New corporation represents a coalition of local governments that will investigate options to purchase LCRA water utilities
Press Release
Contact: Laureen Chernow
Hays County Communications Specialist
laureen.chernow@co.hays.tx.us
Office: 512.393.2296
Hays County Courthouse, San Marcos, TX – The Hays County Commissioners Court Tuesday approved 4-1 forming a utilities development corporation that will be part of a coalition of other local government corporations designed to gather information from the LCRA. The information is not otherwise available to governments due to confidentiality restrictions imposed by the LCRA. The articles of incorporation make it clear that the corporation will not be able to issue debt on behalf of the County.
Mark Kennedy/RoundUp
“Hays County wants to determine if it is in the best interests of its citizens to acquire water and wastewater systems from the LCRA that serve residents of northern Hays County,” said Mark Kennedy, Chief of the District Attorney’s Civil Division who serves as legal advisor to the Court. “Formation of a corporation under the Transportation Code gives local governments in LCRA’s service area a vehicle for collaboratively exploring options and providing an indicative bid for acquisition of LCRA’s systems.”The cities of Leander and Bee Cave have jointly formed the corporation with Hays County and joined the coalition, and others are expected to join.
The LCRA had been asked by several local jurisdictions to give local governments whose citizens are impacted by its intended sale of water and wastewater utilities the first right of refusal and to delay the sale until the end of 2011, but LCRA declined to do so and is moving forward to sell the utilities. Kennedy noted that the Court had to move quickly to form the corporation, allowing affected governments to make a collaborative, informed decision.
Hays County Commissioner Precinct 4 Ray Whisenant will be one of three current board members in the corporation, joining Frank Salvato of the City of Bee Cave and Pix Howell, City of Leander. Board membership may grow as other local governmental entities opt to join in the coalition.
18 comments:
Why does a local government of the people need to incorporate to purchase water for county needs?
Sounds like a scam waiting to happen.
In the past, based on responses to my feature writings here in the Roundup, I have been called a socialist, a liberal, an idiot, a corporation hater - among other intellectual compliments.
But for the life of me I cannot understand why a coalition of local governments would want to form a non-profit utility water corporation for the purchase of a water "alligator" - to use a term from the real estate industry meaning "a cash eater."
On the other hand, maybe the County is not sharing with us the actual detailed "financials' of the LCRA properties - and it is not as bad as publicly assumed. Or maybe some water consultants have determined that with some extensive capital improvements, the LCRA property is a hidden gold mine that will allow the county to avoid further "entrapment" to companies like ATI or a similar surrogate.
More likely, however, it is about what Barbara said in a past comment that the LCRA purchase is simply part of a plan to provide water to future subdivisions - and commercial property developments that support those subdivision.
Now, don't get me wrong; that is what capitalist governments are supposed to do: Use taxpayer money and bond issuance revenues to provide economic growth for job creation and to generate increased tax revenues.
But isn't it about time we brainstorm new paradigms for such economic growth? If the County is going to take on massive risk to all citizens of getting into the water business for the benefit of future growth, it is incumbent they share that risk with the private sector so that all parties are ultimately responsible for the potential money drain that such ventures can create.
For example, take one of the proposed subdivisions near Dripping Springs. Why not have each house sold in those subdivisions to pay a 5% commission (call it what you like to make it legal) of the home's sale price to a county fund to pay back the citizens of Hays County for the costs associated with the water purchase? Sure, the price of the house would mean an increased 5% cost to the buyer, but that is a price they must pay for the privilege of living in Hays County and having the county provide them with the water to move here.
Of course the developers will cry foul, but I think all of us are tired of special interest power brokers "buying" politicians to pilfer our tax dollars to provide them with free infrastructure to make millions of dollars - while the average citizen is stuck with the tab.
This idea, and it just an example of what should become normal public & private sector creative business development thinking, would not apply to developments with their water infrastructure already in place.
Unfortunately, home owners in subdivisions using ATI (for example) for their water source already have negative market forces working against them now, as no one with any investigative consumer skills would want to buy a home - new or used - in a subdivision with ATI's current reputation.
With all this said, I don't have a problem with Will Conley and Winton Porterfield. In fact, they have always been friendly and respectful towards me - even though they know my economic politics are not in line with theirs. See, they are simply doing the job they were either elected to do (Will) or are economically rewarded to do (Winton). In the end, I'm sure they would like to continue to be movers and shakers while doing "business" in the County - even under a new economic development risk sharing paradigm.
In the next County Commissioner election cycle, it is incumbent to start electing (or re-electing) County government problem-solvers who can think outside the box when it comes to paying for growth and how it is implemented. It is time to end unnecessary business welfare locally as well.
Businesses are doing much better financially than governments. It is their turn to contribute to their own prosperity.
