Bee Cave system sold; Rollingwood holds election for purchase; West Lake Hills offer being considered

About a year and a half after the Lower Colorado River Authority board decided to sell its water and wastewater systems, the systems are being sold. Some are being sold in a group to an outside utility company, with others, such as the Rollingwood, West Lake Hills and the West Travis County Regional water and wastewater systems, going to the local municipalities they serve.

"If you go back to why we got in the water and wastewater utility business, it was in large part to try to help smaller systems become compliant with either Clean Water Act rules or different federal or state regulations," said Becky Motal, Lower Colorado River Authority general manager. "I think over the years we found that without a concentration of retail customers, LCRA is not really a good model for being in the utility business. The board decided that just the rate increases we would need for those systems to be paying their own way would be fairly significant."

In its earliest meetings, the LCRA board discussed selling all of its wastewater systems to Corix Infrastructure Inc., a Canadian utility company that operates many utility facilities in North America.

Many of the municipalities that use the systems formed a coalition, fearing that an outside entity purchasing the systems would take control away from local government and raise rates for users. The Coalition of Central Texas Utilities Development Corp. (UDC) includes the City of Bee Cave, City of West Lake Hills, City of Rollingwood, Travis County municipal districts No. 3 and No. 5, and several other affected municipalities.

Bee Cave

In March, LCRA transferred operations of the West Travis County Regional Water and Wastewater System to the West Travis County Public Utility Agency, an organization that formed between the City of Bee Cave, the West Travis County Municipal Utility District and Hays County to oppose wastewater rates and to purchase the system.

"If not for the assistance of Sen. Kirk Watson and the diligence and tenacity of the UDC participants, many of whom are not even served by the West Travis County System, this system would have been purchased by an investor-owned utility, which would have had a monopoly on the service to over 15,000 customers," UDC President Pix Howell said during the WTCPUA's purchase of the West Travis County Regional Water and Wastewater System. "The sale of the system to the WTCPUA represents a huge victory for local control and cooperation among local public officials and neighborhood representatives."

Rollingwood

On Feb. 22, LCRA's board of directors voted to begin negotiations to sell the Rollingwood Wastewater Utility system to the City of Rollingwood. On Feb. 29, the City of Rollingwood and the LCRA entered into a memorandum of understanding (MOU), or an agreement for purchase dependent on a successful election by the City of Rollingwood.

On May 12, Rollingwood residents will vote on bonds that would finance a deal that would allow the City of Rollingwood to purchase the water and wastewater system that serves its residences and businesses from LCRA.

If Rollingwood does not purchase the system, its legal obligations to LCRA include a yearly payment of $775,160 for the next 33 years and to pay all overhead expenses to operate the system, or about $120,000 per year. According to the MOU, a purchase agreement would rid the city of its monetary legal obligations.

If the voters approve the issuance of $12.8 million in general obligation bonds to purchase sewer facilities and make any improvements necessary, the City of Rollingwood will have exclusive rights with the LCRA to negotiate for the Rollingwood Wastewater Collection System until June 23. In order to pay for the bond, a property tax or a wastewater fee increase would need to be levied from Rollingwood residents.

West Lake Hills

On March 29, West Lake Hills Mayor Dave Claunch made an offer of about $15.96 million to LCRA on behalf of the council to purchase the West Lake Hills Wastewater System. The amount includes the city's outstanding debt for the system and its associated costs minus anything the city must pay in construction costs to the system and operating and debt service balances.

At its meeting April 18, the LCRA board adopted a resolution for Motal to negotiate with West Lake Hills for the purchase of its wastewater system.

The West Lake Hills City Council said it would consider finance options after LCRA approved the offer, but Claunch ruled out a general obligations bond, which is the method Rollingwood has decided upon and requires an election.

"Only a third of the residents in West Lake Hills is on the wastewater system, so it wouldn't be fair for other residents' property tax values to go up for these people," Claunch said.