Peoria water buyout issue returns as city hires firm to study the contentious issue

The Peoria City Council took its first small steps Tuesday night in what will be a long and complicated process to decide whether to buy the city's water infrastructure from Illinois American Water.

After some debate, the council voted 7-4 to spend $99,550 to hire a consulting firm to help do research over the coming months before making a decision whether to buy the waterworks. The issue comes before the council every five years.

Mayor Rita Ali and councilmembers Andre Allen, Denise Jackson and Bernice Gordon-Young all voted against hiring the consulting firm Woodard Curran.

Opponents of the measure said it would be imprudent to spend almost $100,000 on a consulting firm when it was unlikely, in their view, the city would end up purchasing the water infrastructure in the end.

"I will be voting no, because I honestly don't believe the city can afford to purchase the water company for one thing — I think that the cost would be astronomical, and I don't believe we should be taking on that astronomical expense," Ali said. "I think it's very risky. Perhaps the study will come back and say that."

Peoria must notify Illinois American Water by Nov. 3 of its intent to buy the utility or not. That means the council has until its Oct. 30 meeting to come up with a decision.

Proponents of hiring the consulting firm — which says it will help the city review background information, financial considerations and determine what operating the water infrastructure would look like — said the firm would be providing a crucial service in helping the council make a decision.

Councilmember Tim Riggenbach said this would be "the best $100,000" the council could spend all year.

"Of all the things we vote on, this is probably the most complex," Riggenbach said. "The vote we take tonight is not to move ahead with due diligence, because that's a very specific thing for the contract we'd be voting on in November, but this is setting the groundwork to give us some unbiased information as to the actual costs involved to do the full due diligence as well as what the repercussions would be moving forward."

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Councilmember John Kelly called hiring the consulting firm a "responsible" move but still harbored reservations about the council ever purchasing the utility.

Councilmember Denis Cyr said Riggenbach "hit the nail on the head" in his assessment.

"To me, I see this money as an investment," Cyr said. "It's not an expense — it's money invested for our constituents so in a few months from now, when reports are coming back, we can, No. 1, have all the information and have a council conversation based on all the information that the third party gathered for us."

Still, there was a feeling among those opposed that the cost to buy the water utility would be too high at the end of the process, no matter what the study said.

In 2002, the City Council moved far enough ahead in the process that it had a valuation done on the utility. It was determined 21 years ago the utility had a value of $227 million.

Allen said the price would likely be much higher than that figure when adjusted for inflation.

"I think we know the answer to this question without even spending the $100,000 on a crystal ball, so I will be voting no on this," Allen said.

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Jackson said she is "very concerned" with the amount of money the city would be spending on the consulting firm.

"I would like to be as careful as possible about how we move forward, especially considering this is taxpayer money," Jackson said. "I am seriously not sure yet that the benefits outweigh the costs we would have to pay if we continue to proceed down this path."

Councilmember Zach Oyler said the money would be well spent because "we're spending money to understand what we're looking at."

Councilmember Mike Vespa voiced a similar sentiment, saying he would vote yes because "we don't know what we don't know."

"What I don't like really in principle is a private company extracting profits from the citizens of Peoria and putting it into the pockets of shareholders who live outside of here or using it to build up their infrastructure in other communities," Vespa said.

He said, too, if the city were to buy the utility, the interest rates on bonds issued to do so would be very high. But he hopes the information from the consulting firm will shine light on all of that.

Now that the firm has been hired, the next step will be a "data gathering and assessment" phase launched by the firm beginning on July 7. The firm will then have "check-in" meetings with the council on July 21, Aug. 11, Sept. 26 and Oct. 3.

On Oct. 10, the firm will make a presentation to the council of its complete findings.

This article originally appeared on Journal Star: Peoria hires consulting firm to help guide decision on water buyout