Travis County Commissioners Court
Tuesday, February 15, 2011,
Item 22
22 is to consider and take appropriate action on resolution regarding decision by lower colorado river authority to sell water and wastewater utilities.
>> for the record, tom webber, transportation and natural resources.
we have a proposed resolution for you to consider signing, which would do several things, but let me start by saying the lower colorado river authority is proposing to sell 32 of their water and wastewater utility systems. These systems extend from matagorda county on the gulf coast all the way to around lake buchanan.
there's five within Travis County and in your backup sterlz I mentioned -- backup materials and I mentioned what those services are and what they provide.
the resolution itself is mainly a desire to have lcra postpone the sales.
at this point it's our understanding they're negotiating with some of the utilities one by one who may -- who they may be able to get to purchase the systems through March 11th.
but then I think that was the ending date for those type of negotiations.
we anticipate after that date what could happen is that the sale would be offered as a block to one buyer.
so 32 systems going to one buyer.
there's a lot of thought around the opportunity comunt that this short changes the opportunity to have more locally based or publicly owned utility operations with lcra getting out of that business.
the resolution we have suggests postponing the plans, allowing appropriate stakeholders of each of these 32 systems to negotiate with lcra through December and to grant the stake o'ers of the system the right of first refusal by maving an acceptable offer from a third party.
and it also recommends that the stakeholders, in other words, people with an interest in any of these systems, be allowed meaningful representation on appropriate lower colorado river authority committees or advisory bodies to -- for this process.
that's all I wanted to offer at this point.
we're available for questions.
>> I'd just like to add that I have a special interest in this.
we sit here at the county and we get the calls when people's rates go up and when there are issues and challenges with their water supplies or wastewaters.
and I think I personally feel like we have a regional challenge out there in water delivery and water rates and utility rates in general.
and that we need to look and come together for regional solutions.
and my concern with this lcra proposed sale right now, and I don't doubt that they probably need to sell it and want to sell it and are trying to figure out how to deal with that, but I would encourage that they slow down and work with the region because given the fact that we know of some large private water supply companies that have come in and bought some small systems in Travis County and significantly increased the rates beyond what is tolerable for some people, and also the fact that at tceq the rate appeal process is very expensive to the ratepayers and indeed a significant challenge for those of limited means that we run the risk of a large sale to a single private company of having a monopoly, being able to go in and raise those rates exponentially if that's in the done on the front end.
so I think we need to look at it from a global standpoint.
I think the different companies that are being offered in this package, they're apples and originals.
there are some small, some large, some with large debt, some that are revenue producing.
and that there is an opportunity -- I think the lcra might probably seize it and giving this whole package deal for the benefit of getting out of it in a wohl way.
-- in a whole way.
I would like to think that lcra recognizes their mission statement of serving the community as a whole as well and that the outcome of this sale needs to be thoughtfully considered.
so I'm really supportive of this resolution in saying take your time, work with the community, work with the regional players and see what kind of solution we can come up with.
as tom said, that is perhaps more locally based.
and it doesn't run the risk of the unknown in a private water supply purchase.
>> Commissioner, this does -- this issue also raises a red flag for me as far as precinct 1 is concerned.
with some of the escalating utility rates that persons within subdivisions are experiencing, having a base rate, any time you flush the commode or water your lawn on top of that expensive base rate, it gets pretty challenging because it actually eats a lot into the mortgage for some of these homeowners.
it's something inch that we need to be -- it's something that I think we need to be really concerned about and it's not only -- it's a possibility that can happen this particular regard and as far as what Commissioner Huber had just echoed, but it's already happening in my precinct today.
we looked at this same issue I guess around 2005 and during that time I think it was house bill 2528 -- 85, rather, I think.
it tried to address some of the exhibit rates that were happening with these kind of situations that are being created here now.
there's no guarantee that even with this resolution that is put before this court that the lcra will honor that.
we don't know that, but we do know that the water supplier that -- that a are purchasing these particular water and wastewater services, their rates, some of them, their rates has just been off the chart.
and of course, unfortunately the bill that I just mentioned, and I have deece is supposed to be reviewing that again and it may also have to be legislation attached with this thing because this is something tceq has to deal with and there was a big article in the american-statesman back in 2005 on this issue.
and of course, we tried to address it in subdivisions in the community, but of course it didn't go anywhere.
this is the second time around for this thing.
