evaluations proposed during negotiations to ensure the acquisition cost had no negative impact on existing customers. Umbaugh also acted as financial advisor on bonds and provided guidance on structuring agreements and in seeking approval by the Indiana Utility Regulatory Commission.

When a letter of intent on the acquisition was reached in July 2013, Fort Wayne Mayor Tom Henry stated: “This is a win for our community. Our efforts in the north have already reaped over $10 million in savings for residents over the past five years, and this effort in the southwest will save residents over $2 million annually as a result of lower rates and reduced or avoided expenses in water softening. This partnership will enhance our quality of life and position Fort Wayne for future growth and success.”

Negotiations following the letter of intent were also protracted, and reaching a final definitive agreement took another year (July 2014). Filings were made immediately with the Indiana Regulatory Commission, and its approvals were received in October 2014. An official statement was prepared, and $63 million in revenue bonds were sold just three weeks later in a competitive sale. The final closing on the bonds was in December 2014. Umbaugh acted as the municipal advisor on the transaction.

More than 2,000 customers were connected to City Utilities Service two days after the bonds were sold, and the remaining customers will be connected in phases over the next twelve months. Even before they are all connected, all 12,500 water customers in the former investor-owned utility’s service area started paying City Utility rates, resulting in savings of about $120-$140 per year on their water bill.

Umbaugh was pleased to assist Fort Wayne move the project along as fast as circumstances would allow, and to help city utilities achieve its goal of better service and lower costs for their residents.