Btw, when referring to Will Conley and Winton Porterfield, I only use them in my comments above as examples of a local elected representative and a successful business person who, going forward, could choose to work toward creating new shared funding and risk paragigms for county growth. And the same public-private sector cooperation could be implemented in the other surrounding counties as well.
The "local government" is not incorporating but scam is still in play.
By creating a corporation whose members are the local governments, the local governments hope to insulate themselves from any liability for the debts of the corporation. By its own terms the corporation's charter permits the corporation to take on debt secured only by revenues from sales of water. Unlike LCRA, the corporation will also have to purchase the water. The $140 million for the pipelines does not include water nor any right to access surface water.
Of course to help ensure that the revenues will be there, the citizens "served" by these systems will likely be prohibited from being able to "opt out" of the system. In particular, one might anticipate that their right to access groundwater will be dispensed with.
The Press Release fails to mention that the only Commissioner to vote against this questionable idea of a coalition was Mark Jones. Although Jones had some nice things to say about Commissioner of Precinct 4 Ray Whisenant representing Hays County on the Board, he said, he couldn’t vote for the County’s participation. Commissioner Ingalsbe changed her vote from last week, probably in trade for support for her Old Bastrop Highway Project. One out of five with a clear head is scary. Thanks Mark Jones.
I’m still trying to figure out why the County is letting the LCRA prevent the release of information about the transactions. That kind of secrecy may be okay for private corporations but stinks to high heaven for a Government entity dealing with a not for profit organization with our tax money. If our County Government can’t or won’t negotiate in the light of day, they should walk away from the table. Why is the seller allowed to dictate to the potential buyer(s)?
I believe this whole thing is less about water and more about the acquisition of a transport system for it. Think “Pipes”. Why else would the County get involved in something that affects only about 5000 citizens? I have no problem with that; I just wish they wouldn’t treat us like fools and tell the truth. If you think this is going to be cost-free you are in for as surprise. Within weeks we will be hearing a different story from Conley and his merry band about what an opportunity this is and that we need to rush to finance it.
Notice how the affected communities and water companies (served by the LCRA) are sitting on the sidelines. Kennedy said that there would be no indebtedness for the County; the current customers of the LCRA will pay for it. Fat Chance!
Remember it was County Attorney Mark Kennedy that brought us the dubious “Jacobs Well” and “Nicholson Ranch” Mega-Buck deals with the Nature Conservancy, along with an alleged tax fraud scheme. He even signed the papers, which in itself may have been illegal.
To Anon April 27, 8:59 AM:
Very good observations.
I agree that it is entirely likely, if the Coalition is successful in buying the LCRA surface water lines, that anyone near the path of the lines will be
mandated to tie onto those lines. Hays County will justify the mandate by saying:
1. using surface water will relieve somewhat the drain on limited groundwater;
2. there are not currently enough LCRA customers to make the payments on the revenue bonds for the LCRA purchase; and
3. funds will be needed to repair the LCRA lines and to extend them to new customers.
In Commissioners Court yesterday -- when the subject was the "Coalition" -- the question was asked whether the Coalition proposes to buy all 32 of the LCRA facilities or just the 2 which currently serve Dripping Springs.
Did I miss something? In his answer, Commissioner Whisenant said that actually there are only 28 properties for sale, but I never heard him answer how many the Coalition proposes to buy.
More unanswered questions about this questionable Coalition undertaking.
I wonder whether rainwater collection users will be able to opt out of tieing on to the LCRA
lines? Those people will already
have gone to great expense to implement rainwater collection, and they use neither groundwater nor surface water.
My opinion on rainwater collection systems is that no new subdivision whatsoever should have any such restrictions in the property purchase contracts.
If such restrictions were to be proposed (or currently exist), I would support buyer boycotts of those properties and I would be the first to donate money to hire attorneys to prevent such restrictions from being built into a home buyer's purchase contract - even though I don't live in the subdivision.
On the other hand, if all the home buyers are foolish enough to agree to mandatory water utility hookups only, they deserve what they get in the long run.
Rocky, I agree with you on, NO restrictions being placed on rainwater collecting systems. I’ll go a little further in saying that no restrictions by any governments or POAs, even those that seek to make the apparatus and storage tanks “invisible” or “disguised”. Our options are already limited due to deed restrictions and/or ordinances forbidding the drilling of a well. Rainwater with a groundwater backup system is the best solution for homes, old or new.
When you said, “if all the home buyers are foolish enough to agree to mandatory water utility hookups only, they deserve what they get in the long run.” I agree again, but there is a problem among Builders, RE brokers and Title Companies. Some excited homebuyers agree unknowingly, because no one tells them and since few actually read their deed restrictions and many never even see them until well after closing. Some, as you and I know, also fall prey to excessive predatory water Rates due to non-disclosure by these individuals as well. Don't expect the HOA/POA to warn you either.