so I think it's something that we need to really, really, really monitor because this region k, the lcra situation from the lakes all the way to the coast, right here within Travis County is something that this court I think really needs to take strong consideration because we've just talked about affordability.
we've talked about affordability of homes.
homes cannot be affordable if the mortgage on those homes are being challenged by utility rates that are just basically out of control.
so etcetera going to be a challenge owe and I think we need to look at that maybe not frus jus from a resolutionwise, but maybe from a legislation type setting to we can be sure that if proper legislation is presented as it was in 2005, it didn't go anywhere, but the -- this community will be able to maintain some type of affordability for the homes and the mortgages that they have to pay.
and of course, this is in western Travis County and of course, the -- if it doesn't do the way we're talking about, if there's not a delay, there's a delay until December in this particular report, but the lcra say you have a resolution.
I don't have to honor that and they don't.
and they just decided to sell these services to someone that's not conscious of the rate of how they can increase, be increased for those homeowners, of the services or the person that use the service.
so we have some ver yaws challenges -- serious challenges here with this service.
we've gone down this path before and we didn't get a lot of support during that time.
but this may be the second time around.
we may have to go after this again and I think the house bill was 2585 during that time when we looked at it.
we may have to revisit this legislatively again, just may have to be one of our legislative items. So I'll just throw that out there also.
>> mr. Reeferseed?
>> thank you, sir.
I would like to echo the fine words of everybody here speaking on this issue so far.
and I couldn't agree more, and I just wanted to throw in my two cents as a property owner out in the cross wind property development area.
just while I've been gone, I've been out of my house for a little while now.
I'm back in my house.
just in that brief period of time, some other company came in from -- it's either from houston or new york city or something.
but some other water company has come in and they've bought out the one that we had and supposedly just tripled, 300 percent increase in the cost of water.
just because they felt like doing that.
and a bunch of us are kind of object set about that and we have an option to say something to them, but it's still kind of iffy.
I don't know what's going on.
I'm just trying to move back to my house and get on top of this.
but like I said, to just have water, to just even turn it on without getting any water.
they're talking about $140 a month just to have water.
and I'm just stunned.
as a poor person and a fixed income and -- where do they come up with this?
and we have to as a community go and make a sting about it, but I've gotten feedback from my other neighbors.
well, it's not going to do anything.
we're still going to be stuck with it.
and this is just outrageous.
so I'm here echoing the kind words and the competent information shared by everybody so far, this is just way, way, way out of whack.
we don't have to put up with this and we should do everything we can to make sure they care about us instead of gouging us.
and the one other little side issue I had was one of the issues I'm so proud and happy to live out there is that we don't have fluoride in our water, or at least we didn't.
they've been juggling these companies and I don't know what's going on.
I called them and they were going to call me back, but they never did about this.
and this is a national scandal, this taking over the world.
people are finding out about the so-called fluoridated toxic sludge that's killing all of us.
and if we can stay on top of this and make sure that these criminal companies don't ruin my neighborhood now.
I got the heck out of Austin just to get away from the fluoride and if they're doing that to my neighborhood, I'm obviously pretty upset about it.
I wanted to throw that question out there and maybe if y'all can find out something or ms. Huber, I appreciate your vast knowledge on this.
>> I would like to clarify.
the cross winds system is not an lcra system and -- it was owned by another plieft watr supply company and then sold to another private water supply company.
it is an example of the rate increase and I think the other people who are here may testify to that further.
but they've had huge rate increase out there.
>> if you would give us your name, we would be happy to get your comments.
>> thank you, sir.
my name is dennis daniel.
this is janis stephenson with me and we're from lcra.
jan is our regional manager of our Travis County system as well as other parts of the system.
and I manage our customer and business for water.
I appreciate the concerns that I've heard.
I truly do.
our board, we started in the utility business in the early '90's.
with started with a mission and continue with that mission to help our communities and protect the environment and believe we've down that.
we've greatly tand spanded.
there's been more utilities and as was represented we have utilities that stretch from matagorda now through lometa.
in 2005 our board started closely reviewing our utility practice.
and they directed us in August of 2007 to seek buyers for those systems where it made sense and to take other steps to try to get the utilities to self-sustaining.
and we've been working towards that.
we've sold six systems since then and we're in negotiations to six more systems today.
in November of '10, the board decide that had we should exit from the utility business.
that they believed that we should focus our staff resources on water supply issues.
so we've been working towards that since.
and I wanted to kind of let you know that I think I've heard the concerns and I trust -- I trust that our board is addressing those concerns by their four criteria that they've asked us to take before bringing any buyers.
