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LCRA, coalition of municipalities to try again for sale of water utilities

Thursday, December 15, 2011 by Michael Kanin

For the third time in two months, the Board of Directors of the Lower Colorado River Authority (LCRA) voted Wednesday to authorize its staff to begin negotiations with the Coalition of Central Texas Utilities Development Corporation for the corporation’s purchase of the LCRA’s west Travis County water and wastewater utilities. The coalition has until the close of business Monday to accept the LCRA’s terms.


The utilities in question are a collection of small municipal entities that serve residents of western Travis County. They include the City of Bee Cave, Dripping Springs, and well as a collection of smaller districts and associations.


A successful sale will be no small feat. As it had before, the board attached the abatement and eventual dismissal of a rate case brought by three of the municipalities in the West Travis County system as a condition of the negotiations. For that to happen, the parties involved in those proceedings, including the City of Bee Caves, West Travis County Municipal Utility (MUD) District 3, and West Travis County MUD 5, would have to okay the settlement.


MUD 5 President Larry Fox told In Fact Daily that he’d be okay with the dismissal “if the sale goes through. If we take ownership of it, we’re okay with it,” he said.


The sale would be the final piece in a long-running attempt by the LCRA to sell off its water and wastewater utilities. At it’s November meeting, the organization authorized staff to negotiate an agreement with Vancouver-headquartered private firm Corix for the sale of 18 small utilities.


The parties are also engaged in discussions over a deal that would allow Corix to operate the handful of utilities that the LCRA plans on keeping in-house for the time being. These include the West Lake Hills and Rollingwood Wastewater Systems (See In Fact Daily, Nov. 22, 2011).


Should negotiations with the coalition falter, the possibility remains that Corix could attempt to purchase the West Travis systems as well. Members of the coalition and area residents have expressed concern that a private acquisition of any of the LCRA’s water and wastewater utilities could bring vast rate increases.


The board also tried to move forward with negotiations for the West Travis utilities. However, confusion about that version of the memorandum of understanding drove a host of last minute changes, and an eventual rejection from LCRA General Manager Becky Motal.


The rate case has been ongoing since Bee Cave, MUD 3 and MUD 5 ratepayers first received notice of a potential rate increase in 2007. In the memorandum of understanding, LCRA officials again set aside a specific provision for its settlement.


According to the document, should the coalition and the LCRA proceed with negotiations that result in the coalition’s purchase of the west Travis utilities before March 31, 2012, rates would remain as they are for area residents. Should the deal take longer—or fall apart entirely—the LCRA could raise the rates by 18 percent.


The board finished its vote close to noon on Wednesday. Coalition head Pix Howell told In Fact Daily that he was not able to review the memorandum of understanding before Wednesday morning. On Wednesday evening he told In Fact Daily that the coalition was “in as good a position as we can be in right now.”


He added that the coalition’s board would meet this morning, at which point he guessed that they would vote to move forward with the new memorandum of understanding. As for the settlement of the rate case, Howell noted that that particular ball wasn’t entirely in his court. However, he said that the issues there were “well defined,” that the parties had made “significant progress,” and that he was “confident that we’ll be able to get there in the end.”


Bee Cave City Administrator Frank Salvato did not return a call for comment.


For its part, the LCRA board sounded very ready to move on. “It’s my hope…as we leave here today that all interested parties know what’s required of them to make this deal work,” said director John Dickerson. “It’s my hope also that we do not have this item on our agenda again.”


Should the coalition meet the Monday deadline, the parties would have until January 17 to complete an agreement.

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