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LCRA postponement could open the door for public purchase

Tuesday, October 25, 2011 by Michael Kanin

Last week’s delay in the sale of the Lower Colorado River Authority’s water and wastewater utilities has left the members of a coalition of Central Texas municipalities with some hope.


“I’m encouraged by the board’s decision and hopeful that it means they’re willing to negotiate with us,” West Lake Hills Mayor Dave Claunch told In Fact Daily. “The decision was notable because it didn’t specifically instruct staff to negotiate with the coalition, but we assume that’s what it means.”


West Lake Hills is part of the Coalition of Central Texas Utilities. That group bid against a host of other private firms and at least one other public entity in an attempt to acquire more than 20 water and wastewater utilities that span the range of the LCRA’s service area. The LCRA board seemed set to sell many of those entities to CalWater after its September board meeting (See In Fact Daily, Sept. 22, 2011).


LCRA staff and bid consultant BMO had recommended selling the utilities to Corix, a Vancouver-based private water firm (See In Fact Daily, Aug. 25, 2011).


But a late move from the coalition may have forced the board to change its mind about a private sale. Over the past couple of weeks, the coalition engaged in a flurry of activity that was spurred by an October 13 meeting hosted by Sen. Kirk Watson (D-Austin). There, representatives of the interested parties discussed the coalition’s bid in detail.


Then, on Oct. 17, LCRA General Manager Becky Motal sent a letter to coalition head Pix Howell which called the Watson discussion “substantive” and a version of the coalition’s bid “considerable.” Motal’s letter then asked 12 detailed questions about the coalition’s proposal.


Howell’s response came Wednesday morning as the board was preparing to discuss the sale. From the speaker’s podium, he urged board members to consider the coalition’s bid. “With the opportunity to actually make some revenue over and above the debt and value of the systems, I think that (it) should be satisfactory to you,” he said.


The coalition hopes to acquire the utilities via a lease-purchase arrangement that would break the buy into three groups. Entities would amortize the systems at a 5 percent interest rate over a period of 30 years.


Under this proposal, the cities of Rollingwood and West Lake Hills, and Bastrop County’s Water Control and Improvement District No. 2 would each acquire their systems individually. The newly formed West Travis County Public Utility Authority would take on the purchase of all other west Travis County LCRA-owned water and wastewater systems and combine them under an entity that would also include Hays County.


The remaining utilities would be combined into a Public Utility District that would be created during the 2013 legislative session. That entity could be run by the Texas Community Utility Partnership, a separate entity that had also offered its own bid on all of the LCRA’s water systems.


The coalition argues that this arrangement would allow it to avoid having to pay extensive defeasance costs that would otherwise be associated with the purchase (See In Fact Daily, Sept. 8, 2011).

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