Travis County Commissioners Court
Tuesday, July 5, 2011 (Agenda)
Item 24
24.
consider and take appropriate action on the divestiture of lcra's water systems. We will call up the human resources items next.
>> good morning, judge, Commissioners, john white t.n.r.
last week we had some considerable discussion regarding the coalition of public entities that are working to -- to become owners of the various lcra water and wastewater utilities that lcra has decided to divest itself of.
we have a number of guests here today.
who will speak on behalf of the coalition.
I think that -- that I gave you some backup that included a -- a listing of some specific issues that are sort of outstanding for us to maybe consider.
and in addition you've got last week's backup that gives sort of history of this.
there is some -- some additional documentation regarding the establishment of a public utility agency and then finally there is a set of questions that -- that the coalition members were kind enough to -- to provide some responses to that in your backup as well.
but I think they might like to go ahead and talk a little bit about it.
I think what I'll do is lay out as I understand it the specific requests are, one, that the county join their coalition of central Texas utilities development corporation as a formal member.
secondly, make a monetary contribution to help fund the corporation's efforts.
join in the creation of a public utility agency to hold the west Travis County water and wastewater utilities and then finally, to -- to make a more explicit appeal to lcra to do business with the coalition in their efforts to acquire these facilities, perhaps even overlooking how potentially higher bids that might be received from the private sector.
with that, I will turn it over to you folks to -- to talk about where you want, what you would like to see happen here and -- and --
>> well, let me start off because I didn't get to come to the last meeting.
and I have something to say.
my name is
>> [indiscernible] I am the president of the coalition of central Texas utilities development corporation.
board of directors.
we formed this so we could essentially be an umbrella for all of the individual systems. In order to do these bidding efforts with the lcra.
they required us to have a business entity that could do those.
I think the last time that I spoke to you about this was in February.
just to give you a little update from that point in time, we were -- we were still being told then that they were not interested in -- in any offer that we might want to make.
that they never intended to talk to us about buying our own systems and I think as a result in part of your help, but others, we have finally gotten to a point where we are part of their process.
and in fact we have open support from the chair of the lcra board and another board members, so we've come a long way, I think, as you might suspect, much of that is politics.
I think there's also been some light shed on the fact that there are many regulatory issues that a private sector buyer would have to face both from the tceq and then in one case even with fish and wildlife service.
so it's going to be very difficult for the private sector to buy it.
I think that the board has come to the realization that we may be their best option.
the position that we're in now I think is -- is the attendees at your last Commissioners court may have informed you, is we're in the due diligence stage for a final offer, which is due on August 3rd.
the -- the overview of this is ridiculous in a way.
that you would do a $300 million size purchase, in a short of a period of time as the lcra and their consultant bmo have set this out.
Commissioner Eckhardt mentioned the -- the phrase lightning speed.
that's essentially what we've had to do.
when we meet with the public in some cases they are suspicious of what we are doing because it is happening so fast.
it's occurring without the real capability to communicate with the public on the detail of it.
it's all occurring within the context of a very specific process and I know, you know, to a certain degree I think -- I think the county attorney has decide that there may be some improprieties in the way they've done this.
but the rest of us basically went through a non-disclosure agreement in order to become part of this process, which as you might imagine is -- is somewhat brain damaging to think about for a public entity since someone could still do a freedom of information request, we would have to disclose the information.
so it's all been kind of a mind bending process.
we are, however, deep into due diligence, there's many site visits, a lot of inventory going on, a lot of review of documents, contracts, developer agreements, as you might imagine, almost 13, 14 years of miscellaneous documents.
in one case trying to figure out what values really are for the system.
the lcra didn't really keep track of the operating
>> [indiscernible] for these systems since 2006 so there's a bundle of information that we're trying to weed through.
that's where the request for the $12,000 comes from, we obviously have a lot of entities that are stepping up to pay their share.
your number I have to admit was sort of magically come up with.
