The LCRA Means Business

Authority's Plans to Expand Threatens Austin's Control Over Growth

LCRA general manager Mark Rose will step in to help the MUDs if the City won't
photograph by Jana Birchum
On January 23, fog enshrouded the lofty slopes of the waterway that meanders through the heart of Austin. In the boardroom of the Lower Colorado River Authority, backed by a panoramic series of windows overlooking the river, members of the Save Barton Creek Association (SBCA) pleaded that the board ensure the survival of the creek as the LCRA undergoes monumental changes. For more than six decades, the state agency that was Lyndon B. Johnson's pride and joy has harnessed the river's resources, and lighted the Central Texas outback with the magic of electricity. Now, the board and general manager Mark Rose are broadening the agency's portfolio in water and wastewater services, and communities over the environmentally sensitive Edwards Aquifer and the Barton Creek Watershed provide a ready customer base.

That this entrepreneurial opportunity is available to the LCRA is symptomatic of unrestrained development in the booming Eighties. All manner of Municipal Utility Districts (MUDs) arose in the Hill Country, with nary a thought accorded to regional planning. Created outside Austin and designed to escape the city's taxes and regulations regarding development, the districts did not receive Austin utilities; many MUDs simply financed and operated their own water and wastewater mini-plants, also known as "package" plants. As a city councilmember from 1983-87, Rose voted to create quite a few of those MUDs, guaranteeing their bond issuances in exchange for promises of future annexation and the expanded tax base for Austin that would result. Now, the MUDs want relief from the plumbing business and its complex regulations, sans annexation, and again, Rose is there to help.

Save Our Springs (S.O.S.) counselor Bill Bunch, himself a longtime element in Austin's watery politics, says he is not surprised by Rose's Mr. Fix-it role for the MUDs. "It's just his usual habit of helping out developers."

Rose, of course, doesn't describe it thus. "That's nonsense," he scoffs, in the rustic decor of his LCRA pad. The LCRA leader says he approved of the MUDs because growth is inevitable, and it's best to work with it, rather than trying to stop it. And although the LCRA's expansion from one of the nation's best wholesale electric providers to a major water provider is arguably a wise business move in light of the impending deregulation of the electric industry, Rose says that's not what it's all about. Rather, he says, the LCRA wants to provide water/wastewater service to the MUDs simply because it's a business opportunity.

Control Issues

Agendas aside, by its nature, the LCRA expansion is seen by some as a swift backhand to Austin's efforts to influence growth over the Barton Creek Watershed portion of the aquifer, from whence 35,000 people get their drinking water. "With the LCRA running the show," fears Austin's Environmental Board Chair and Save Barton Creek-er Mary Arnold, "it will be easier for new development to take place."

Besides diminishing the spoils for Austin's Water & Wastewater Department, the LCRA's new hobby threatens Austin's authority in the region, since utility services are a tool that can be used to set the parameters for growth. With Austin being the region's cultural and economic mecca, it has plenty at stake in ensuring that sprawl, if not prevented, is at least contained. "The area around Austin is more logically served by (the city)," says Councilmember and Save Barton Creek-er Jackie Goodman. "We can look at annexation, environmental factors, growth planning, and regional planning relative to traffic, utilities, and pollution. The LCRA's only concern is providing water and wastewater."

For those reasons, Goodman seems likely to support a controversial proposal for the City to provide wastewater service to the Davenport Municipal Utility District, a western Travis County MUD created before Rose became a councilmember. Like jealous lovers, city officials such as Goodman and Mayor Bruce Todd have worked overtime to keep the MUD's eyes off the LCRA, which intends to come to Davenport's rescue if the City does not.

The Davenport MUD is expected to ask for inclusion in the city's wastewater system in the coming weeks. Davenport first came to the council with this proposal back in December, threatening to take its business to the LCRA if the city didn't acquiesce. The council was ready to deal, but, remembering attempts by several MUDs to persuade the 1995 legislature to nullify annexation promises, council demanded a clause in the proposed contract that would have prevented Davenport from pursuing annexation exemption. At that point, the MUD hit the fan, negotiations fizzled, and the MUD dropped out.

Davenport has now come crawling back, and Todd and Goodman have worked with the MUD's lobbyist, Jody Richardson, of Akin, Gump, Strauss, Hauer & Feld, to tweak the annexation clause. The clause now allows individual MUD residents, but not the MUD board, to lobby the Lege.

