The sale of Eureka’s water and sewer systems is set to close – exactly two years after voters approved the sale.
Missouri American Water will buy the city’s water and sewer systems for $28 million on Aug. 4, Mayor Sean Flower said. Eureka voters approved selling the systems in the Aug. 4, 2020, election.
The sale cleared its final hurdle June 9 when the Missouri Public Service Commission voted 4-1 to approve the transfer. The commission regulates investor-owned electric, natural gas, steam, water and sewer utilities in Missouri.
“I was happy and just kind of relieved,” Flower said. “It was very nice to get a final decision on it, because the whole system has kind of been in limbo. We’ve been operating it, but you don’t know whether you’re going to keep it and have to do improvements to it or whether you’re going to sell it and kind of move on to other things.”
Missouri American Water senior director of operations Brian Eisenloeffel said Eureka residents will receive their first bill from Missouri American Water 30 days after the sale closes. However, Eureka residents will have to wait to start getting different water.
“We still have a pipeline to be built,” he said. “We weren’t able to break ground and start construction on that until the acquisition was final.”
Eisenloeffel said a 5-mile pipeline will be constructed from the company’s water plant in Wildwood to Eureka. He said the project will take about two years to complete.
However, Eureka residents will receive service from the company after the sale is completed, Eisenloeffel said.
“You might see our trucks. You might see our employees who will be working at the wastewater plant to treat the wastewater right away,” he said.
He also said Missouri American has extended offers to current city employees who work on the water and sewer systems. He did not say how many plan to work for Missouri American after the sale.
City Administrator Craig Sabo said Eureka has 11 employees who work on the water and sewer systems and could be offered jobs.
One thing residents will receive quickly after the sale is new water meters, Eisenloeffel said.
“We’re going to be working to change water meters pretty quickly right after the close date,” he said. “It’s an automated meter, it talks through the cellular data system, and communicates with our billing systems to make sure they get accurate bills.”
Two-year sale
Flower said sales of utilities typically take about three or four months, but Eureka’s sale took much longer. He said the sale had two extensions because of the COVID-19 pandemic, and the commission balked at the $28 million price tag.
In the lead-up to the sale agreement, three appraisers were employed to determine the value of the two systems.
The city hired Dinan Real Estate, Missouri American hired Joe Batis and those two appraisers hired Elizabeth Goodman Schneider to give a third opinion.
In January 2020, Kelly Simpson of Flinn Engineering, who worked with the appraisal firms, determined the two systems were worth $16.1 million, the commission’s report said.
After receiving the engineering firm’s report, the three appraisal firms determined the systems were worth $18 million, but that price tag increased to $28 million in March 2020 after the appraisers combined the value of the systems with the amount of money charged customers.
“I think it was fair,” Eisenloeffel said of the appraisal process. “We rely on the professional judgment of the appraisers. We respect those numbers, and I believe they are very accurate.”
Flower said he didn’t understand the price was disputed since the appraisal process was followed.
“The statute says we use an appraisal to determine the price, we did it and followed that rule,” he said.
Flower said the city plans to use about $5 million from the sale to pay off debt from the construction of the Timbers of Eureka Recreation Center and from operating the water system.
Flower said city officials are looking at numerous other projects that can be funded with the remaining $23 million. He said the city may use some of the money to help finance the construction of a new Allenton bridge and to fund road, stormwater and parks improvement projects.
“We can basically lend ourselves the money and kind of pay it back so we’re not paying interest to outside banks,” he said. “It gives us a lot of flexibility with the financing part.”
Flower said he will be proud to see the sale close.
“It’s just a huge deal for Eureka,” he said. “It’s not all the time that you take something from start to finish and just get it accomplished.”