I think it was as much as anything a hope that you might be interested in participating at that level.
the rest of us are being calculated on the number of connections that we have.
it's more of a pro rata share for the actual systems involved.
with that, I think that I will turn it over to the mayor.
he was here last time.
I think your specific questions went to him.
he's developed a resolution that I think you also requested, but I am here as a resource, if I can answer any questions, I would be happy to.
let me just say I think the list of what john went through as our request of you may be a little shorter than that.
I think your support in this effort, number one, your capability to be able to create unique entities, water districts or, you know, water supply corporations, things like that, may be necessary for some of the smaller entities involved.
I don't know that it's really necessary that you become part of any -- any district itself.
obviously that's -- that's something that we can discuss.
there's -- there's lots of -- of -- of the smaller entities that are willing to form -- to form that kind of partnership, so I don't know if you really need to look at being part of another entity.
such as a development authority or something like that.
and I'm -- again I'm just speaking as -- as president of the uvc.
but money and the resolution of support, that's really what I would love to see out of -- out of Travis County at this particular point in time and then, you know, if you want to get carried away with something, I would be happy to talk about that, too.
>> haven't we already done a resolution of support?
>> what's that.
>> for the coalition, didn't we already do a resolution of support?
>> you did a resolution.
>> [multiple voices]
>> I'm going to let the mayor talk about this particular resolution and answer your question.
>> you did, you are correct, you guys did adopt a resolution earlier this year, expressing support for the coalition's efforts.
and requesting that they delay the divestiture process until December 31st and that all of the systems be given a first right of refusal, that was in a resolution that many government entities in central Texas adopted it and passed in the January/february time frame.
it's important to note that the lcra disregarded all of the requests in those resolutions, but it was still nonetheless important to have your support for that.
based on our conversations last week, I drafted this proposed resolution for you to consider.
judge, may I approach?
>> sure.
>> so we don't have that --
>> I did this last night, my apologies.
>> I totally understand.
truly you all are having to move at lightning speed.
>> this is a draft that you are free to edit, I will send an electronic version of it a little later.
but in essence it recounts the first few whereases recall the steps that have been taken to get to this point and what the coalition has done.
but I do want to point your -- your attention to kind of what I consider the meat of the resolution and that's the third whereas from the bottom.
whereas an unknown number of other bidders represented invest store owned utility companies interested in extracting profits from central Texas have submitted competing bids that have also been allowed to move forward at the phase 2 due diligence phase.
we are competing against for profit enron type of corporations that aren't doing this out of the kindness of their heart.
they see this as an opportunity to extract profits from the central Texas communities and take this to other -- this would represent a giant sucking sound of money coming out of Travis County in central Texas, vest store owned utilities to be awarded the systems. Were.
whereas bmo notified all of the bid takers their deadline is August 3rd, they consider -- they're going to be considering it at the lcra board meeting August 24th.
lcra board doesn't meet during July.
that sounds like a wonderful extravagance that I wish our municipal government could enjoy a month off.
but we expect them to possibly prepare to take action to award these systems in August.
the final whereas on that page, they have repeatedly stated that the purchase price is not their sole criteria.
they've also indicated that winning bidders must have the ability and commitment to provide reliable quality utility services, the ability to invest capital for needed infrastructure, meaning expansion and improvements and a commitment to meeting the state regulatory requirements.
but it's remarkable that absent from that list is any sort of commitment to provide affordable rates for the individual rate pairs in these systems. I believe senator watson announced a probe or investigation into invest store owned utilities and -- invest store owned utilities and how they jack up rates for their rate payers.
it's going to be interesting to see what that investigation showed.
