Lebanon board OKs two preallocation MOUs with Eli Lilly, subject to city council approval

The Lebanon Utility Service Board on Feb. 5 approved two preallocation memoranda of understanding (MOUs) that reserve future water capacity — and in one case wastewater capacity — for Eli Lilly projects in the city’s LEAP innovation district, subject to approval by the Lebanon City Council.

The board voted to approve a water-and-wastewater preallocation MOU for Eli Lilly’s Medicine Foundry project and a separate water-only preallocation MOU for an expansion at Lilly’s existing LP‑1 site (the "LP‑1x" application). Both motions passed by recorded roll call votes with four ayes and one no. Aaron Smith explained his “no” votes at each motion, saying he was concerned about preferential treatment for Lilly and urging similar offers to other city developers.

Jeff Jacob, the utility’s legal counsel, told the board the MOUs follow the utility’s standard template but include project-specific customizations. Jacob described the commercial terms: Eli Lilly would make a 10% deposit on the allocated capacity now, and pay the remainder of the availability fee when the utility notifies the company that water (and, where relevant, wastewater) capacity is available. He said the agreements are contingent on Citizens Energy Group providing the upstream water capacity in 2027 and 2028 and on the city’s financing and installation of water and wastewater infrastructure.

Aisling Judge, identified at the meeting as “a senior director for operations at the LP‑1 manufacturing site,” gave a project update for the LP‑1x expansion, describing additional small‑molecule and peptide manufacturing buildings and ongoing construction at the LP‑1 campus. She said the LP‑1x allocation would support process and process‑support activities in the new buildings and noted Lilly’s community events and local hiring plans, including a March 6 open‑careers event at the Lebanon fairgrounds.

Board members and staff emphasized that the MOUs are part of the city’s broader LEAP financing plan. Jacob said the documents were being presented now because they are part of the financing package that underpins the availability fee assumptions and the bond financing for the water/wastewater work; he also reminded the board that the MOUs require city council approval before they take effect.

Aaron Smith, who cast the lone no vote on both motions, explained that he had raised concerns at the board’s working session about “the preferential treatment that Lilly is receiving” and said he wanted similar offers extended to other Lebanon developers within 45 to 60 days. He said his “no” did not reflect opposition to Lilly as a neighbor but rather a concern over fairness in the timing of offers.

Both MOUs passed by roll call with the following recorded votes: Tim Hudson, Neil Taylor, Bill Stoner and Anne Patterson — aye; Aaron Smith — no. The board approved both motions on the condition they be placed on the Lebanon City Council agenda for final authorization.

Why it matters: The MOUs reserve utility capacity that supports large manufacturing investment in the LEAP District and are tied to the city’s financing structure for upcoming water and wastewater work. The agreements include a financial deposit and are explicitly contingent on third‑party infrastructure capacity and subsequent city council approval, meaning the arrangements do not guarantee immediate service or construction until those conditions are satisfied.

What’s next: The utility will forward the MOUs to the city council for action. Per statements at the meeting, the full availability fees will be due when the utility notifies Lilly that the water/wastewater service is available; Citizens Energy Group’s delivery capacity in 2027–28 remains a gating factor.