1. CSO Strategies & Financial Management Mayor Gregory A. Ballard City of Indianapolis December 9, 2010

2. Combined Sewer Overflow Consent Decree Background – In 2006, Consent Decree costs were at approximately $1.7 billion – Other system needs (Septic Tank Elimination Program, rehabilitation and expansion): $1.8 billion – Total original need totaled approximately $3.5 billion – By 2007 costs had escalated to approximately $3.8 billion – Began pursuing amendment through EPA Region 5 for alternative solution Note: All dollars in 2004 $ values 2

3. Infrastructure Challenges – Consent Decree/Wastewater Facilities $3.5 billion in wastewater costs $300 million in overruns – Water utility was $916 million in debt – Streets, sidewalks, bridges and culverts $1.5 billion needed in repairs – Stormwater flooding – Sustainable solutions an afterthought – Property tax caps in place; income tax revenues declined in 2010 by $50 million 3

4. Combined Sewer Overflow Consent Decree Value Engineering (started in 2008): – Identified better, more cost- effective design with sustainable solutions – Needed EPA and IDEM approval – U.S. Conference of Mayors opened national EPA dialogue – Final negotiations allowed for eventual savings of more than $740 million – Removes more than 5 billion gallons of sewer overflows annually Note: All dollars in 2004 $ values 4

5. – New deep tunnel storage systems – Expansion and flexibility of two Advanced Wastewater Treatment plants – Remote satellite storage facilities – Separation of storm water and sanitary sewers Green roofs Rain gardens Bioswales Combined Sewer Overflow Consent Decree 5

6. Utility Transfer Background REI Process – July 21, 2009: Indianapolis issued a Request for Expression of Interest (REI) – Goals: Reduce future utility rates Take politics out of the management of water and wastewater utilities – 26 firms responded to the REI – Established the Infrastructure Advisory Committee (IAC) IAC: Evaluated responses and shortlisted to 8 proposals IAC: Evaluated 8 proposals and recommended Citizens Energy Group 6

7. Citizens Energy Group Citizens – A public charitable trust that operates like a nonprofit for community benefit – Citizens has a 123-year history of: professional management operational excellence high customer satisfaction Citizens governance structure – Two non-partisan groups: Board of Trustees Board of Directors – Regulated by the Indiana Utility Regulatory Commission (IURC) 7

8. Utility Transfer Agreement Total Value of Assets – Value of water system$916 million – Value of wastewater system$789 million Total value of assets$1.7 billion Existing Debt Assumed by Citizens – Water system debt$916 million – Wastewater system debt$527 million Total existing debt to Citizens$1.44 billion Net value of systems after debt totals $262.6 million 8

9. Utility Transfer Agreement Total Proceeds to City of Indianapolis – Cash to City from Citizens$262.6 million* – PILOT bond issue$153.8 million – Wastewater general fund$60 million Maximum proceeds to City$476.4 million* *Equals value of assets less existing debt. Paid in two installments: $170.6 million at closing and $92 million on Oct. 1, 2011. *Contingencies prior to closing could reduce amount to $425 million 9

10. Utility Transfer Agreement Transparent public outreach campaign was crucial – More than 60 meetings: Public meetings Neighborhood groups Key stakeholders Advisory groups Faith-based leaders City-County Councilors – Garnered support from numerous community organizations 10

11. Indianapolis: Leading the Way Sustainable Solutions National Recognition 11