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Hays County, Forestar water contract in jeopardy

Wednesday, April 2, 2014 by Andy Sevilla

Hays County’s attempt to secure a water supply contract from Forestar Real Estate Group has run into a legal roadblock in addition to the fact that Forestar currently can’t deliver the amount of water promised in the proposed contract.

Late last year, Hays officials contracted with Forestar to provide 45,000 acre-feet of water from the Lost Pines Groundwater Conservation District. However, Forestar did not have an appropriate permit from the water district to sell the water, and Lost Pines officials were only offering to sell them 12,000 acre-feet.

Forestar is now dealing with legal questions about its contract with Hays. County officials put their first-year’s payment – $1 million – in an escrow account, pending a Texas Attorney General’s opinion on county authority when dealing with water issues.

Hays County Attorney Mark Kennedy said Monday that the local government was seeking a definitive answer on whether they could enter into a five-year contract with Forestar for 45,000 acre-feet of water from the Carrizo-Wilcox Aquifer at a reservation cost of about $1 million per year.

Kennedy said counties are required to rely on expressed and implied authority, and his office felt state water code revisions offer significant implied authority. However, in dealing with a $1 million-a-year contract, Kennedy advised the county to seek as much granted authority as possible.

Hays County requested an opinion on numerous matters including, purchasing, transferring, assigning and paying for groundwater. That opinion, if affirmative, would have released the $1 million payment to Forestar, per the agreement.

The attorney general’s office, however, declined to issue an opinion on the matter, citing the office’s inability to interpret a contract, Kennedy told a room full of Hays, Travis and Williamson county representatives who were meeting to discuss a potential future water partnership.

“We were very careful to stay away from the contract question,” he said. “We had to include reference to it, of course, since we had one. And we wanted to show, by attaching (the contract) as an exhibit, that one existed and if they cared to take a look at it to help color the question.”

“Instead of still answering, what I consider to be a pure legal question – interpretation of the statutory provisions – they pointed at the contract and said ‘we can’t comment on this,’” Kennedy said.

Since the contract calls for the affirmative opinion by the attorney general’s office –allowing the county to purchase, sell, transfer, assign and pay for groundwater, among other things – officials now say the agreement is in need of amendments.

Payments to Forestar were to begin on the date the county received the affirmative opinion.

“So we don’t have an affirmative opinion date, we have the punted opinion date, for lack of a better term,” Kennedy said.

In January, the Lost Pines Groundwater Conservation District rejected a permit request by Forestar seeking 45,000 acre-feet of water from the Carrizo-Wilcox Aquifer, which the real estate group would then sell to Hays County.

The conservation district did approve 12,000 acre-feet of water for Forestar. An acre-foot of water is the amount of water it would take to fill an acre with water at a one-foot depth.

Kennedy said Forestar recently filed suit in Lee County appealing the conservation district’s denial of an additional 33,000 acre-feet of water. Hays County is not involved in the suit, he said.

Hays County officials also are looking to either join the Lone Star Regional Water Authority, create a Utility Development Corporation, along with Travis and Williamson counties, or join both, to help move the water they may have access to in the aquifer under Lee and Bastrop counties.

Hays County Commissioners have said moving the water would be too costly for one government to do on its own, and is looking for partnerships to address regional water needs. 

Officials from the three counties and other stakeholders are tentatively scheduled to reconvene on April 14 and continue discussions on a potential water partnership.

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