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LCRA backs sale of one water system, but vote fails on deal for others

Thursday, November 17, 2011 by Michael Kanin

The Board of Directors of the Lower Colorado River Authority voted unanimously Wednesday to begin negotiations with a coalition of Central Texas municipalities for the purchase of the organization’s West Travis County Regional Water and Wastewater System but failed—by just one vote—to approve the sale of up to 18 of the LCRA’s other water and wastewater systems to Vancouver-based Corix.


Twelve of the 15 LCRA board members had to vote ‘yes’ for the Corix measure to pass. Only 11 did so, with Kathleen White, Lori Berger, and former Pflugerville Mayor John M. Franklin voting no. Board member Scott Spears – the husband of Teresa Spears, who is Gov. Rick Perry’s Director of Governmental Appointments – was absent.


Late Wednesday, LCRA spokesperson Clara Tuma told In Fact Daily that the utility’s board would host a special called meeting about its water utility sales at 10am on Monday, leaving open the possibility that the vote could be reversed.


The coalition’s proposal was centered on a lease-purchase agreement that initially contained provisions for the cities of Rollingwood, West Lake Hills, and Bastrop County’s Water Control and Improvement District No. 2 to purchase their respective systems individually. The West Travis County Public Utility Authority would take on the purchase of the West Travis County water and wastewater systems and combine them under a new utility that would also include Hays County (See In Fact Daily, Oct. 25, 2011).


Under that initial proposal, the coalition would have also acquired the rest of the utilities—smaller entities in the Hill Country and Southeast Texas regions that the coalition would have placed under the control of the Texas Community Utility Partnership. Until recently, the partnership – another public group – had hoped to acquire all of the LCRA water and wastewater utilities on its own.


On Wednesday, the board continued to signal that it would hold on to the Rollingwood and West Lake Hills utilities. It also seemed to imply that it would not sell the smaller utilities to the coalition.


To further complicate matters, Wednesday’s second resolution would have also left staff with the option to negotiate the purchase of the West Travis County Water and Wastewater systems with Corix. That move would effectively put the firm in direct competition with the coalition for that utility.


The Corix resolution would have given staff until Jan. 18 to complete a deal between the LCRA and the firm. The coalition has until 5pm on Jan. 17. This arrangement seems to indicate that a Corix agreement would serve as a backup plan, should the LCRA fail to complete its deal with the coalition.


In addition, the second resolution would have instructed staff to work on operations contracts with Corix for 10 systems. These include five utilities that LCRA has already agreed to sell back to individual municipalities – the Glenlake Water System, the Hamilton Creek Water System, the South Road Water System, the Sunrise Beach Water System, and the Whitewater Springs Water System.


A management agreement with Corix would also have extended to the five utilities that the LCRA has indicated that it will keep—the Westlake Hills Wastewater System, the Rollingwood Wastewater System, the Tahitian Village Wastewater System, and the Windmill Ranch Water and Raw Water Transport systems.


With the failure of the second resolution, Corix representatives left without any clear official indication of where they might find themselves in relation to the LCRA’s utilities—and vice versa. There was even some speculation that the company could try to work its way into an agreement with the coalition that would leave ownership of the West Travis utilities in public hands, but would put Corix in charge of daily operations—much like the arrangement that the LCRA board seemed inclined to award the firm with regard to the five utilities that it keeps.


Corix operates the University of Oklahoma‘s water system as part of a partnership arrangement that puts the private company in charge of much of that utility’s day-to-day operations. Among other service deals, the firm also holds a contract with the City of Austin to read the city’s residential water meters.


This new round of negotiations represents the third time LCRA staff has been instructed to talk with Corix. The company was initially recommended by staff and consultants as the sole purchaser of the bulk of the water and wastewater systems. It was then included in a second round of discussions that also featured California-based investor-owned utility CalWater.


CalWater was not included in any of Wednesday’s action.


Late Wednesday, the Statesman reported that the LCRA had also rejected a contract application for 8.3 billion gallons of water per year for the proposed White Stallion coal plant in Matagorda County. The agency rejected the first proposal from White Stallion in August, but water levels have continued to drop since then. The LCRA might have a hard time explaining to rice farmers and other “interruptible” customers how it could sell so much water to a power plant that has not yet been built when their own supplies seem likely to be cut in the near future.

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