A Drip of Progress for Northridge Acres

At first it appeared that businessman Patrick King would be able to walk on all that high-priced water he sells to the folks in the Northridge Acres subdivision directly into a fat loan from the Texas Water Development Board. Now it looks like he might need a life jacket. (See "Between Round Rock and a Hard Place," Nov. 15.) King has run the Northridge Water Supply Corporation for two years under a receivership order.

Last month, the TWDB sent King a five-page letter requesting answers to a variety of questions on engineering/construction, financial, and legal issues associated with the $390,000 loan he's seeking. The loan would pay to hook the stranded subdivision to city of Austin water and to disconnect it from the Round Rock fire hydrant that has been the community's only water source for three years. King originally sought $537,000 for the project but has reduced the amount requested.

Community activist Nettie Brown and other Northridge Acres residents have complained long and loudly that the loan will leave them with a 30-year debt on top of already expensive water service, without much to show for it other than Austin water flowing through antiquated and inadequate pipes that often are buried in their ditches and septic system drainage fields. Finally, their complaints appear to have been heard.

Along with raising questions about King's application, the TWDB will survey Northridge Acres residents to find out how they feel about the proposed improvements. Prominent on the TWDB's list of things for King to do was a survey of "customers to determine their support for the project," but the TWDB has since decided to conduct the door-to-door survey on its own Dec. 7. In addition, TWDB staffers are looking into other possible solutions to the community's water and sewer problems that go beyond the scope of King's Austin hookup loan.

Mark Hall, manager of TWDB's Central Texas region, said the survey would be used to determine how many people actually are served by the water system, as well as how many support improvements to the system, especially if they involve some cost to users.

The TWDB also appears to be taking an interest in the high price residents pay for water -- $40 monthly for up to 3,000 gallons plus assorted late fees, reconnect fees, meter-reading fees, and other charges. The letter asks King to supply a rate collection history, along with "copies of customer billing records for the period starting January 2002 through October 2002." It also requests financial information, including a balance sheet and income statement, on the Northridge Water Supply Corporation through Sept. 30, 2002.

Northridge residents have complained that King would be using the TWDB loan to line his own pockets and those of his business consultants and associates. The water board letter raises several questions about the fact that some "budgetary line items are greater than the amounts we commonly see on projects" and asks for breakdowns and information on proposed costs including:

Engineering fees totaling 29% of construction costs

Fiscal fees to a financial advisor totaling 4.6% of the project costs

Legal fees to general and bond attorneys totaling 5% of project costs

Fees to the city of Austin (including a second set of fiscal costs) totaling 7.9% of the project

King's own "administration and organization expenses" totaling 2% of the total cost

An explanation of an Austin interconnect fee as the largest single item in the project, a cost that the letter says "appears high."

Additionally, King must submit an affidavit stating that the loan application was approved in a public meeting held in accordance with the Open Meetings Act. Residents have complained that King declared himself a "board of one" and approved the application at a poorly advertised meeting.

Among the practical matters the letter addresses is the fact that "the proposed water contract [with the city of Austin] will be for 20 years. Please describe how the water availability is secured for the duration of the loan repayment period." The water board loan would be for a period of at least 30 years. The board wants King to provide a schedule for the ending of receivership and to describe what conditions must be met before that can happen.

Ignacio Madera Jr., deputy executive administrator for the Office of Project Finance and Construction Assistance, said the TWDB supplies guidelines for loan applicants, and when all of the guidelines are not met, letters like the one King received are not uncommon. Madera seemed particularly concerned that, under the application, the loan to King would accomplish nothing more than the financing to connect Northridge Acres to the Austin water supply, when the estimated cost for all of the improvements and upgrades the neighborhood needs for water and sewer services would be approximately $1.2 million.

Hall said the board has been told King will respond to the issues raised in the letter and keep the loan application alive. There is no deadline for King to respond, and he did not respond to a Chronicle request for comment.

Once King has responded to TWDB concerns, Madera says, "We would have to make a further assessment," adding, "We are trying to make something happen" to improve the water/sewer situation in Northridge Acres. "We are starting discussions with other entities, including the city of Austin, city of Round Rock, Travis and Williamson counties to explore what we can do collectively to solve the problem," Madera said. "We are taking care of some of those meetings now."

Meanwhile, the residents of Northridge Acres hunker down with their fire hydrant, waiting to see whether anything happens this time. Said Nettie Brown, "We've heard talk before."