HANCOCK COUNTY — Cumberland has reached an agreement to sell part of a sanitary sewer utility it oversees to New Palestine for around $865,000.

About 130 Hancock County residents north of New Palestine will pay a lower rate to their new provider, which will also service a neighborhood that’s under way and another that’s planned. New Palestine will grow its sewer utility, while Cumberland will acquire funds to put toward its debts.

The Gem south sanitary sewer utility, which Cumberland has owned since 2010, abuts New Palestine’s northern border. The service area extends north to West County Road 200S, and even farther north to include the Centennial Commons neighborhood north of 200S and east of 500W. Its western border is Mt. Comfort Road, and its eastern border is County Road 200W.

Along with Centennial Commons, the sewer utility also serves the Overlook neighborhood east of 450W and south of 300S.

Coming to the sanitary sewer system are about 30 homes directly to Centennial Commons’ west along with more than 200 anticipated south of the neighborhood.

New Palestine and Cumberland have been negotiating the sale of the Gem south system for more than a year. Cumberland Town Council approved a purchase agreement on Oct. 16.

According to the agreement, the purchase price is equal to the number of sanitary sewer customers in the area as of the closing date, multiplied by $7,000. The agreement also states that New Palestine will pay an amount equal to 98% of the sanitary sewer utility’s accounts receivable from customers in that area as calculated two days before closing.

Ben Lipps, director of public works for Cumberland, said at the town council meeting that the total will come out to around $865,000. He added it will go a long way toward bond payments and bring the town closer to being debt-free.

“It’ll be a really good benefit to the utility,” Lipps said.

Gem Sewage Works’ monthly single-family residence rate is $78. New Palestine’s is $67.

Jim Robinson, New Palestine planning commissioner, expects the town council to vote on the purchase agreement soon.

“It will be a good purchase for New Palestine,” Robinson said. “It will allow our sewer territory to go north to (County Road 200S). Our growth seems to be going more west, so for the town to grow north a bit to give a buffer I think will be tremendously great for the town.”

If approved, Lipps expects the deal to close before the end of the year.

New Palestine intends to borrow the funds for the purchase and pay off the debt through funds generated from new sewer customers.

New Palestine plans to disconnect the Gem south sanitary sewer system from its current treatment plant near County Roads 300S and 450W and connect it to the new plant the town recently built at 4772 S. Bittner Road. The new plant has a capacity of 400,000 gallons per day but with a slight alteration can go up to 500,000 gallons per day, Robinson said.

Lipps said the current Gem south sewage plant has a capacity of 100,000 gallons per day and was built in 2003.

Robinson said New Palestine may find a use for the current Gem south plant.

“We’ll re-utilize some of that structure if possible,” he said.

The deal follows Cumberland’s sale of the Gem water utility to NineStar Connect, which was finalized in January 2019.

Cumberland will continue to operate the northern Gem utility territory, which spans predominantly between I-70, County Road 200S, Mt. Comfort Road and County Road 200W.
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