"You mentioned the four or five important water features in the area, so I'm puzzled why all would not be willing to back this up given the fact that the whole reason for doing this is to protect that asset you guys are so worried about."
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By Bob Ochoa
The Texas Water Development Board Thursday refused to approve an $8.5 million loan to the City of Wimberley to construct a central wastewater system, even while the city is facing an environmental "crisis" from failing septic systems along Cypress Creek and the Blanco River.
After lengthy discussion about the city's loan application before the Board, including testimony from City Administrator Don Ferguson and General Manager Bill West of the Guadalupe Blanco River Authority, the city's partner in the proposed project which would own and operate the system, the Board said it would not approve a loan without sufficient pledged revenues as backing from both the city and the GBRA.
TWDB Executive Administrator Kevin Ward said to Ferguson and West, "we'd like to see the GBRA and the city come back with a more adequate pledge to ensure that this project can transition through development and construction without having the risk that there would not be repayment of the loan . . . I think the staff has looked at every way we could to structure a pad where we would give part of the money up front but in the final analysis we struggled with meeting the statutory requirement of making a finding that there was adequate security."
"We've closed down one business in the past," Ferguson added, "and we have a fear that we are going to continue to do that. The solution is centralized wastewater and I think the solution is also recognizing the fact that it's not going to be cheap any way you look at it."
GBRA's General Manager West (at right) told the Board that the GBRA "has been trying to assist the Wimberley Valley for years regarding water and wastewater . . . the immediate concern is that of wastewater . . . Wimberley is built on failing septic tanks and that portion that is served by the (proposed) package plant is a result of an enforcement order by TCEQ (Texas Commission on Environmental Quality)."
A Water Development Board staff summary of the project proposal and loan application points out that prospective residential and commercial customers of the wastewater system would be charged a combined water and sewage monthly fee of $242.50 on top of an estimated $10,000 connection fee which could be paid over five years, in addition to a "hook-up" cost to connect to the system. Additional rate increases would be necessary before 2019 to meet the loan's debt service obligations.
wastewater plant. The black lines are the sewer lines.
The city has agreed to a "non-standard" condition that it would require 60% of the potential customers to formally request service from the wastewater system and pay a deposit before final approval of a loan from the Water Development Board. The city would have to provide evidence documenting that 60% have signed. Additionally, customers would have to make a minimum payment of 50% of the connection fee.
"My (city) council has stepped up to the plate. They've adopted a mandatory connection ordinance in advance of this application," Ferguson said. "My council has taken a position that it's not going to get any cheaper."
Final approval of the loan also hinges to a large degree on whether the GBRA is willing to guarantee its payment. But West informed the Board that his board took no action at its meeting last week on the question. "What we do not agree with is Water Development Board's required pledge by GBRA from other GBRA revenue sources for the remaining 40% of the project, for basically backing the whole thing up . . . If GBRA agreed to that pledge every future project within our basin would want the same deal. We simply can't afford to do that."
West and Ferguson thanked Board members and said they would take the Board's decision back to their respective parties for further consideration.
Outtakes . . . The agency's summary of the proposed wastewater project notes that Wimberley's population (inside the city limits) for 2010 is 2,851, a 25% decrease from the 2000 census. The project's utility service cost as a percentage of median household income ($46,042) "is high (6%) when compared to the benchmark routinely used to analyze the overall cost to the customer of these types of systems (2%)." The City of Wimberley has adopted a "mandatory hook up ordinance" requiring "all property owners" inside the city limits and in its ETJ to connect to the system once it becomes operational. The system's initial capacity would be 115,000 gallons to serve approximately 199 customers in the downtown area. An $8 million loan to serve 199 customers comes to about $42,000 per customer, a Water Development Board member pointed out. It has also been pointed out that some septic tanks on the Square are being pumped as frequently as once a month. (Where's all that stuff being dumped?)
TWDB Vice Chairman Jack Hunt asked if the potential customers included people from Houston. "Everybody I know in Houston has a home in Wimberley," he said. "Obviously this is not a financeable deal. I think even our lawyers failed to sign off on it. The problem you have is not what's happening in Wimberley, it's what's happening all around Wimberley and the threat. You mentioned the four or five important water features in the area, so I'm puzzled why all would not be willing to back this up given the fact that the whole reason for doing this is to protect that asset you guys are so worried about."
GBRA Gen. Mgr. West: "There's no tax base (property tax) there in Wimberley. That's one of the problems."
Vice Chairman Hunt: "Well it is a problem particularly in an area where I know there's tremendous wealth that would benefit from this, from having the river polluted. It kind of reminds me of the Frio River case where you have a small area creating a problem where it really doesn't have the resources to the solve the problem but it's creating a problem for a bigger area which does have the resources . . . I have been here 13 years and seen a lot of deals I scratched my head about, but this is one where my hair came out when I started scratching on it."
According to the TWDB profiles of members of the Board, Mr. Hunt is president, CEO, and director of King Ranch, Inc., a land-based multi-business resource company. Mr. Hunt also serves as director of the Texas and Southwestern Cattle Raisers Association. He was appointed to the Board in 1998 by Gov. George W. Bush and reappointed by Gov. Rick Perry in 2004.