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February 14th, 2011
Hays County looks to buy local LCRA water system

021411lcra

Janet Stephenson, who manages the West Travis County Regional Water System, speaking last week to Hays County commissioners. Photo by Sean Batura.

By SEAN BATURA
News Reporter

Hays County is in a race with private interests to prepare for the possible purchase of tens of millions of dollars worth of water and wastewater utility infrastructure from the Lower Colorado River Authority (LCRA).

Hays County commissioners said they want to prevent the infrastructure from falling into the hands of private interests.

Among LCRA’s 32 water/wastewater utilities planned for sale, the West Travis County Regional Water System serves an estimated 20,380 people in Travis and Hays Counties.

“Right now, Chinese investors could buy that system, and under the state laws and regulations, expand that system in an aggressive fashion to the best of their ability, with little checks and balances at all besides the process of TCEQ (Texas Commission on Environmental Quality), which is limited,” said Hays County Precinct 3 Commissioner Will Conley (R-Wimberley).

Commissioners last month asked LCRA to grant public entities the right of first refusal to buy the water/wastewater systems. LCRA representative Robert Cullick said LCRA has no intention of granting the request.

Commissioners said they need more time to conduct due diligence and possibly prepare a bid. Private entities already in the water utility business have more resources than the county to prepare bids and begin negotiations within LCRA’s current divestiture time frame, Conley said. Commissioners last month asked LCRA to postpone its divestiture process.

Cullick said LCRA does not plan to delay the sale of the utility systems. LCRA representatives say they intend to find buyers, public or private, who are willing and able to protect the public interest.

Hays County commissioners argue that only public control of utilities can insure reasonable water/wastewater rates, quality service, sound environmental stewardship, and controlled growth.

Although The West Travis County Regional Water System serves a small number of Hays County residents in the Dripping Springs area, Conley said the entire county will be adversely and irreversibly affected for years to come if the system becomes privately-owned.

LCRA representatives have told county commissioners that their organization invested about $140 million in the system. Cullick said it is virtually impossible to determine how much LCRA invested in the portion of the West Travis County Regional Water System that serves Hays County, because the system is so interconnected. Cullick said LCRA’s bargaining position would be compromised if he indicated how much Hays County could expect to pay for a portion of the system.

LCRA’s board of directors decided in 2008 to divest itself of all water/wastewater utilities. LCRA representatives say the organization cannot maintain the utilities and recoup itself for related capital improvements without increasing rates at least 10 percent in the next six years. LCRA directors want to divert resources from water/wastewater utilities to long-term water availability planning.

Conley, who said he wants to keep the Wimberley area “as quiet as possible,” said public entities must control utilities if they are to preserve the county’s rural character and focus growth along U.S. 290 and Interstate-35.

“A private utility is going to grow wherever it can grow because it’s in their interest to do so,” Conley said. “A public utility has more of a public responsibility, and investment to look at some broader issues of the community, rather than simply just pushing line connections.”

Conley said the county can legally issue revenue bonds for the purchase of utilities. Revenue bond debt is issued based on the revenue projected to be generated by a utility. Conley said the county cannot legally use ad valorem tax revenues to pay down debt issued for utility purchases.

Conley said the county could operate its portion of the system by creating a utility district or by contracting with a nonprofit or for-profit entity.

By the end of this month, LCRA is expected to make a portfolio available to interested buyers that would describe all water/wastewater assets to be sold. The assets to be sold include water intakes, water and wastewater treatment plants, pumps, storage tanks, collection and distribution pipes, and associated facilities.

If LCRA divests itself of its 32 remaining water/wastewater systems, it will still maintain control of water withdrawn from the Colorado River, as that is part of its core mission. LCRA would still sell raw Colorado River water, it just would not treat, transport, and distribute the water.

LCRA officials said the authority prefers to sell all its water/wastewater utilities to one bidder in order to insure it divests itself of all the systems and preserves the benefit of economies of scale in maintenance and operations costs. Cullick said any entity is free to bid on a portion of the regional system, though LCRA has not broken its water/wastewater assets into smaller portions. Cullick and Senior Regional Manager Janet Stephenson said LCRA invested more than $300 million in the systems.

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2 thoughts on “Hays County looks to buy local LCRA water system”

  1. “Right now, Chinese investors could buy that system”,…said Hays County Precinct 3 Commissioner Will Conley (R-Wimberley).

    Does Commissioner Conley take us for fools? Can Conley site ANY indication he has seen, read or heard about Chinese investors interested in a few Hays County water systems? Of course not.

    Conley is working for his special interest supporters (water purveyor Terry Gilmore?) to have taxpayers pay for water infrastructure so they (NOT the Chinese) can sell water at market prices. It will be a multi-step plan but rest assured Conley knows the end result and the back story in this issue.

    Conley is using taxpayer money to buy off sections of voters. First the Pct 1 San Marcos road building (with County money), then the Pct 3 Wimberley conservationists with Jacob’s Well and now he’s going for Pct 4 voters who are on the LCRA water line.

    What can he possible do for Pct 2 voters?

    Whatever Conley has in mind, it will pile on still more public debt that taxpayers will be stuck with—and he will vote against any tax increase while the other commissioners carry the water. (pun intended)

    We are either fools or willing to be bought by the Conley schemes.

  2. Pingback: QUOTE CORNER - San Marcos Local News

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