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Austin water utility hopes to buy share in Brushy Creek system

Wednesday, July 15, 2009 by Bill McCann

Preparing for continued population growth in the far North Austin area, the Austin Water Utility is moving forward with plans to buy a share of the Brushy Creek Regional Wastewater System from the Lower Colorado River Authority (LCRA). 

The system came up for sale after its two biggest users, the cities of Round Rock and Cedar Park, began discussions with LCRA to buy the system as a way to reduce long and short-term costs. All three cities plan to buy the system from LCRA together, said Bart Jennings, utility strategy manager at the Austin Water Utility. Total purchase cost is expected to be about $115 million.

Water officials told the Water and Wastewater Commission that the city’s acquisition would benefit Austin, not only in meeting expected significant future growth in the area, but also in reducing costs.

“Our cost to be a direct owner is going to be less than the cost we are paying now. So it makes good business sense to us,” said Austin Water Utility Director Greg Meszaros. “We are a small user of the system now. But there is a lot of undeveloped land in the area and that area is going to grow. So Austin’s percentage of the system will expand in the future.”

Austin expects to pay about $13 million for its share, which includes 800,000 gallons a day of reserved capacity in the wastewater treatment system as well as interceptor sewers, Jennings said. Austin currently uses about 630,000 gallons of that capacity, mostly serving the Avery Ranch subdivision. 

The exact dollar figure had not been determined as of last week because financial experts for LCRA were still determining the outstanding debt of the system, a difficult job because LCRA combines all of its debt, according to Jennings.

The Brushy Creek system, which is in southern Williamson County, includes two plants with a current combined treatment capacity of 24.8 million gallons a day. But the system inevitably will expand as the area population grows. (For example, developers recently announced plans for Avery Station, which would include 700 homes and townhomes on 178 acres south of Avery Ranch.) The existing interceptor sewers already have been sized to handle wastewater flows projected for 2037, Jennings said.

LCRA joined with the Brazos River Authority in the mid 1990s to develop the Brushy Creek system, LCRA owning it and Brazos operating and maintaining it. The system serves about 200,000 residents in the cities of Cedar Park, Round Rock and Austin, and the Fern Bluff and Brushy Creek municipal utility districts.  Austin has been a customer since 2000. The City of Leander plans to join in the system after the three cities acquire it, according to an Austin Water Utility project summary.

In June, LCRA, Cedar Park and Round Rock signed a memorandum of understanding as a major step leading to the sale, which is to be completed by Dec. 8. The next step in the deal is to negotiate a purchase agreement by Sept. 1. Plans call for the three cities to pay off the system’s debt; pay the costs related to the financial transactions; and pay LCRA $2.6 million in consideration for the value of the system as well as fees that would have been paid to LCRA under its management contract.

The Austin Water Utility got the backing of the Water and Wastewater Commission last week to go ahead with the purchase. The City Council is scheduled to consider the acquisition on July 23.

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