case studies
energy & utilities
efficiency optimization

City of Indianapolis frees up $1.5 billion

Consolidated utility ownership lowers rates and helps fund vital infrastructure

The challenge

The City of Indianapolis needed to free up $1.5 billion of its budget to fund a range of critical infrastructure needs, including roads, bridges and sidewalks. It also faced substantial projected rises in water and sewer rates over the coming decade and a half.

In addition, Indianapolis's wholly-owned water and sewage systems were run separately from one another, meaning that potential synergies were not being achieved.

The solution

Citi sought to find efficiencies and savings in the Indianapolis utility portfolio, to help fund the infrastructure projects.

A range of options were considered including operational synergies, capital program savings, not-for-profit structures, long-term concession arrangements and sales of assets.

The City of Indianapolis decided on an asset sale and Citi acted as advisor in the sale of Indianapolis's water and sewage assets to Citizens Energy Group, a public charitable trust for Indianapolis citizens that already owned the city's natural gas, steam and chilled water assets.

The result

The asset sale generated $450 million to help fund general infrastructure, and as the buyer was a public entity, favorable terms were possible to fund the debt.

The combining of five different utilities produced synergies of $43 million a year, which will grow over time. Water and sewer rates are also projected to be 25% lower than before the asset sale.