LOUISVILLE, Ky. (WDRB) – A group of Charlestown, Ind., residents is asking state regulators to temporarily halt a company’s approved purchase of the city water system and investigate the deal.

The Charlestown City Council voted this week to sell the water infrastructure to Indiana-American Water Co. for $13.4 million, but the sale still needs state approval.

The residents – part of a group called No Outsourcing Water, or NOW -- filed the complaint Friday with the Indiana Utility Regulatory Commission. They claim the sale would subsidize Charlestown’s economic development projects, such as the redevelopment of the low-income Pleasant Ridge neighborhood, with rates paid by the utility’s existing customers.

And they allege that, with little advance notice to the public, the city agreed to give Indiana-American access to Charlestown’s aquifer for more than a century at low rental rates.

“Taken together with other concerns about the sale, NOW believes Indiana-American’s actions are unreasonable and contrary to the public interest,” the complaint says. It was submitted by attorney J. David Agnew of New Albany.

Joe Loughmiller, an Indiana-American spokesman, said in an email that the company is reviewing the complaint and will respond through the normal commission process.

The residents say in their filing that a contract between the city and a developer appears to show that part of the redevelopment of Pleasant Ridge will be paid with money received from Indiana-American.

Michael Gillenwater, Charlestown’s city attorney, did not immediately respond to a message left at his office Friday afternoon.

The deal is expected to result in higher water rates. Charlestown Mayor Bob Hall has said that an average 5,000-gallon user will likely see monthly rates jump from $18 to $44. Without the sale, he said rates would have climbed to $53 per month.

Indiana-American also has pledged to spend $7.2 million over the next five years to address the city's poor water quality, which has included instances of discolored water in the past.

The Charlestown group takes issue with a second part of the deal in which Indiana-American will lease the city's well field. The city supplies its own water through those wells, in addition to selling water to other communities, the complaint says.

The 105-year lease agreement allows Indiana-American to draw water from the wells at a cost of 3 cents for each 1,000 gallons, rising to 10 cents per 1,000 gallons, according to records filed with the complaint.

But the Charlestown residents allege those rates are “exceedingly low.” They note, by comparison, that another Indiana town is asking for state approval of rates of $1.44 per 1,000 gallons.

“According to our regulatory counsel, Indiana-American’s unfettered access to these wells is a huge win for Indiana-American because of the increasing water scarcity in Indiana-American’s service territories in Central and Northern Indiana,” the complaint says.

The residents say the terms of the lease agreement were not provided to the public prior to the meeting at which the sale was approved.

Reach reporter Marcus Green at 502-585-0825, mgreen@wdrb.com, on Twitter or on Facebook. Copyright 2017 WDRB News. All rights reserved.