LCRA Close To Capping Utility Sales

The LCRA board on Nov. 21 authorized General Manager Becky Motal to negotiate the sale of 18 of its water and wastewater systems in the Hill Country and LCRA's southeast service area to Canandian-based Corix Infrastructure Inc. (Photo by Jana Birchum)

Lower Colorado River Authority board Chair Tim Timmerman is in the habit of announcing the presence of the local dignitaries who attend the organization's monthly board meetings. For the past several months, his introductions have included a roster of Central Texans who have done their level best to convince Timmerman and his colleagues that the LCRA should sell some 30 municipal water and wastewaster utilities to a coalition of regional municipalities and not to a private company. A chunk of the group's pitch – indeed, any moral high ground the coalition might hold in what's become a protracted battle for the utilities – is its promise that it would fend off attempts from distant corporate entities, which the coalition members fear will hike their water rates to unaffordable levels if they acquired the utilities.

Moral high ground or no, the coalition – formally called the Coalition of Central Texas Utilities Development Corporation – may be left, if not entirely out in the cold, at least without the bulk of their target: On Nov. 21, the LCRA board voted to authorize exclusive negotiations with Vancouver-based private utility Corix Infrastructure Inc. for the right to purchase 18 of the utility's water and wastewater systems. Though the board awarded the same exclusivity to the coalition for the West Travis County Regional Water and Wastewater Systems, it also gave Corix the right of first refusal to acquire those systems should a deal with the coalition fall through – a very real possibility.

When the board convened a week ago, on Nov. 16, head of the coalition Pix Howell wasn't, as he put it, ready to count his chickens, but right about then things were looking up. The LCRA had first announced its intention to seek buyers for the water and wastewater systems in November 2010; com­mon wisdom was that the systems, spread across the organization's vast service area, simply cost too much for the LCRA to operate and maintain. A Septem­ber resolution from the LCRA board instructed staff to work out a deal with Corix and another private firm, but Howell's group had fought its way past the board's initial instructions to the brink of acquiring at least a slice of what it was after. (See "West Lake Comes Out Swinging Against LCRA," Aug. 12.) And as LCRA board member Tom Martine began to read that morning's version of the board's instructions – which included directions to LCRA staff to negotiate and conclude an agreement with the coalition – it seemed as if things might have taken at least a partial turn in favor of Howell and his organization.

As it turned out, Howell was right not to count his chickens. The board made only a fraction of its water and wastewater utilities available for sale to the West Travis County coalition. It also followed its initial instructions with a second resolution that would have directed staff to attempt a deal with Corix should negotiations with the coalition falter. But the topper was a seeming contractual poison pill: An instruction included in a memorandum of understanding stipulated that the coalition must somehow dispatch with a rate case brought against the LCRA by the members of the West Travis systems by Wednesday, Nov. 23. (As of press time, it was unclear if this would be possible.)

After months of negotiations, resolutions, meetings with officials, and much public scrutiny of a major mission shift for the organization, however, the LCRA board was unable to pass the second action involving Corix. Three of the board's 15 directors – former Pflugerville Mayor John Franklin, Lori Berger, and board Secretary Kathleen Hartnett White – voted against the Corix resolution. With board member Franklin Scott Spears – hus­band of Gov. Rick Perry's director of appointments Teresa Spears – absent, the vote was one short of the 12 needed for affirmation.

"It's almost comical," Howell said Nov. 18. Even Howell's typically optimistic view saw the two resolutions as the product of board frustration with the process. In the worst case, Howell suggested subterfuge. "They [may have] set it up so that Corix ... gets the systems," he suggested.

That brings us to Monday morning (Nov. 21). Just after board members concluded their business on Nov. 16, word came down that they would be back for another meeting less than a week later. This time, it took less than an hour for all the ducks to line up: With directors John Dickerson and White absent, the board voted 13-0 to move forward with negotiations to sell 18 of the utilities to Corix. The LCRA will hang on to its West Lake Hills utility but will try to contract with Corix to run that system as well as any others it keeps. After the meeting, Franklin told local tip sheet In Fact Daily that he was able to answer financial questions he had. He also suggested he'd been swayed by the fact that the residents of Lometa, in Lampasas County (whose system would be included in the Corix purchase), would have right of first refusal over any future purchaser.

As he closed Monday's meeting, Tim­mer­man took pains to emphasize that "96 percent of our customers will end up in public hands, or still with the LCRA." That figure presumably included the potential sale of the West Travis systems to the coalition. Whatever the final tally, the sales are far from their conclusion: Even if Corix and the LCRA are able to settle on a deal, the sale must still be approved by the Texas Com­mission on Environmental Quality. Still, there will no doubt be some level of public opposition to that end – for proof, one need look no further than the lengthy rate case that the LCRA is so eager to dispose of. Stay tuned.