I believe you the, the Travis County Commissioners court, is familiar with how these investor owned utilities lead to inappropriately high water rates.
it's our belief, hopefully you will confer, that the coalition the udc is in the best position to meet the criteria defined by the lcra board and the criteria that should have been defined by the lcra board for affordable rates.
as a not for profit entity it stands to logic that the udc is going to be in a position to offer lower rates to the individual customers.
so as picks mentioned, what we're asking for in the resolution, I didn't include any mention of the funding, I don't really consider that to be part of the resolution, but we would like you to contribute 12,000 to the legal fund.
think of it as a way to help protect the interests of some of these smaller systems who don't have the ability to come together and get capital to contribute to the legal efforts.
there's lots of little small systems that serve neighborhoods.
that don't have a municipal or governmental entity other than the counties that represent their interests.
so -- so what we're asking for in the resolution is your support of our efforts.
your formal encouragement of the lcra to consider its historical commitment.
the lcra went into these systems 10, 15, 20 years ago and made a commitment to rescue some of these systems that were maybe failing and dumping pollutants into the watershed, into the river basin and to establish these systems. I believe at that time, picks was there, there was never a discussion about turning these into a valuable assets to be sold or a profit making machine.
it was always understood that this was a part of the lcra's mission.
to serve the community and to rescue, improve the water systems and to assist with these smaller communities that need this kind of help.
they made a commitment to us and these other ones.
we signed a contract with an entity for 40 years, a public entity knowing that we were going to be partners in doing this.
for them to walk away from that commitment and responsibility is troublesome, but if they want to do it that's fine.
over the last couple of decades, the lcra plowed excessive fees and charges and I call them profits, they bristle at that term, development fees, they charge a 3% fee on top of all of their costs.
as a part of their development they then parcel or dole out to various constituents up and down the river.
there are five layers of markup in any lcra capital improvement project where they charge a staff fee and the administrative fee and a bond issuance fee and interest on the bonds, on top of that this 3% development fee.
all of that money that the lcra has sucked out of these systems, if they want to walk away from these systems that's fine.
but they shouldn't be allowed to recover all of those fees and costs.
they should be encouraged to sell these systems at a rate that reflects more accurately reflects their cash flows and the value of the assets involved.
in our system alone, we did an analysis of whether an invest store owned utility purchases a water and wastewater system.
they typically do it by looking at a cost per connection, you have 300 connections, you value the connections athletes say $500 each, that gets you your investment cost.
we found that -- we have never seen a purchase where they have paid more than a few thousand dollars per connection.
that's even on the high end.
if you look at West Lake Hills system, the price that they are wanting to charge for our system, robert was 38,000 a connection?
$38,000 a connection was what the price tag they put on our system for.
so if they want to walk away from that, that's fine.
but they shouldn't expect to get their full profits for the next four years.
in our negotiations with them, we told them -- 3% development fee that they would have earned for the next 20 years, in this case they're walking away but want to be paid their future profits.
they need to put as much pressure on the lcra board to realize that the udc is really the best entity to take over the systems. It simplifies regulatory process, legal process, avoids inevitable lawsuits out the wazoo.
it cannot be assigned to a third party and we can withhold that approve for any reason.
imagine legal complexities with transferring ownership of our system to another entity.
your help comes at a critical time.
they are in the decision making process.
we hope from a strong statement from you about expressing your support.
feel free to edit this.
I don't expect you to adopt it today.
I will send you an electronic version to john later this morning, perhaps at your meeting next week you guys can be poised to take action to that item.
thank you.
>> questions, comments?
>> I have some questions.
>> okay.
>> but first I want to make a comment.
I want to thank all of you here and the others have that been working with you, with your nose to the grind stone for the past month, because this is a big issue, it is a big issue to all of the rate payers, not in just Travis County, but all other systems that are at risk here.
and I have a huge problem with the fact that lcra and all of their language has left out the phraseology associated with affordable.
because we have already experienced what some private water companies have done to our rates in Travis County.
in jacking up the charge.
so anyway, that said, I had a -- first of all, I'm still a little bit confused what you are asking of us today other than for -- for a monetary commitment.
I thought that you were asking us to -- to sign the resolution joining the udc as well.