Not everyone is convinced. Noting that city legal staff had originally wanted a terminator clause, whereby the city could cut off service in four years if the MUD attempted to get out of its promised annexation, John Gilvar, aide to Councilmember Beverly Griffith, observes: "If the MUD won't request annexation outright, and they won't accept a terminator clause, then clearly they just don't want to be annexed. It's a bad business deal for Austin to not annex an area where there's clearly a lot of tax base."

Growth-wary environmental activists also dislike the deal because, they say, the City may provide even more fuel for the development fire than the LCRA would. Under Texas Natural Resource Conservation Commission (TNRCC) rules, the LCRA would have to irrigate its sewage on flat land, such as golf courses, leaving less space for building. Many MUDs rely on this process of wastewater irrigation, and partly for that reason, development over the aquifer has been limited. But if Davenport, or other MUDs over the aquifer, hook onto the City's centralized system, which transports treated wastewater into the Colorado River downstream, potential for development will increase. Besides making land available for development that would otherwise be used for irrigation, a centralized sewer makes the MUD a more prosperous option to investors. Enviro Board Chair Arnold worries that a centralized system would translate into more development, which would mean an increase in attendant and more pollution.

Branching Out

Because poo-poo flows downhill, and defying gravity requires expensive lift stations to pump water uphill, a centralized system for MUDs over the aquifer has so far been financially prohibitive. But some fear that the LCRA may be planning to branch out; environmentalists speculate that the agency is considering acquiring individual MUDs' package plants (which handle both water supply and wastewater disposal) to one day create its own centralized system. In 1994, the LCRA purchased the Uplands water system, built by a developer for a neighborhood near Texas Hwy 71 and Bee Caves Road. They intend to make the plant a regional water supply system. And if the LCRA plans a regional water supply system, why not a regional wastewater system as well?

Rose won't make any predictions: "What happens 25 or 30 years from now I can't speak to. For now, we're just content to buy systems." The LCRA currently has no package treatment plants in western Travis County. But it is romancing the sewage plant owned by FM Properties Operating Company (FMP), spin-off of global polluter Freeport-McMoRan. Needless to say, Austin activists are alarmed. The plant is at the 300-home Barton Creek Community, which has been the symbol of the creek's endangerment and a political flashpoint that Austinites have rallied against for years. As with the Davenport deal, enviros fear that the LCRA's potential involvement as a wastewater service provider could prompt a hastily made city deal with FMP, as councilmembers attempt to get some kind of handle on controlling growth in the Barton Creek Community. "With the LCRA's help, FMP hopes to achieve a long-time goal -- to intimidate Austin into supplying the centralized sewer system they need in order to build out to a higher density," wrote Sierra Club President Steve Beers in a January 21 letter to Rose.

While FMP's minister of propaganda, Bill Collier, would not respond, Rose does. "There's nothing to be gained by trying to intimidate folks," Rose says. "Our number-one goal is simply to be where the residents want us to be."

The latest round of trouble with FMP began when it requested city wastewater service in February, 1995. The company threatened to lobby the Lege for a water-quality protection zone, exempting it from city regulations, if it didn't get its way. It didn't, and the bill passed. Now, FMP is moving ahead with plans to further develop the Barton Creek Community, under the regulatory authority of the audaciously lenient TNRCC. While FMP claims that it doesn't need Austin to fulfill its master plan dreams, consisting of thousands of homes and dozens of commercial establishments, it does need to get onto a centralized sewer system to truly sprawl out.

Rose insists that that's ridiculous, and says FMP can grow just as much with the irrigation as with a centralized method. But he cannot explain why, then, FMP has thrice asked the council for a central sewer hook-up since 1990. Knowing that it wouldn't get sewage hookups from the current environmental majority on the council, FMP approached the LCRA last year, requesting that the agency take over its water and wastewater treatment package plant in western Travis County. On November 21, the 15-person LCRA board, with only two dissents, agreed to enter into negotiations with FMP.

The Thorns at Rose's Side

Adding to the environmentalists' concern is the fact that Rose has always publicly supported the idea of the city providing the Barton Creek development with wastewater service. And Rose has surrounded himself with the likes of David Armbrust and Joe Beal, both considered by enviros to be grim reapers to the creek's preservation. Rose hired Beal in September of 1995 from his vice-presidency seat at the environmental engineering firm of Espey Huston & Associates to manage the LCRA's water and wastewater arm; part of that job, of course, is overseeing that section's growth. In his past life, Beal, who played a key role in the effort to create the Balcones Canyonlands Conservation Plan, was a prime opponent of the S.O.S. water-quality ordinance as a former member of Citizens for Responsible Planning (known as CRAP by opponents). Beal was present at the SBCA presentation to the LCRA board, as was FMP representative Armbrust, whose law firm Strasburger & Price represents several of the MUDs. Armbrust, who has lobbied for Freeport in the past, also has a chummy history with the LCRA -- Rose hired him in 1995 as a lobbyist to try to convince councilmembers it would be a good idea for the LCRA to partner up with the city to run the electric utility.

