Leander, once in such dire straits that it turned to Cedar Park for water, is now in position to provide its northern neighbor, Liberty Hill, with the valuable resource.

City officials are working with Liberty Hill on a contract that would transport 600 acre-feet per year of Liberty Hill–owned water from Lake Travis to the growing community along Hwy. 29. In exchange for transporting the water, the deal would "potentially" bring Leander $500,000–$1 million annually to help offset the rising cost of infrastructure, Leander City Manager Kent Cagle said.

"As far as reducing water rates, it's probably not going to happen because our debt service increases every year from now until 2020," he said. "So it's helping avoid a rate increase. That's the main thing."

Cagle said he is hopeful the deal will be finalized by the end of March. Liberty Hill Mayor Jamie Williamson confirmed negotiations but said no contract has been signed.

The deal would bring water through Leander's water intake pipe in Lake Travis up to the Sandy Creek Water Treatment Plant and eventually up to the city's limits.

"Then, the ball is in Liberty Hill's court," Cagle said. "They'll have to build a water line to us using their own money."

The deal is similar to a 1998 agreement between Leander and Cedar Park that helped Leander transition from unreliable groundwater resources and the Chisholm Trail Special Utility District, Leander City Engineer Wayne Watts said.

"The contract with Chisholm Trail [SUD] was kind of weak," he said. "When they couldn't fulfill their commitment to us it didn't penalize them; it just penalized the city."

Cedar Park agreed to transport more than half a million gallons of water per day to Leander.

"Liberty Hill is pretty much in the same situation we were in," Watts said. "Their wells just cannot keep up with the growth and demand."

Cedar Park and Leander have since collaborated on the larger Brushy Creek Regional Utility Authority project, which also includes Round Rock. The project's first phase went live in 2012.

"Water entities generally try to help each other out," said Sam Roberts, Cedar Park assistant city manager and 21-year city employee. "If one entity has excess capacity and the other has a need, there is usually a deal worked out that benefits both sides."

The BCRUA system was designed specifically to handle the capacities of the three cities already involved, Roberts said, although there is a stipulation that allows cities with excess capacities to supply water to other entities not within the existing region being served.

But the deal between Leander and Liberty Hill will bypass all BCRUA water and infrastructure, Cagle said. While the previous deal with Cedar Park was vital to growing Leander, which is eventually projected to surpass Cedar Park's population, Cagle has no fear of a similar occurrence.

"We're going to have plenty of growth," he said. "We're not all that concerned about providing [Liberty Hill] water and it causing development to leapfrog us."

In addition to the water transfer, Leander could consider selling part of its 24,000 acre-feet of Lake Travis water to Liberty Hill, Cagle said.

"They'll find water somewhere, so ours, I believe, makes the most sense."