Image
Above: Regular maintenance of the city's distribution system includes the flushing of fire hydrants. Right: The entire system is monitored and managed in the control room at the Indianapolis water system. Photos: Veolia Water
Image
The White River is one of Indianapolis Water's primary sources.
The Capital Plan

As part of the agreement, the private partner annually submits a five-year capital plan defining all of the capital projects anticipated and required during that timeframe. The management agreement contains specific definitions of what constitutes a capital project.

“The board initially reviews our capital plan to determine if all of the items are capital projects as defined under the management agreement,” said Chuck Voltz, vice president for Veolia Water. “If there is disagreement regarding a project's definition, it can be taken to the board's coordination committee for resolution. Next, projects undergo a critical rating system to determine which ones are most immediately necessary. Finally, we determine the number of projects that can be completed with available capital funds.”

For projects categorized as generic or nondefinitive, such as upgrading and rehabilitating underground infrastructure, the city allocates a set amount of money and Veolia performs an analysis to identify the most obvious needs. The analysis covers such items as the replacement of leaking feeder mains and the need for any new ones. The private partner then goes back to the board for a supplemental capital project authorization and works off this preset allocation of funds during the year.

Accountability Built In

Indianapolis's public-private partnership contains two features noticeably absent in the traditional approach to infrastructure provision—contractual guarantees and specific, incentive-based performance measures. The two most important capital project measurements are meeting scheduled deadlines and staying within the budget.

By clearly defining the private partner's responsibilities for capital projects and stipulating the incentives for meeting the objectives, Indianapolis found that accountability is built in. In the typical public-sector approach to infrastructure provision, responsibility typically is less defined, often diffusing accountability and weakening the incentive to perform.

Besides the accountability and discipline created by the management contract's performance-based incentives, additional approaches by the private partner contribute to cost optimization and timely completion of capital projects. These include the design-build-operate project delivery approach and value engineering, which incorporates life-cycle costs.

Project Priorities

The public-private partnership began on April 30, 2002, and the pre-existing Indianapolis Water Co. capital plan was carried forward with minor adjustments into 2003, until an adjusted capital plan could be formulated. Since January 2004, the private partner has executed 90 projects, focusing on infrastructure and water quality. These include underground projects totaling about 30 miles of main that were identified and approved for construction.

“These projects close gaps in the system, improve the system's hydraulic efficiency, and reduce the number of dead-ends that can potentially contribute to water-quality issues,” said Voltz. “Also, over the past two years, 22 projects have been identified and constructed that replace those segments of main with the highest incidence of failure. In the past, these projects had not been a priority, even though these failures often resulted in service interruption, damage to city infrastructure such as sidewalks and roads, and loss of water.”

Recent and current capital projects include:

  • Four 1 -million-gallon elevated storage tanks to improve reliability and enable existing infrastructure to meet peak demands
  • Improvements to the existing filters at the White River and Fall Creek treatment plants to reduce the backwash water requirements while increasing the available supply
  • Expansion of the city's Geist station to increase plant capacity by 4 mgd
  • Improvements at the White River treatment plant, including construction of a new water intake structure to reduce dependency on a canal as a source, and upgrading sedimentation/flocculation basins to ensure adequate water quality prior to filtration
  • Creation of a new residual handling facility to eliminate water treatment plant disposal to the Indianapolis sewer system and minimize costs.
  • Other city-funded projects under way include boiler upgrades, security associated with fencing and camera/communication upgrades, refurbishment of several city reservoirs, and design work associated with upgrades at several treatment systems. Current bond-funded projects, in addition to the expanded Geist groundwater plant and elevated storage tanks, include underdrain upgrades at the Fall Creek and White River plants, and approximately $9 million of feeder main extensions.