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Despite hurdles, Hays County, Forestar move ahead with water deal

Friday, May 16, 2014 by Andy Sevilla

Hays County Commissioners are moving forward with a massive water supply contract, despite not clearing a legal hurdle called for by the water reservation and purchase agreement.

Last October, Hays County officials entered into a contract with Austin-based Forestar Real Estate Group to secure the reservation and purchase of 45,000 acre-feet of water per year from the Simsboro formation of the Carrizo-Wilcox Aquifer in Lee County, at a reservation cost of $1 million per year.

But before the first year’s payment to Forestar was to be released, Hays County was to secure an affirmative opinion by the Texas Attorney General on county authority to enter into water reservation and supply agreements, and pay for those agreements with property tax revenues.

The AG, however, declined to opine on the matter, citing the office’s inability to interpret a contract, a move that sent county officials scrambling to amend the original agreement and continue its progress.

After about three hours in executive session, Hays County Commissioners Tuesday approved an amendment to the contract that threw out the AG requirement, and instead the county will rely on implicit authority granted to counties through revisions in state water codes.

Pct. 3 Commissioner Will Conley, the lone member to vote against the amendment, urged his colleagues on the dais to consider the liability and risk now associated with the water project.

“I don’t believe it’s wise for us to move forward, particularly alone, at this point in time, in this regard, when we could back up, hit reset, build a stronger coalition here at home working with our municipal partners and others,” Conley said. “We have a legislative session coming up soon in which we could potentially ask for clarity on that issue and work more off explicit authority, instead of implied.”

In the past couple of months, Hays County has organized at least three public meetings with Travis and Williamson county representatives to forge a regional partnership and together tackle future water supply issues. Not much has come from those meetings, but State Rep. Jason Isaac (R-Dripping Springs) has been in the room at least twice and said a regional effort could help make waves in legislature.

“I believe we should step back, reset, take our experience and knowledge we have developed over the last year and give ourselves an opportunity to get on solid ground here at home, develop stronger relationships regionally and work … for something that has a little bit more security for our taxpayers as we move forward,” Conley said.

But Hays County Judge Bert Cobb, perhaps the most ardent supporter of the water supply contract, said officials have waited too long, and that commissioners have already weighted the risks, benefits and alternatives to the agreement and have decided to advance.

“Anytime there’s a crisis we have one of two choices: we can either mitigate, which we’re trying to do; or we can change our lifestyle,” Cobb said. “I want there to be water so that my children and grandchildren can enjoy the beauty and the opportunity of Hays County, just like I did. That’s why I came here.”

Cobb said lack of water has been a pain felt personally by him. He said in 1930 his family lost everything they had and moved to Bell County, where there was water and jobs. Then in the drought of the 1950s, Cobb said his family once again lost everything and moved to Hays County.

“The conditions are as bad (now) as they were in the 1950s for drought, so it behooves me as a public servant to try and prevent that upheaval, change in people’s lives,” Cobb said. “It changed my family forever. I don’t want that to happen if there’s anything we could do to prevent it.”

Though the amendment allows Forestar to collect the $1 million first-year payment without the AG’s explicit blessing, changes also were made to favor Hays County’s reservation rates.

Hays County’s rate to reserve water is $22.22 per acre-foot. An acre-foot of water is the amount of water it takes to fill an acre of land at a depth of 1 foot.

And though Forestar is on the hook for 45,000 acre-feet of water per year, per the contract, the company is only permitted 12,000 acre-feet of water, for now.

Forestar is suing the Lost Pines Groundwater Conservation District after the district rejected Forestar’s permit request for the 45,000 acre-feet per year in January. The conservation district approved only a 12,000 acre-feet per year permit.

Per the amended agreement, Hays County will pay $4.04 per acre-foot of the unpermitted water, or the 33,000 acre-feet of water Forestar is fighting the conservation district for. Therefore, for fiscal years 2015-2018 Hays County will pay Forestar the permitted and unpermitted rates, initially determined at about $400,000, by county officials.

With the amendment, Hays County also will pay an additional $100,000 non-refundable termination option fee in 2015 that will apply to the 2016-2018 period, allowing the county to terminate the contract with 90 days prior written notice, according to a county statement.

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