>>
>> [indiscernible]
>> I don't think we're asking them to join the udc, are we?
>> no, I think, just to recap a couple of things.
Commissioner, you're named on the executive committee of the board already.
I think that makes Travis County essentially a member of the coalition.
I know staff have attended the meetings, et cetera.
>> the difference then for clarification purposes, between the broad coalition and those who have actually joined together to form a corporation that is -- that is guiding this --
>> the corporation members are basically members through partnership agreements or interlocal agreements.
that's how again we have to be structured in order to do business with the lcra.
I would think that you might consider an interlocal agreement.
it doesn't obligate any funding.
it says so in the language.
as a matter of fact, the development corporation language is very specific in the fact that there is no -- there is no obligation to any of the members to furnish funding.
and -- and that probably raises a question, how will we buy these systems?
udc will basically incur debt.
at the moment, that is -- that it wins and I'm confident that we will end up winning the bid, at the point in time that it wins the bid, however what we will be doing in terms of -- of funding the systems is think of it as a simultaneous closing on the part of all of these entities from the city of Leander to -- to glen lake neighborhood association on closing on their systems. Now that said, we may have some orphans.
but we're also exploring a couple of options in that regard, one including actually a private partner, private/public partnership with one of the private bidders that is willing to work with us on -- on funding, operating, or some variety thereof, of systems that -- that have not got the wherewithal to -- to either form a group yet or aren't organized enough to be able to do that.
in any case, being able to operate them and put them on their way to establishing a reasonable rate, and a reasonable process for them to be able to eventually control their system.
I think it's interesting in that regard that the private sector, at least one entity, would be interested in doing that because they realize what their obstacles are going to be with regulatory requirements.
everything from ccn's, which many of the lcra systems don't have, to bond defeance, to getting the -- getting qualified by tceq to do retail service in a hostile environment where you -- where you may have neighborhoods showing up protesting the fact to the fish and wildlife service consultation which requires some ongoing consultation with fish on how the system is growing and what expansions may take place, I mean, they realize that the public sector would be their best partner in being able to do that.
so I hope that didn't ramble too far down the rabbit trail from your original question.
>> let me add to that.
in the case of the orphans and this other this public/private partnership that we're talking to, I don't believe we can reveal the name of that other party just yet, but I believe they're locally owned or owned in the central Texas area and they are a small operation that's interested in expanding into operations and ownership of some of these smaller systems where practical.
whereas picks says there's no other logical entity to take it over.
the counties may decide, you may want to decide you want to participate and either constant your operations to take over these systems or create a new public entity to do that or it may make sense to have this private entity take over and own the systems. If they are able to purchase it as the purchase price we anticipate, that will result in lower rates.
because it will not have to pay to -- the super high price tag that the lcra has required.
but to answer your question, we're not asking Travis County to join the udc.
the coalition is an informal body.
I mean, you can join the coalition today if you want to.
the corporation would necessitate an interlocal agreement.
we're not asking for Travis County's participation in that formal level at that time.
just the financial participation and some statement of support, either this resolution or something similar.
>> extra executive committee am I a member of?
>> the executive committee was formed out of the coalition originally.
before the udc was formed.
>> that's what I thought.
>> and it -- downtown recall this, huh?
-- you don't recall this, huh?
>> no, I recall that.
I wasn't sure if it morphed into the executive committee of the udc?
>> well, because those meetings are still not public.
you're discussing basically all these individual systems financing, how they're going to put their bids together and there ever that is a closed meeting and is announced as such under the open meetings act whenever the udc board meets.
>> so excuse me.
at this point who are the actual formal members of the udc?
>> I couldn't list them all.
there's 20 or 30 of them.
>> well, there's the coalition, which is about 22 members, butt the ones that actually adopted the --
>> let's back up a second.
you have membership through partnership and interlocals, but don't necessarily serve on the board.
right now the board is made up of hays county.
ray wize nhunt from hays county is a board member.
