A state agency on Thursday took the first step toward providing financing for a new option to channel 25 million gallons of water a day to the LEAP Lebanon Innovation District and other Boone County developments through loans of up to $100 million.
The potential project would serve as a water source to support the LEAP innovation park, which is the Indiana Economic Development Corp.’s major effort to draw giant tech manufacturing to the state. It is being contemplated to serve the Lebanon area’s water needs for the next 15 to 20 years, said James McGoff, chief operating officer and director of environmental programs at the Indiana Finance Authority.
Lebanon Mayor Matt Gentry said he doesn’t expect the effort to fully remove the possibility of the need for an additional water source, such as a pipeline from the Wabash River, somewhere down the road.
The IEDC’s exploration of possibly pumping up to 100 million gallons of water per day through a 35-mile pipeline to LEAP from Wabash River aquifers near Lafayette has stirred controversy over regional water rights for nearly two years. (LEAP stands for Limitless Exploration/Advanced Pace.)
The new water project discussed Thursday is separate and apart from a possible Wabash pipeline and is not included in the finance authority’s ongoing 28-county Wabash headwaters study
The new project would involve Citizens Energy likely tapping into water systems in Westfield and Whitestown to sell the resource to Lebanon Utilities for the city’s growing needs, officials said, though discussions are ongoing.
Citizens said that while the water might pass through the Westfield or Whitestown water infrastructure, it would not be selling or depleting water resources from those communities to fulfill Lebanon’s needs. Citizens would use its vast water system, which includes the White River, Fall Creek and groundwater.
Lebanon’s needs include providing water for the second phase of Indianapolis-based drugmaker Eli Lilly and Co.’s massive planned manufacturing complex at LEAP and for homebuilders who have received approval to build more than 700 homes near the research park.
Citizens Energy said Thursday that it has been in talks with the Indiana Finance Authority and Lebanon Utilities “for some time” to support Boone County development.
The Citizens Energy-Lebanon Utilities project is one of several water and wastewater improvement efforts around the state that could be funded through $500 million in bonds approved Thursday by the Indiana Finance Authority.
While no additional authorization for the bonds is needed, financing for the Lebanon Utilities project would still need to be approved for funding through the State Revolving Fund Loan Program, finance authority officials told IBJ in an email.
The State Revolving Fund Loan Program uses U.S. Environmental Protection Agency grants to provide low-interest loans to improve wastewater and drinking water infrastructure.
The water needs of LEAP and the surrounding footprint are the equivalent of a small town, McGoff said, and other water supply avenues are still being discussed. The project would provide water to support new company investments that have been announced or are in the works with the IEDC, he said.
“The information we’ve been provided is that 25 million gallons a day will satisfy not only the LEAP District, but also what Boone County and the city of Lebanon needs to grow currently,” McGoff said.
The IEDC declined to comment on the water project, referring all questions to the state finance authority.
Gentry, the Lebanon mayor, said he is hopeful an agreement can be finalized soon to allow development in Lebanon to move forward. Most projects generally have been stalled since June when Gentry announced the city doesn’t have the capacity to support more commercial or housing development until a water solution is found.
“We’re optimistic on the current plans, and optimistic that we have a path forward,” Gentry said.
The current water capacity for Lebanon Utilities—about 4.6 million gallons per day—is enough to support the municipality and the first phase of Eli Lilly and Co.’s LEAP project announced in 2022, which alone is expected to use 800,000 gallons daily.
More water will be required for the additional $5.4 billion investment the company shared earlier this year, which would rely on an additional 500,000 gallons per day or more.
But expanding capacity with the new water project would go far beyond helping Eli Lilly and could assist a cadre of other possible deals in the works.
Two sources familiar with LEAP said at least five big projects aside from Lilly are under consideration for the mega-site—each of them highly reliant on water availability. Among them is a $50 billion semiconductor manufacturing facility, for which Lebanon is considered a finalist, the sources each told IBJ independently.
“Certainly the need for going north to Wabash was really needed in a case where we would land a large user, such as a semiconductor facility and things like that,” he said. “But I think the way the IEDC looked at [the Wabash pipeline] is that they could solve two problems at the same time. Looking at the larger Central Indiana water challenges, I wouldn’t say this replaces [the pipeline plan] long term, because I think down the road there’s still the outlying issue that Indianapolis will need additional water sourcing eventually, but certainly this is a good solution for Lebanon and LEAP at this time.”
Citizens’ return to the LEAP project comes just 10 months after it withdrew an application to supply up to 10 million gallons per day to the site.
Laura O’Brien, the spokeswoman for Citizens, said the Lebanon project likely would tie into the Westfield and Whitestown water pipelines but would not reduce either municipality’s capacity. Those water sources would then be connected to Lebanon Utilities as part of a wholesale water agreement.
“At this juncture, we are making good progress on discussions to provide up to 25 million gallons of water per day to Lebanon Utilities,” Citizens said in a written statement.
“Citizens has been proud to be a collaborative partner with the IFA, Lebanon Utilities, and others at the state throughout this process,” the utility added. “We are well-positioned to meet current customers’ water demand now and in the future, and we are excited about the potential to support such a significant regional water supply project while protecting our current customers from bearing any of the costs associated with this program.”