Peoria Heights is weighing a sale of its water department to a private company as quality control problems persist and costly new regulations loom.
Village trustees say they often hear from residents who report getting brown water from their faucets, and the system has known issues with manganese and PFAS (per- and poly-fluoroalkyl substances), also known as “forever chemicals.”
Mayor Mike Phelan said the village had a consulting firm evaluate the system and make recommendations on how to address the issues.
“We have not seen significant investment in water infrastructure in decades, literally, because the village simply didn’t have the money to do so,” Phelan said in an interview with WCBU after Tuesday’s village board meeting.
“Those are very high on the on the board’s priority to address those complaints, and there are going to be very expensive fixes," he said. "We want to move this along and solve the problem as quickly as possible.”
Among the options is selling the system to Illinois American Water. Representatives gave a preliminary presentation about the acquisition process that led to an hourlong discussion with trustees.
Kyle Smith, the company’s senior manager for the western division, said any sale usually includes all water department assets. But he acknowledged one particular aspect of Peoria Heights’ system presents a unique situation: the 200-foot, 500,000-gallon water tower.
“Being familiar with Peoria Heights and your proud history and of course your iconic water tower out here, we realize that that tower is going to need to stay with Peoria Heights,” Smith said. “All these things would be negotiated during the deal.
“Typically we would take everything. I was under the impression that the village would be possibly interested in retaining ownership of the observation tower so it can continue to be a historic landmark," he said. "That’s something we would be amenable to that could be potentially split off in any proposed deal.”
Phelan said that keeping the tower might present additional concerns for the village.
“There’s multiple facets to all of this,” Phelan said. “If that were the case, the village would have to make plans on how to maintain that tower, because it is supported now by water revenue. If you sell the company, you don’t have those revenues to pay for the upkeep on the tower.
“And I still think that there’s going to have to be engineering studies of the tower itself, if you’re no longer holding water in that tower.”
Smith noted the entire acquisition process is quite lengthy, requiring multiple assessments and negotiations that could take more than a year. He said either side could back away from the deal at any time up until the sale is completed.
Phelan said hearing from Illinois American Water is necessary for the village to determine its best course of action.
“I’m currently not an advocate for selling the water company,” he said. “I’m an advocate for taking a look first at repairing and investing in our own system. But this is another option that the trustees are looking at, and I think it’s good due diligence.”
Smith noted that Illinois American Water is regulated by the Illinois Commerce Commission (ICC), and therefore bound to certain conditions related to any sale.
“Rates are obviously a big concern,” Smith said. “That’s all negotiated during the actual purchase process. Existing rates are typically adopted right out of the gate. If there is a discrepancy between your existing rates and our current rates for the territory that you lie within, they’re ramped up over time if necessary. That is all negotiated on the front end of any agreement, as to what that looks like and how long it takes to get to where we need to be.”
Smith also said current Peoria Heights water department workers would not be in jeopardy of losing their jobs and benefits.
“We, again, are required by the ICC to (retain) any employees that you would deem water employees that would essentially transition over with any sale of the water system,” he said.
It’s unclear how much it might cost or how long it could take to fix the discoloration in the water system, with a need to determine how much of the problem comes from the water source and how much is from infrastructure.
Phelan said the village wants to know if turning to Illinois American Water would be cheaper and faster than pursuing its own solution.
“Being a bigger company, they may be able to speed up the fix. However, the (water) source is going to most likely be different,” Phelan said. “Again, this is all hypothetical; we haven’t even had any formal talks with Illinois American Water, just informal talks. Their source for the water would probably be out of the City of Peoria, where the village is currently using wells from the Sankoty aquifer.
“So if the village would pursue its own solutions, we would need filtration improvements. We would need water main replacement; we would need service line replacement and we’re working on replacing lead service lines. So all sorts of things – it’s a multifaceted approach to this problem.”
Another question raised was how Illinois American Water’s ability to serve Peoria Heights could change if Peoria were to exercise its current option to buy back its water service from the company.
“Illinois American Water is not in a position where they are looking to divest or sell the system,” Smith said. “Should that train ever get further down the tracks, that’s all going to have to be negotiated.
“The reality is we don’t know, and we plan to never find out.”