I'm a board member from the city of Leander.
we have mayor pat frain from sunrise beach.
she's also a board member.
steve hudson from westlake is a board member.
and -- and frank salvato from bee cave.
city of bee cave.
and that's the board.
>> so the udc board, I mean just to be clear, this has happened as you said that I said that it was lightning speed.
>> [laughter] the udc board has not yet had an opportunity to establish bylaws --
>> it's done.
>> oh, really?
>> we submitted our first -- our indicative bid, the phase 1 to the lcra.
we were recognized by them as a corporation.
we have our paperwork from the secretary of state as well.
>> wow, you all really have moved --
>> bank account.
>> speeds unheard of.
>> we even have a tax number, we're rolling.
>> we don't have t-shirts and koozies.
>> or name plaques yet.
>> you're not going to use that $12,000 for that.
>> no.
>> okay.
>> I share Commissioner Huber's concern that this is essentially a -- I'm sorry.
>> go ahead.
>> well, john took the questions out of my mouth on who was on the board for the udc.
and if we put 12,000 into it now, we're helping you with your administrative costs and you're not looking for us to sign an interlocal to be an actual part of the udc; is that correct?
>> unless you wish to.
>> okay.
>> we're not --
>> let me just ask, if we considered doing that.
because I had some questions that I think the court ought to hear the answers to or -- if they aren't answers yet.
I understand that you've had to move so fast that there's still some pockets that you're working on.
but especially relates to the orphans.
because -- the rest of you the orphans are these smaller entities that don't have the resources to be actively participative.
correct me if I'm wrong, but a number of these are ones where they just gave their systems to lcra, right?
then were not given the opportunity to-- to buy them back or get them back or be a part of the discussions.
so that's concerning.
but are any of these orphans in Travis County?
aren't most of them in other counties?
>> that's hard to answer.
what -- and I'll tell you why it's difficult question to answer.
is each meeting that we have of the coalition, we end up having somebody show up that gets a bill from the lcra that's part of a system that wasn't necessarily on the list.
so there are systems in hays county, there's systems in Travis County, possibly, I can't -- I can't say that for sure.
burnet and llano counties, bastrop, colorado county, matagorda, that may also have not even become aware that this is about to happen.
that we know we'll have to pick up as we can.
part of the due diligence right now.
trying to figure out who all to send bills to.
so it's -- it's complicate understand that regard.
we knew that we would have to be agile as we go through this process to be able to deal with those kinds of systems as they pop up.
but I think for the most part you are correct.
the majority of the smaller systems are around the highland lakes, outside the Travis County.
>> let me pull several questions that I had here, because the answer may include all of it.
in reading to the answers for the question that you responded last week to us, questions beget more questions.
you talked to the udc acquiring the whole and then allowing different entities to -- to buy their own or form their own organization to buy their own.
one of the concerns that -- that the -- that comes -- issues that's raised for me out of that is many of these orphans were non-performing in the first place.
they were very struggling financially strapped systems. So if those who can come in and form an organization and buy their entities, those are going to be the ones that have the financial resources to do so.
but then you have got this whole package of orphans this -- that have a history of financial challenges.
so -- so is it likely that the udc then is going to end up left holding the bag with the -- with these orphaned groups with -- with not -- not having -- having viable options for spinning them off.
in other words, we -- the -- part of the -- part of the mission of this whole effort is to handle the -- the management and operations of these in such a way as that the rates don't get bumped up off the charts.
yet these orphans are the ones that are probably the most likely to be spun off to a coalition or a private entity to -- to manage those which puts -- seems to me, there would be a risk of putting them right back in the same situation that you are looking at for an lcra divestiture standpoint.