I'd like to emphasize that, any buyers for the system.
so the board has said that they want us to exit from the business as a whole.
it's not one buyer.
it could be a combination.
if they're a public en-- if there are public entities interested, we'd love to hear from them.
they're welcome.
that's part of the process.
and we are still working on that process.
we haven't put it out yet, an invitation out yet.
I expect that will occur by the end of this month.
and we will invite and have invited and if anyone is interested, then I invite them to contact our chief financial officer, which is brady edwards.
and we'll put them and we'll try to get there.
so that's the effort underway right now is to look at the broad breath of who is interested and try to sort out how we can meet the board's criteria.
and the board's criteria were the ability and commitment to continue to provide reliable and quality services.
and that was the first criteria they listed.
second was the ability to invest additional capital as need sod that we could keep up with the systems. And that's one of the things that we believe we've been successful at.
the commitment of the buyer to meet regulatory standards.
and really that's a tall to say you need to operate these in the way that maintains public health, safety and welfare of the environment.
and then the willingness of the buyer to compensate lcra for the vest made.
-- for the investment made.
I want to emphasize that's not profit.
we're not seek to go make a lot of money, any money.
we're seeking to recover the investment we've made so that the balance of our customers don't have to pick up that cost.
that's the criteria that our board has set out.
as you might imagine with 32 utility systems it's a complex process and we have several hundred contracts.
we are committed to honor those contracts.
many of those contracts have rights of first refusal, which we will absolutely honor.
we'll give those --
>> how many?
>> excuse me?
>> how many have rights of first refusal?
>> about a dozen.
>> my understanding was six of the 32.
>> it depends on the system and it prosecute depends on the contract.
there's also consent.
you may have the right number.
I remember between six and a dozen.
there are also many contracts that have rights to consent to assignment.
and again, we will honor those commitments and work with those.
so the idea -- we don't know how this is going to work out.
that's why we're in this process is to try to work it out.
>> I'd be happy to address any questions that you have, but lcra staff and the lcra board takes pride in the public service mission that we have and we believe we have brought considerable value to our service area by providing for safe and reliable infrastructure.
we need the infrastructure to be here.
for us to continue to live wait we'd like to.
and we intend to see that that continues through this transaction.
>> I have one question on the four criteria?
>> yes, ma'am.
>> the first one, reliable, quality service.
where is affordable in there?
that's what our concerns are of those potential rate increases?
>> I understand that.
and as you're well aware, we've had a long running contest to define affordability in a rate case that in addition to costing the folks that have appealed our rates a lot of money, have cost us and our customers a lot of money.
that's what the tceq works through and that's what we're working through with tceq is to define that.
>> and I'd also like to point out that the mission to provide reliable, low cost utility and public services in partnership with our customers and local communities, it seems to me from what I've objected about this process that that mission has not perhaps been fully fulfilled because it doesn't seem to me like all of those who might have been -- have had the opportunity to pull together early on to look at a localized, some sort of regional solution were not (indiscernible) and in advance of putting the intent to sell out there.
is there some way that we can backup just a little bit and address it from a regional standpoint working with the lcra and community as a whole?
I don't know if the county would have a role in it or not, but we didn't have any idea about it until we heard from our concerned citizens out there.
>> I can appreciate that.
our board has asked us to continue with the process that's been laid out.
the next step in that process is to request statements of interest essentially.
and to work through that.
we also have a standing agenda item on our on board at this point which we will update them each and every month and would invite any of y'all to attend.
>> your March 11th deadline, which was ever so slightly extended for those that you have negotiations ongoing with, is just around the corner.
>> yes, ma'am, it is.
>> it's hardly enough time to --
>> we're expecting to hear from a couple of folks that we've been negotiating with as early as tomorrow.
>> and -- but there are also many that were not given opportunity to negotiate with, is that true?
>> that's true.
there's many that didn't express any interest before our board made a decision to sell the whole.
