The City of Kewanee received bids from three firms for the operation and maintenance of its water and sewer treatment plants.
“The City Council will have three proposals to choose from, each of which has their own merits,” said City Manager Gary Bradley.
Bock, Inc., the firm that operates the systems today, was among the three proposals.
“The city has worked with Bock for several years, so there’s familiarity with them, we know how they work and what to expect,” Bradley said.
ION Environmental Solutions, of Muscatine, Iowa, provided a proposal as well.
“We haven’t worked with them before, but they’ve operated plants that are similar to Kewanee’s systems, and their proposed fee is significantly lower than the proposal provided by Bock, Inc.,” Bradley said.
He said it is the third proposal, however, that has generated the most speculation on social media. Illinois American Water provided a proposal that would have them purchase and operate the city’s system.
Under their proposal, the firm would acquire the system for approximately $34 million, and operate the water and wastewater treatment systems for up to one year at a contracted price, during which time the value of the systems would be independently appraised by three firms to ensure that the purchase price represents a fair market value.
“That would give both sides of the transaction plenty of time to make sure that any transfer of assets was well thought out and planned,” Bradley said.
In addition to the $34 million purchase price, Illinois American Water has indicated that they would invest approximately $30 million in improvements to the water and sewer systems during their first five years of ownership.
“We were talking about doing $8 million in improvements at a meeting recently, and we knew that would barely touch what needs to be done to the system,” Bradley said. As for the proceeds from the sale, “How those funds would be spent would be up to the City Council to decide, but it would certainly be enough that the city could take a drastically different approach to how it maintains streets and stormwater.
It would be enough for the city to acquire pavement reclamation and laydown equipment, or its own small asphalt plant if reclamation wasn’t the preferred option, to be able to perform its own street work going forward.
“We could resurface the streets on our own,” Bradley said, “and we could do it in such a way that we could leverage our newly found resources with the resources provided by Illinois American, ultimately giving Kewanee some of the best maintained infrastructure in the region.”
One topic that has been noted several times on social media is that the City Council would no longer maintain control of the rates.
“Control is a big thing for a lot of people,” Bradley said. “In a number of communities, that local control has led to keeping rates as low as possible without setting aside funds for future improvements to the system, the proverbial ‘kicking the can down the road.’ That helps current ratepayers, but it hampers the customers in the future, and that’s kind of where we find ourselves today.”
Kewanee’s systems show the effects of long-term deferred maintenance, as operating costs are covered but rates are not high enough to cover system improvements that are needed. “It’s not just about raising rates,” Bradley said. “They can lower operating costs because they have economies of scale in purchasing. They pay a lot less for the same things we’re buying, because they’re buying them in bulk.”
If the system were sold to Illinois American Water, the company would be required to submit their case for rate increases to Illinois Commerce Commission.
With each of the three proposals, there is a lot to consider.
“We just got the proposals last Friday afternoon,” Bradley said, “we need a chance to sift through them to evaluate the advantages and disadvantages of each. When we’ve done that and have made a recommendation to the City Council and they’ve chosen a course of action, then we’ll be in a better place to comment on the specifics of each proposal.
“Right now,” he said, “there’s a lot of disinformation being circulated and statements being made that are just false. We’re going to take the time to ensure that the City Council has all of the relevant information they need to make the best decision for Kewanee based on facts, not fearmongering and fiction.”
