Lebanon needs to find new water source to support more construction, mayor says

The city of Lebanon needs to find an additional water source before new business and residential construction can take place in the city.

Mayor Matt Gentry told IBJ the city is not running out of water and Lebanon Utilities customers, along with companies and developers who have already paid to reserve water capacity, will receive their allocations.

“To be very clear about this, this is not a situation where someone’s going to turn on a faucet and water’s not going to come out,” he said. “It’s how we allocate our water supply and how we assign it to users.”

While projects in progress aren’t in jeopardy, Lebanon cannot currently offer water to companies and developers looking to build in the city who have not already reserved allocations. That includes the second phase of Indianapolis-based drugmaker Eli Lilly and Co.’s massive planned manufacturing complex and developers and homebuilders who have received approval to build more than 700 homes near the LEAP Lebanon Research and Innovation District.

The Lebanon Reporter first reported on the city’s need to find an additional water source.

Lebanon, which has a population of about 17,000, receives most of its water, about 3.6 million gallons per day, from collector wells on Sugar Creek at the property of the former Old Indiana Fun Park. The community also gets an additional 1 million gallons per day from a smaller well within city limits.

Gentry said the city is negotiating with a couple of utility companies to deliver more water to the city. It would take about 12 to 48 months to build the infrastructure needed to support the additional water supply depending on the type of system built to pump or push the water. The cost to provide more water to Lebanon could be between $10 million and $30 million.

Companies and developers will be able to begin setting construction schedules for their Lebanon projects once the city reaches a deal with a utility company to provide water and a timeline is in place for installation.

“That would then allow that kind of construction to progress and begin, and then by the time that they’ve completed construction, the water will be delivered as well,” Gentry said.

Lebanon is working with Texas-based engineering and consulting firm Intera to search for additional nearby pockets of water. Intera has also worked with the state of Indiana to identify potential water resources for the LEAP District. LEAP stands for Limitless Exploration/Advanced Pace.

Water policy has been a hot topic in Indiana in the two years since the state announced the LEAP district project. The Indiana Economic Development Corp. is looking to build a controversial 35-mile pipeline from a Wabash River aquifer in Tippecanoe County to the LEAP District.

“I think something that gets missed a little bit, though, is that the solution, the low-hanging fruit for us, is not a large pipeline to Lafayette,” Gentry said. “That’s really only needed in the kind of situation where we actually land the larger semiconductor-type facilities [at the LEAP District] that are super-heavy water users.”

Water capacity is counted as equivalent dwelling units, or EDUs, and Lebanon defines one EDU as equal to 500 gallons of water per day. However, water users throughout Lebanon, combined between households and large companies, use an average of 190 gallons of water per day. Gentry said the city could temporarily redefine one EDU as 300 gallons of water per day as a stopgap until the city finds a solution.

Gentry said Lebanon mayors have been watching the city’s water situation since 2006 when there were first discussions about its water limitations. He said Lebanon straddles the White River Valley and the Wabash River Valley and “water streams away from us naturally.”

Eli Lilly and Co. is building a $9 billion manufacturing complex at the LEAP district where it will produce active pharmaceutical ingredients for Mounjaro, Zepbound and other drugs, along with cell and gene therapies.

The company broke ground last year on the site on a $3.7 billion project to construct a dozen buildings and announced last month it would invest another $5.3 billion to fill in the project with more buildings and equipment. Construction is still in early stages and the company hopes to begin producing drug ingredients there in 2026.

In 2022, the Lebanon City Council approved an agreement to reserve 864,000 gallons of water per day—or just more than 1,700 EDUs—for Lilly’s complex. Gentry said Lebanon has enough water for the first phase of Lilly’s project, but it will need to find a water solution for the project’s second phase.

“We’re working with our regional partners to determine what that solution is,” he said.

Water is also allocated for the second phase of the Hickory Junction project near Interstate 65 and State Road 39, and its developer purchased 95 EDUs this spring.

Westfield-based Card & Associates Athletic Facilities plans to build hotels, restaurants and shops in the second phase of the Hickory Junction development. The first phase of Hickory Junction included the 200,000-square-foot Farmers Bank Fieldhouse, which opened in February.

Gloucester, Massachusetts-based Gorton’s Seafood, which plans to build a 110,000-square-foot production facility in Lebanon, has also reserved 150 EDUs.

“Couple [Lilly] with the additional growth we’ve been having in our business park and the residential growth we’ve been having, the available EDUs have now reached a point where we’re at zero,” Gentry said. “We’ve allocated everything we have based on projects that have been approved and are either under construction or moving through that planning process. They paid their fees and they have water secured for them.”