Folks,
Be careful to clarify when discussing "restrictions".
Rocky said:
"My opinion on rainwater collection systems is that no new subdivision whatsoever should have any such restrictions in the property purchase contracts."
Did you mean:
i) restrictions that prohibit rainwater systems;
ii) restrictions that require them; or even
iii) restrictions that make them the sole source?
Your statement and therefore your position (no offense) is unclear.
I hope you are proposing that there should not be restrictions either prohibiting or mandating them. Why not let the OWNER make the decision about it, right?
Yet all too often we see "restrictions" imposed under the pretext of "preserving value for the owner" when in fact they are being imposed by local government and others who profit at the expense of the owner. Restrictions in either direction are not good for the owner. When the county imposes them it is effectively an unconstitutional ordinance disguised as "private contract" via deed restriction.
People aren't "choosing" these places because of the restrictive covenants. There is an expanding population and people are looking for HOUSING.
If the LCRA system is supposed to be good for the customers then why not let the owners make that decision for themselves instead of trying to force them into being customers? Yet, I suspect the county and this new "Utility Development Corporation" will enter into a self serving agreement that requires the county to disprove any plat application that would allow lot owners to "opt out" of the LCRA system. You can bet you will see the same thing with all the other members that have platting authority.
The mandated customer condition will be handled one of two ways: i) using restrictive covenants to prohibit any alternatives (e.g., no rainwater, no wells); or ii) using restrictive covenants to expressly mandate customer status (e.g., you will enter a customer service agreement with UDC for water).
Let's just see if the county is willing to permit "choice"
"...LCRA will still own most rights to surface water in Lake Travis," according to the San Marcos Mercury, April 27, 2011.
(www.smmercury.com)
According to an article ("Hays County wants a 'seat at the table' ") in the April 27 issue of the San Marcos Mercury, the Coalition wants to purchase only the LCRA facilities which are in the LCRA West Travis County Region (which includes Dripping Springs). However, the City of Leander is in the Williamson County Region, not the West Travis.
If the Coalition bought all of the West Travis Region properties, it presumably would own the wastewater treatment plant near Bee Cave (Travis County) and the water line along Hwy. 290.
Dripping Springs already has a
wastewater treatment plant just east of the RR 12/FM 150 intersection. A plant on 40 acres -- which leaves plenty of room for expansion -- and which is
conveniently located to thousands
of homes which have been platted for the area. Why buy the Bee Cave
WWTP which would be a very expensive distance from Dripping Springs?
Seems like Bee Cave and Lakeway would be a more natural combination. Lakeway is an LCRA customer, too. Leander is closer to
Bee Cave and Lakeway than to Dripping Springs, too.
This sounds like a great move to me!!!
LCRA itself puts out some info on the divestiture of water and wastewater facilities. Go to
www.lcra.org and search for "divestiture." Click on the first hit. On the page that comes up you can sign up to receive an e-newsletter on the divestiture and can read some past issues.
To be more specific, the name of the wastewater treatment plant (WWTP) that is part of the LCRA West Travis region is Lake Pointe
WWTP. It's in the Lake Pointe subdivision of Bee Cave, on Santee Drive.
The Bee Cave Lift Station channels
wastewater to the Lake Pointe WWTP. The WWTP will probably have to be enlarged (again) soon; Bee
Cave area is growing fast.
It still seems like a better deal to me for Dripping Springs to enlarge its own WWTP at RR12/FM 150
instead of buying the distant Lake
Pointe WWTP AND then having to spend millions more on enlarging it. The DS WWTP is on 40 acres --
plenty of room for expansion. And
it's right next to several large subdivisions which are platted to spring up there.
My guess/hope is that the Coalition will make a joint bid for properties in the West Travis and Williamson districts of LCRA
(and in other districts, too, depending on what other members join the Coalition). Then, after the joint/group purchase, the members will parcel out to the members the pieces which each member wants. The City of Bee Cave, for example, might take the Lake Pointe WWTP. Dripping Springs
will get the Hwy 290 water lines. Lakeway and West Lake Hills will get their WWTPs. Leander will get
the water line from Lake Travis to
Leander. And so on.
LCRA doesn't expect the sale of all
the properties to close until mid-2013. Then there will probably be
exorbitant legal fees to parcel out the properties (and the debt that goes along with them) to each
member of the Coalition.
Dripping Springs had better get cracking on enlarging its WWTP at
RR 12/FM 150. Subdivisions near it
will almost certainly have begun
construction before 2013 -- some
already have.
I don't know the boundaries of the Hays County Development District No. 1 (which was formed by legislation in 2000). I wonder whether it takes in the Dripping Springs wastewater treatment plant at RR 12/FM 150?
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