>> the reason I think that this resolution makes sense it the decision to exit the water wastewater utility business was publicized in November 2010.
chfers just a few months ago.
and the elected officials that complained to us complained that lcra doesn't listen to them and is going full speed ahead.
and that they really have not had time to review the situation, evaluate it and determine whether they can pick up the utility for their residents.
and so when they complain to me it made sense to request that lcra slow down and at least give these governmental entities through December of this year an opportunity really to see if they could pick it up.
I mean, it's not like -- it's not like they've been sitting around waiting on the opportunity to get into the water, wastewater business.
it's kind of like Travis County.
we're not in the business.
however, if we were forced to get in the business to serve Travis County residents, then we would want to take a hard look at that.
it would take us some time to do it, though.
so really in the scheme of things, where in you look at the request to be given until the end of this year to decide whether they can pick up, it makes all the sense in the world.
the the other thing is you're talking about a substantial financial investment the other thing is that the contracts are one sided and lcra has figured out a way to creatively gouge them for every penny that lcra can get out of it.
the specific examples that they gave us, and we were in a meeting with some of them, did convince me that if lcra is not trying to profit, it is trying to gain -- trying to get monetary gain in some other way.
photography I think the resolution is worded civil and diplomatic and I think we're asking the lcra to work with the governmental entities, which is not much we can do besides listen and try to join them and urge lcra as a quasi governmental entity to work with the other governmental entities.
it's not like there are a lot of private individuals trying to get in the water, wastewater business all of a sudden.
these are governments that are really hearing from their residents and the residents that I hear about when they look around at the private utility companies, see water rates increase dramatically in a short time, and that is the fear that they expressed.
and to be honest, so far all we've been able to do is kind of give a receptive ear, a pat on the back to the extent that we thought one would help, but in this resolution we're kind of asking the board, give these governmental entity an opportunity to try to put together something better than a private utility company to serve their respective residents.
and so --
>> I can appreciate that and I will certainly carry that message back to our general manager and executive management.
I'm not here to argue about your resolution.
I'm just trying to provide some facts and answer some questions.
>> well, does that mean that -- if I'm hearing you right, it's a big problem.
it is a big issue.
>> yes, sir.
>> all across Travis County.
not just only the western part, eastern side, all over, especially when you've got persons that have to go to tceq.
they have to deal with this thing, but we're talking about folks that are trying to make it.
you know, paycheck by paycheck.
trying to make it.
and yet they're experiencing some utility bills that are just mind boggling.
mind boggling.
and I guess it will make me feel real comfortable if I knew exactly what position the lcra is at this point.
in other words, to deal with those particular governmental entities.
I know you have to take it before your board and all these other things, but I would like to see where you are today as far as what you're talking about.
it would make me feel a little more comfortable.
and of course, I still have to deal and we as Commissioners still have to deal with our -- the residents that live in our precinct that use utility services from private water suppliers, water and wastewater suppliers.
we have to deal with this knowing that our hands are basically tied as far as having the authority to regulate the rates because that's something that tceq does and other government al entities that deal with that.
but tceq is the main source as far as this is is concerned.
so it's a pervasive type situation and I think the lcra, who is actually a ccn, and you've been one for years, supplying water to the other ccn's around here, surface water.
you've been around for years.
and it just -- we need to get some affordability in this situation and this apparently has become a runaway utility freight train disaster.
and it's disastrous because we try to keep things affordable, as I said before, we talk about affordable housing and all these other things.
how can you have affordable housing when utility rates almost exceed your mortgage?
that doesn't make any sense to me.
and I think we can do something about it county wide.
county wide.
I think all of us can do something about this situation.
it's not that we're begging you, but I think we need to slow down and let's see if we can work things out.
I would like to go to the legislature and see if we can handle some of this stuff because it's outrageous.
but anyway, I want to hear from you and see what we have on the table now that is something that you can work with.
ask them until December of this year.
>> Commissioner, my name is roland pena.
I want to thank you --
>> how you doing?
>> good.
I want to thank the judge Biscoe, Commissioner Huber, Commissioner Gomez, Commissioner Eckhardt and you, Commissioner Davis, for you to give us the opportunity to come before you.
I thought it was important to just give you some additional information that may be helpful in this process.
dennis you can help me out if I mess this up.
my understanding is that we have a consultant, an investment banker that is assisting lcra.
we've never done this before.
it's our utility system that we've created 10 to 15 years ago and it's a fairly new system.
but we've sought that additional resource, that consultant to help us do that.
this is determined if this will be successful.
if this is going to be a successful strategy for us.
should he determine that there are interests, this being those opportunities that are interested or potential private buyers, then he will bring back that to the board.
if he determines that this method is not going to work, then he will provide that information to the board and the board will have to determine whether they take a new path or whether this is going to be feasible.
