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January 19th, 2012
FAQ: LCRA water system sale to Hays County, partners


On Jan. 17, the LCRA executed a purchase agreement to sell the West Travis Regional County System to the West Travis County Public Utility Agency, of which Hays County is a member. Previously, the county had taken a lead role in forming the Coalition of Central Texas Utilities Development Corporation, made up of cities, water supplies and other districts that buy water through the regional water system. Hays County’s spokesperson, Laureen Chernow, released this Frequently Asked Questions on the purchase today:

What is the WTCPUA?

The WTCPUA is a public utility agency created under the Texas Local Government Code by its three sponsoring entities: Hays County, the City of Bee Cave and West Travis County Municipal Utility District No. 5. It is currently governed by a three member Board of Directors with one director appointed from each of the sponsoring entities. Hays County Commissioner Ray Whisenant is a Board member of the WTCPUA on behalf of the County.

Who is the LCRA selling the West Travis County System to the WTCPUA or the UDC?

The LCRA is selling the West Travis County System to the WTCPUA. The WTCPUA will own and operate the System. The UDC facilitated various aspects of the negotiations to transfer the System, but will have no ownership in the System.

Will title to the West Travis County System properties stay with the WTCPUA, or will the systems be parceled to individual communities and water suppliers?

The WTCPUA plans to own and operate the System. There are no plans to divide the System and sell it to third parties. In fact, the WTCPUA’s agreement with LCRA precludes such a division.

How much debt will be incurred by the WTCPUA for the acquisition of the West Travis County System and how much will be owed by the entities receiving service?

The WTCPUA will be making installment payments to the LCRA from 2012 until 2019 in amounts that will allow LCRA to pay off the debt LCRA has already issued for the System. The principal amount of this debt is currently approximated to be $140 million. The WTCPUA will issue bonds to make these payments, and such bonds will be paid only from rate revenues collected from System customers.

Will any other entity, including Hays County, be liable for the debt payments if the WTCPUA cannot make a payment?

No. The WTCPUA alone will be responsible for debt payments. Liability for debt payments will not be assumed by the entities that created the WTCPUA.

Must the WTCPUA promote large-scale growth in the West Travis County/North Hays County area to increase the number of customer and pay the revenue bonds?

The WTCPUA assumed a more conservative growth rate than used by LCRA in its planning when negotiating its purchase agreement with the LCRA. The WTCPUA is currently in the process of refining its growth assumptions. In addition, the WTCPUA’s payments to LCRA are spread over a seven-year period.

Will the costs of projects, such as a pipeline, be born only by those ratepayers being served by the particular project, or will the cost be distributed among all those serviced by the WTCPUA?

The WTCPUA is in the process of drafting and adopting policies that fairly allocate capital costs to system ratepayers. One specific component the WTCPUA will focus on is the principle that existing ratepayers should not bear the burden of capital costs attributable to new development.

Does the WTCPUA anticipate a rate increase? If so, by how much?

It is likely that the WTCPUA will have to raise rates and the WTCPUA is currently working to determine what that percentage will be. This increase, however, is expected to be lower than the 10% increase proposed by LCRA before the divestiture, and significantly lower than the possible 70% increase ratepayers could have seen if receiving service from a private investor-owned utility.

Is the LCRA going to provide water to the WTCPUA? If so, will the rates from LCRA to the WTCPUA be higher than they are to current users?

LCRA will provide raw water to the WTCPUA under a firm water contract to be executed between the two entities. The WTCPUA will pay the same firm water contract rate as all other firm water users. LCRA may increase firm water rates from time to time, but the WTCPUA has anticipated annual rate increases in its business model.

Will the WTCPUA have guaranteed water rights from LCRA for water in time of drought?

Yes. The WTCPUA will have a firm water contract with the LCRA for a specified amount of water to provide service to the West Travis County System. As with every other governmental and private entity purchasing water from the LCRA, the WTCPUA will have to abide by water conservation, drought contingency and pro rata curtailment requirements during times of drought.

Will debt for facilities of entities in the West Travis County System, such as water districts, be rolled into the WTCPUA revenue bonds?

No. Debt of individual entities within the West Travis County System will not be transferred to the WTCPUA.

LCRA water users currently pay a 6% fee which goes into the Hays County General Revenue Fund pursuant to a contract between the County and LCRA. Will Hays County continue to receive this 6% fee?

This is a policy decision that the WTCPUA Board of Directors will address as they transition ownership of the West Travis County System from the LCRA.

Will the WTCPUA add amounts to its revenue bonds for the upgrade of water and wastewater facilities?

Possibly, but only where such upgrades are necessary and can be reasonably financed. The WTCPUA is in the process of creating a 5-year business model that will encompass any facilities upgrades that are needed for the West Travis County System.

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One thought on “FAQ: LCRA water system sale to Hays County, partners

  1. The answer to question #7 includes this sentence: “One specific component the WTCPUA will focus on is the principle that existing ratepayers [current LCRA customers] should not bear the burden of capital costs attributable to new development.”

    That seems fair enough — that current customers should not bear the
    cost of extending service to new customers –, but 1)how will that cost be determined and 2)does that mean that new customers will have to pay an enormous hook-up fee to get the service? Or that land developers will
    pay the per-lot hook-up fee for each new house in their subdivisions?

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