The board of the Lower Colorado River Authority on Monday took the first step towards selling 18 retail water and wastewater systems in the Hill Country and in LCRA’s southeast service area to Corix Infrastructure.
The board also granted Corix an option and right of first refusal, under certain conditions, to buy the West Travis County Regional Water and Wastewater System, which serves an estimated 7,000 water users in northern Hays County.
Until recently, Corix had been in the running to buy the West Travis System. LCRA staff on August 23 chose Corix as the most responsible bidder for the system before postponing action a day later. The board in September entered negotiations with Corix and California Water for that and other systems before changing course.
The LCRA board on Nov. 16 unanimously chose the Coalition of Central Texas Utilities Development Corporation as the most responsible bidder for the West Travis System. The Utilities Development Corporation was formed by Hays County and the cities of Bee Cave, Leander, West Lake Hills and Sunrise Beach and 17 other entities including the city of Dripping Springs and the Dripping Springs Water Supply Corp. LCRA has invested at least $140 million in the system.
An agreement between LCRA and the coalition says that if the parties do not finalize a purchase agreement by Jan. 17, 2012, they may discontinue negotiations. Therefore, Corix may have another shot at the system.
The 12 Hill Country systems involved in the pending sale to Corix include Lake Buchanan Water System, Spicewood Beach Water System, Smithwick Water System, Ridge Harbor Water System, Ridge Harbor Wastewater System, Paradise Point Water System, Sandy Harbor Water System, Quail Creek Water System, Lometa Water System (subject to right of first refusal by the City of Lometa), Lometa Wastewater System (subject to right of first refusal by the City of Lometa), Tow Village Water System and Bonanza Beach Water System.
The six southeast systems involved include Camp Swift Wastewater System, McKinney Roughs Wastewater System, Alleyton Water System, Alleyton Wastewater System, Matagorda Dunes Water System and Matagorda Dunes Wastewater System.
The LCRA board, which unanimously chose Corix, set Feb. 21, 2012 as the deadline to negotiate the purchase and operations agreements with the firm. Corix is an international company, based in Vancouver, that provides service to more than 220 water and wastewater systems that serve 650,000 people in North America.
“Corix is a well-respected utility company with a proven track record,” said General Manager Becky Motal. “The Board took a hard look at the company and judged it was appropriate to move forward with negotiations.”
LCRA’s board decided in November 2010 to sell all of its water/wastewater systems. LCRA purchased and developed the community water/wastewater systems in the Hill Country and along the Colorado River, mostly in the past 10 to 15 years, and has since invested more than $300 million to improve the systems’ infrastructure.
In many cases, LCRA purchased the systems to help meet the environmental needs and economic development goals of the local communities,” said LCRA spokesperson Clara Tuma. “However, despite cutting costs and raising rates, these systems do not cover their costs and are subsidized by more than $3 million a year.”
In choosing the coalition and Corix, LCRA determined both entities best met the four criteria set by its board for choosing buyers, namely:
-Ability and commitment to provide reliable, quality utility services
-Ability to invest capital for needed infrastructure
-Commitment to meeting state regulatory requirements
-Willingness to compensate LCRA for its investment
“The Board has set criteria to ensure that high-quality, financially sound entities are brought in that can serve the area well,” said LCRA Chair Timothy Timmerman on Monday. “LCRA started the process of divesting the water and wastewater utilities two years ago when it divested the Brushy Creek Regional Wastewater System. With today’s decision, approximately 96 percent of the customers served by LCRA before divestiture began are slated to go to systems owned by the customers or their communities or will remain with LCRA.”