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LCRA finalizes sale of 18 small water systems to Corix Utilities

Tuesday, August 5, 2014 by Mark Richardson

The Lower Colorado River Authority has closed the sale of 18 of its former small water/wastewater systems to Corix Utilities Texas, a subsidiary of Vancouver-based Corix Utilities. Officials gave no price for the transaction.

LCRA officials announced in 2010 that they were planning to sell the group of systems, which at the time was costing the agency almost $3 million a year more than it was making in rate payments to maintain the systems. Over the years that it managed the 18 systems, LCRA officials say they invested more than $300 million in infrastructure for the utilities.

Corix has operated the utility systems under a contract with the LCRA since July 2012.

The LCRA board of directors gave permission to proceed with negotiations with Corix in November 2011. It took almost three years to finalize the deal. Corix owns or operates more than 800 water and wastewater utilities with more than 900,000 customers in the U.S. and Canada. Its Texas subsidiary has its headquarters in Buda.

Once the LCRA announced that the utilities were for sale, it hired a Toronto-based consultant, BMO, to review the applicants for the utilities and make a final recommendation. The process made almost no one happy, and there were several threats of lawsuits and an Attorney General’s ruling before the LCRA board could move forward.

At the time of the LCRA’s original sale announcement, former LCRA Board Member Pix Howell formed a consortium aimed at keeping the water system in the hands of public entities. Howell’s Coalition of Central Texas Utilities Development Corporation — which at the time represented Bee Cave, Leander, Sunrise Beach, Hays County and West Lake Hills — bid on the systems but ultimately lost out to Corix. (See Austin Monitor, Oct. 13, 2013)

“I’m not surprised that it took them all this time to close out the deal,” he said. “Over time, the LCRA has simply taken over the operation of these small utilities with little or no paperwork involved. I suspect that over the last three years they have had to get all of their ownership papers and permits in order before Corix would take ownership.”

Howell says he is concerned that water rates for the customers will inevitably increase.

“Corix is a for-profit company, so they have to cover their costs,” he said. “And they will inevitably pass those costs along to the ratepayers. Private companies don’t always do what’s best for their customers, but what’s best for their bottom line. I think these utilities would serve their customers much better if they were publicly owned.”

In a statement, Corix said since it has been operating the systems for the past two years, it customers should not notice any difference in their water and wastewater services. The company said it water rates, which at set by the Texas Commission on Environmental Quality, would not change for at least one year after the sale.

Most of the utilities in the sale are in the Hill Country, including water/wastewater systems in Ridge Harbor, Spicewood Beach, Quail Creek, Smithwick, Sandy Harbor, Lake Buchanan, Paradise Point and Lometa. Other properties are in southeast Texas along the Lower Colorado River, including Matagorda Dunes, Alleyton, Camp Swift, McKinney Roughs and Windmill Ranch.

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