County water and sewer authority meetings under way concerning LCRA utility sale

When I asked Commissioner Whisenant if he really thought we could complete the due diligence on $100 million-plus of assets in that short a time frame, his response was "No."

Send your comments and questions to roundup.editor@gmail.com, to Sam at sam_brannon@hotmail.com, to Commissioner Whisenant at ray.whisenant@co.hays.tx.us, 512.858.7268, to Judge Cobb at bert.cobb@co.hays.tx.us, 512.393.2205, or click on the "comments" at the bottom of the story

Austin Chronicle/map & story

Editor's note: It is interesting that the Hays County Water and Sewer Authority created in response to an alleged emergency groundwater shortage in northern Hays County that brought LCRA's Hwy 290 Water Line into north Hays County is now the same entity being used by the county – eleven years later – to purchase the water line from the LCRA.

You could say that the commissioners court, in creating the Authority in May of 2000, was wise in planning for a relatively secure water future for north Hays County. We say "relatively" because LCRA's ability to deliver surface water to a growing list of water customers is drawing thinner with each passing drought.

Skeptics might say that former County Judge Jim Powers, using the groundwater scare, helped push through the mechanism in May of 2000 that resulted in a new water supply for major new development opportunities, the upscale Belterra subdivision being one example. Eleven years later, that mechanism is being used to purchase the 290 line/system from the LCRA to potentially support a great deal more growth – a developer's dream come true. You can speculate on the consequences for the county and the opportunities for the deal makers from there. (The original 290 water line deal involved the US Fish and Wildlife Commission and an agreement that the water line would not be used to serve new development. See HCWSA link above. Question is, will that agreement stand should Hays County purchase the system from the LCRA?)

The minutes of the May 2000 commissioners court meeting that launched the HCWSA state that the "primary purpose" of the Authority "is to expand surface water service while reducing demands on the Trinity and Edwards Aquifers, insuring a safe reliable water source for all (our emphasis) residents of Hays County. The secondary purpose is to provide a mechanism for regional planning in cooperation with state and federal agencies, cities, utility providers & developments lacking adequate utilities and infrastructure." (Download a copy of the minutes at this Google link, top of the page.)

____________________

Side note, breaking news – The Lubbock Avalanche-Journal | By Elliot Blackburn – Canadian River Authority buys water rights from Pickens | PLAINVIEW June 23 2011 – Texas Panhandle leaders inked contracts purchasing $103 million of water rights from business tycoon T. Boone Pickens on Thursday, securing, they believed, water supplies for their residents into the next century.

____________________

By Sam Brannon
Hays Citizens' Budget Project

Members of the Hays County Water and Sewer Authority held their second meeting Tuesday June 21 at 6:30pm at the Precinct 4 office in Dripping Springs.

For those not familiar with it, the county commissioners court created the HCWSA in May of 2000, then under former County Judge Jim Powers. The entity was created in response to a declared groundwater emergency in subdivisions in the north part of the county, most notably Sunset Canyon on Hwy 290, which paved the way for the LCRA "290" surface water pipeline into Hays County.

Early this year, the Authority was put back into service when the current commissioners court decided to pursue the pipeline and wastewater facilities that LCRA is looking to shed.

I knew the two were related, but until Tuesday night I wasn't sure how. It seems that the HCWSA will be the arm of the county that will be involved in the Coalition of Central Texas Utilities Development Corporation (last meeting was scheduled last night at City of Bee Cave City Hall).

To date there's been precious little discussion in commissioners court about what's happening with this initiative – nothing in the past 2 meetings, and with the vacation week that was taken, it has been about a month since it was last discussed, and even lightly then. And because Commissioner Whisenant posts the LCRA asset acquisition in the "Standing Agenda Items" rather than on the regular agenda, we never know when or if the item will be discussed.

My best advice is that if you want any information, you're going to have to ask for it. So far, I’m not pleased with some of the answers I have heard.

The 7 directors of the HCWSA board are: Commissioner Whisenant, Rueben Garza of San Marcos, Commissioner Debbie Ingalsbe’s appointee; James Holt, Pct. 2 Commissioner Mark Jones’ appointee; Tom Haley, former GM of the Wimberley Water Supply Corp., Commissioner Conley’s appointee, (absent at Tuesday's meeting); Lon Shell, County Judge Bert Cobb’s chief of staff and appointee; and Judge Cobb, who was also absent for the meeting. Clint Garza, Hays County Director of Development Services, was present.

Others attending were David Steed of TCID #17, Ron Kelly, president of the board of the Dripping Springs Water Supply Corporation; Linda Kinney, Ray Whisenant’s assistant and a key Republican Party insider; and Roger Derlin of HCWCID #1 (Belterra subdivision/home to State Rep. Jason Isaac).

Unsatisfactory Answers

What we learned is that Hays County passed the first round of the bidding and is now in the second and final round. The final bid is due August 1st. The winner is to be announced in late August, according to the LCRA. About 5 weeks remain to complete a bid (presumably binding if it’s accepted) on assets that LCRA has stated are worth $200-300 million. The portion that Hays County is interested in keeping were quoted at $140 million.

When I asked Commissioner Whisenant if he really thought we could complete the due diligence on $100 million-plus of assets in that short a time frame, his response was "No." And he's right, the pipelines and treatment plants have to undergo thorough inspections. Maintenance records have to be reviewed. The county has plans for additional capacity for new development (no more pretending this isn't a developer subsidy play), so the costs and revenues need to be well estimated.

They should be looking at every customer and supply contract in order to understand what obligations they carry with them. All of this must be built into the bid. And, of course, there's no way all that can be done prior to the August 1st bid deadline. So how do they expect to submit a bid – any bid – and maintain fidelity to the interests of taxpayers of Hays County?

Commissioner Whisenant followed his first answer with a second: "But that's the timeline LCRA gave us to work with." As the old adage goes, if you're at the poker table and you can't identify the sucker, it is you – in this case, us, the taxpayers of Hays County.

It was repeated throughout the meeting that Hays taxpayers would not be on the hook for the debt that will be issued. The answer, they say, is that some entity, perhaps the Coalition UDC or the HCWSA (unclear) will issue revenue bonds for financing. I asked, "Who loans money on money-losing assets?" That got a chuckle from Commissioner Whisenant, but no answer.

If someone were to loan money on a money-losing asset, they would want something very tangible as collateral. I'm sure all of the taxable property within Hays County would work as collateral.

If you want to follow this issue, I suggest you start attending the weekly WSA meetings. Commissioner Whisenant will send out the meeting location and time by email.

We should all be watching this deal very closely.