I thought that was important for you to know.
I think the timeline that's important for you to know is we've determined it would take 18 to 24 months to sell the systems and complete the systems, and that's just an estimation.
it could take longer.
but in essence I guess what I'm saying is those communities that have expressed some concern to you still have an opportunity to express interest in this process.
and I felt that that was important for you to know.
>> after about March 11th that you don't have a lot of interest or you have interest in two or three, would that then mean that the remaining systems would all try to be sold to one purchaser?
>> the March 11th deadline is we felt like it was important for those communities and those systems that we were already in discussion with to have a chance to conclude those discussions.
and those were for six different systems and we're talking to five different entities.
and it includes westlake hills and it includes elgin and four others.
so that's what the March 11th deadline was to talk to them.
if we didn't reach agreement by then or substantial agreement by then, then the board would like them to be included with the package, that then we would seek proposals for the whole systems or parts of the system.
so the board has said we want all of the systems -- we want to divest of all of the systems. That may take one buyer, it may take a dozen, whatever combination it takes.
so those parties would then -- could also participate then, some of those parties have a right of first refusal that they could exercise.
so there's a lot of process left here and time left here.
it's not we're trying to steam roll.
we're trying to get on with the process and have our business and our customers served.
>> but it will take 18 to 24 months anyway, then why not tell them you have until December 31st of this year?
the time between November 2010 and March 11 is roughly five months.
and a lot of the government entities have been in the business of corrections, transportation, everything except water wastewater.
and then all of a sudden they're asked to consider that plus figure out a way to fund it.
and -- when we chatted with them, they believed that the majority of them believe that they've been excluded from the process.
that in fact lcra leadership is not dealing with them in good faith.
that while you're saying let's negotiate, in fact you don't mean it.
and I can tell you that because water and wastewater are indispensable services, there is a market for them.
and the more one buyer pays, the higher the rates will be for consumers afterwards.
so there is reason to be fearful.
and, you know, we understand it.
we kind of got off the energy at the city of Austin here and they go pennies at a time and we feel that.
we're a customer kind of like private residents out there.
I think lcra is unnecessarily leaving a public relations black eye on this deal.
and -- but getting into the water wastewater business all of a sudden is really a big deal.
because in addition to acquiring the system, you've got to figure out how you operate it, how you manage it.
and so -- I just think that expecting governmental entities to make that decision and be able to pull it off in a few months is not reasonable.
and I think that if Travis County were given the same option, then we would have the same reaction.
it would take us a couple of years really to figure out whether we could do it.
and it would take at least I think a year for us to figure it out.
and we are a large governmental entity.
so we have a greater financial capacity than a lot of the small rural counties and other entities that we've been hearing from.
>> and the repercussions on some of the -- particularly the smaller ones, raising money to deal with this, how it relates to their bond rating and their bond indebtedness, you can't turn it around in 30 or 60 days.
and I would just like to also offer up that the reality, if not the perception is an investment banker looks at something from a pure business deal.
and I think we have a public responsibility here that ought to be considered as well.
and with hope that lcra will work with us and everybody else to be sure that we are truly responsible to our public out there.
>> now, we have always had an excellent relationship with lcra.
>> yes, sir.
>> and we hope that that continues.
and we try not to tell how to run your business.
but every now and then a suggestion is good.
>> yes, sir.
>> and so y'all may have one to give us next week.
>> [ laughter ]
>> I move approval of the resolution.
>> did we give you a chance to finish?
>> yes, sir.
unless you have other questions.
I appreciate what you've said.
I truly do.
I'll take the message back.
there is a staff update on Wednesday at our board.
>> thank you very much.
all in favor?
that passes by unanimous vote.
mr. Reeferseed?
>> I'm just hanging out.
The Closed Caption log for this Commissioners Court agenda item is provided by Travis County Internet Services. Since this file is derived from the Closed Captions created during live cablecasts, there are occasional spelling and grammatical errors. This Closed Caption log is not an official record the Commissioners Court Meeting and cannot be relied on for official purposes. For official records please contact the County Clerk at (512) 854-4722.
Last Modified:
Tuesday, February, 2011 2:19 PM