Add the LCRA's hesitation to release details of the prospective FMP agreement, and there are even more qualms for enviros. On January 4, Craig Smith, of the Save Barton Creek Association, submitted eight questions about the FMP deal to Mr. Rose, yet has not received a response. On December 16, the SBCA hosted a meeting with Rose, but those in attendance left with more questions than answers. That's partly because both FMP and the LCRA are in negotiations and keeping mum. Beal claims that "our philosophy is absolute disclosure of the data we have," but he adds the caveat: after the ink dries. "Once we make a decision, it will all be public information."

That's too little, too late for environmentalists. What the LCRA is disclosing is that FMP simply wants to focus on development instead of water and wastewater. Initially, the LCRA plans to purchase $5 million of the $11.5 million plant. Once the investment is recouped with water and wastewater sales, the agency intends to buy more of the plant. If eventual growth requires a plant expansion, the LCRA says, Freeport will pay for it initially, with the LCRA paying the company back once the revenue base allows profit. "We'll make sure there's cash-flow support before we'll invest in the utility," says Beal. Ken Manning, who, as a founding member of the SBCA, is sort of the LCRA's environmental ombudsman and fireman, says that negotiations will not be complete until June, just as a new council will take over. Could Freeport come knocking on the city's door asking for a centralized system then? Collier would not comment.

Joined at the Lobbyist: Joe Beal and David Arbrust listen to the Save Barton Creek Association ask LCRA board members for help in protecting the Creek. Former S.O.S. opponent Beal manages LCRA's water and wastewater division, and Armbrust, who represented FMP at the board meeting, has lobbied for both Freeport and the LCRA.
photograph by Jana Birchum

A Plan for Protection

Considering the lack of disclosure about the deal, it was not surprising when an impatient LCRA board posed only one question at the January 23 board meeting to the handful of Save Barton Creek-ers presenting their concerns. Pix Howell, an engineer for Murfee Engineering, which works for the Circle C MUDs, asked how long the presentation would take. It took about 45 minutes, and included a request by the SBCA that the LCRA enact a water-quality ordinance to protect the Barton Creek Watershed. That's because some land over the watershed and outside Austin's regulatory jurisdiction, including FMP property, is not protected by the city's land-use ordinances, and, in some case, is not protected by any land-use ordinances whatsoever.

The LCRA has created the Highland Lakes Ordinance to protect the banks of the Colorado River upstream of Austin. But by Austin's standards, the ordinance is a joke. It's like trying to safeguard a mansion with a toothless Chihuahua. It restricts only phosphorus, sediment, oil and grease, and has no impervious cover limits. By comparison, S.O.S. covers 13 pollutants, and allows a maximum of 25% impervious coverage. The SBCA wants the Highland Lakes ordinance strengthened, and extended to the watershed. Will that happen? "No comment," says LCRA water and wastewater chief Beal.

Most importantly, the SBCA requested a regional plan. While Rose waxes on about the need for regional planning, there's nothing in the works. "We don't really have a regional plan," says Beal. "We're looking at opportunities as they arrive." The lack of a plan is the reason at least one of the two LCRA board members voted against the FMP deal. Peter Pincoffs, a Travis County resident, noted during the vote: "Our efforts would be better served by focusing on regional issues, rather than on one development." Fred Henneke, from Kerr County, also voted against the deal, but declined to explain why.

Beal and Rose do say that the LCRA is looking to partner with the city in the future. "We can help provide water and wastewater from a planning, financial, and operational standpoint," says Beal. In the Eighties, both entities agreed to collaborate when and if Austin's growth requires a new water treatment plant. In addition to the utility partnership, LCRA has suggested collaborating on a plan to operate the city's Ullrich Water Treatment Plant, which the city is considering expanding.

Whether or not the city should provide service to MUDs is a dangerous guessing game that could mean the end of Barton Creek, but one thing is certain: The city needs to maintain a say-so regarding growth in the region. And so, while the LCRA's involvement is a headache to city officials, it may provoke a cooperative effort to serve existing developments. Who knows? With the arrival of a long-awaited regional plan, perhaps this could be the beginning of a beautiful friendship.

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