City Council approved a memorandum of understanding Oct. 23 with the Chisholm Trail Special Utility District that will allow the city to negotiate a definitive agreement between the city's water utility and Chisholm Trail SUD.

The Chisholm Trail SUD provides water to about 6,300 customers, about two-thirds of which are in or near the Georgetown extraterritorial jurisdiction.

In June, the two entities heard the results of a six-month feasibility study that recommended the creation of a local government corporation, or LGC, to help ensure water supplies for future growth and keep water rates stable.

The Chisholm Trail SUD board of directors approved the memorandum at its Oct. 18 meeting.

The memorandum outlines the general framework of a more detailed agreement that will be negotiated during the next several months, Assistant City Manager Jim Briggs said.

"The most logical conclusion is a consolidation of the two water systems," said Mary Wilson, chairwoman of the Chisholm Trail SUD board of directors, of the 10-month-long process. "At the end of the day, our customers and your future citizens expect adequate water at a reasonable cost."

According to the agreement, the city would own the LGC, create a board that would include seven members—two of which are City Council members and two residents living in the LGC service territory, and transfer Chisholm Trail personnel to the city. The agreement also states that no LGC water utility customer would be transferred into the city's utility for two years.

The two entities must approve the detailed agreement by March 13, according to the memorandum.

The document does not outline specific details such as water rates.

The proposed plan, during a 15-year period, could save about $27.5 million dollars through shared costs and would allow time for the city to find future water contracts, Briggs said.

Under the LGC, the city would operate the entire system, but the Chisholm Trail customers and Georgetown's customers would be financially separated because of the different levels of services and costs related to each customer base.