The buyout or consideration is up every 5 years. What is being proposed is to remove the 5 year buyout and make that buyout option every 20 years now, in return here is what shakes out:
Illinois American agrees to spend 8 million on infrastructure - Eric Turner is spreading this around as road improvements. It is not road improvements it is water infrastructure which is piping underground, hydrants etc. Illinois American does this already or has to in order to continue to operate. This is no gain or pickup for the city. What I do not know is how much they currently spend each year for their system improvements but I bet it is already close to the $8 million figure.
When Illinois American does work for upgrades or has to make repairs, they have to obtain work permits. Currently they pay about $250k for their work permits to do the upgrades that they are required to do. Under this new agreement in exchange for extending the agreement to 20 years instead of 5, they will now pay approximately $1,450,000 in work permit fees. In simple terms, the water company is paying one million a year additional to the city to take the buyout from 5 years to 20 years. This is a good deal for the water company as they will just pass on an increase in water rates to cover the expenditure.
If approved by the council then the Illinois commerce commission, there will be a 3% fee assessed to all users of water in the city of Peoria, they are calling it a franchise fee but basically its a tax on residents and businesses. The water company will add it to the bill and then remit it to the city. This fee will amount to about a million more each year to the city but it is being paid by the taxpayers and businesses. It is a tax, plain and simple.
So, with the increased permit fees and the franchise fee being placed on residents and businesses, the city will get about $2.5 million in additional revenue each year. Ardis, Urich and others are positioning this as a way to improve our roads in Peoria.
Personally, I think the fix is in and its a done deal. I think its a bad move as it removes the accountability every 5 years for the water company and now extends it to 20 years. Who do you think will pay for the extra permit they fees they have agreed to pay? It will be the tax payers once again. There is no referendum, the city council will vote on the agreement, then it goes to the illinois commerce commission for consideration and approval or de