>> let me give kind of a precursor to that, there is one that I know of orphan in Travis County, it's the glen lake subdivision off of -- of emma long park, that area.
and -- and the -- you have to understand that it is accurate to say that some of these orphans have been struggling financially.
and -- but you have to take that into context.
they have been struggling financially within the lcra world.
the charges that lcra piles on to these systems inflates the costs, then those systems don't have sufficient revenues to cover the costs.
was the problem really that the revenues were not sufficient or the problem that the lcra piled too many costs on to their backs.
if the coalition is successful in acquiring these systems at a reasonable price, that accurately reflects those systems ability to cash flow, and have reasonable rates, which is -- which is some -- the primary criteria that's going into the coalition's calculations of -- of how to value these systems and how to place a bid, then they may not be financially struggling anymore.
they may be completely viable.
and to have them either become a part of a new governmental entity created by you or created by the udc or the udc morphs into that, won't necessarily result in a financial model that's not viable.
so as far as whether or not the coalition or the udc will get stuck with those systems or if they'll get parsed out to -- to a, you know, this private entity that we've been talking to, kind of remains to be seen.
>> picks?
>> well, keep in mind, too, that this is mostly about control of the systems. Not so much affordability.
I mean, I see the cost of water climbing exponentially over the next 20 years.
just -- just competition for the resource for a treated water source.
but -- but that said, many of the small systems that we've talked to, especially in burnet county, llano, they were subsidized by the larger systems, by the westlakes, Leanders, et cetera, already.
their rate was kept low, lower, artificially.
now, in discussions, they realized that their rate is going to go up.
so in their case, their choice was do I want my rate to go up and know that some stream of that is going into somebody's pocket that probably lives someplace else in a different state?
or do I want my rate to go up and know where that cost is going?
and so the great majority of those small systems already realize their rate will -- will increase.
in some cases, double.
but they would rather have control of that themselves than know that somebody else is doing it.
then to back up, many of these smaller systems will probably be bundled together so they can see some kind of economy of scale.
operational costs, maintenance costs, it's going to be a lot easier for -- for groups of systems that are in basically the same geographical area than capable on an individual basis.
so that's part of the process that we're going through now.
along with the due diligence is figuring out the systems that may more sense as a group, whether they are individually -- organized or were they organized as a group.
the udc itself, although -- although, you know, it's interesting and as -- as an aside, I think there's been a growing desire on the part of some of the members to keep something like the udc together because we've realized that -- that we're a lot more successful and not only -- in not only identifying ways to deal with these kinds of issues, but from a coordination and sharing standpoint long term.
more as an esoteric group or a coordination entity than a business entity and so -- so, you know, who knows.
udc may grow and do some -- some kind of cool, you know, cosmic thing at some point.
>> [one moment please for change in captioners]
>> camp swift was a problem.
it had some violations in terms of tceq hazardous waste.
and that's one example of a system that is going to be difficult to take over.
well, we found an entity that is interested in.
we can take that if it will get a couple more profitable systems within the same geographic region.
so that's a lot of what we're doing is we're kind of putting pieces together.
now, as to whether or not 10, 15 years down the road they fail for whatever reason, that maybe too, but I think as long as we are organized in a group we can better respond to those kind of issues than if it was just left to itself.
>> I have several questions for staff.
first of all, if we were to consider making this 12,000-dollar contribution, have we identified a possible source of funds?
>> staff simply note that had we would probably be looking at allocated reserve.
>> allocated reserves?
okay.
has legal --
>> has staff determined that tnr did not have 12,000 available in its budget?
>> [ laughter ]
>> I think that the delay in my response there is that we have not looked at our budget real carefully except that I have been looked at by our budget people, who have said not likely.
>> to be kind to tnr, of course this isn't an area that we budgeted for at all.
we haven't done water, wastewater.
so I could understand your reticence to even look at any of your line items because they're not directly on point.
but it's -- but we should probably do it as an exercise anyway.
>> I ask the question because it's too easy to hit the allocated reserve.
we hit it this morning for almost $900,000 for fuel overcosts.
we budgeted one rate and today the market is much higher.
so if it's not there, it's not there, but it would seem to me that between now and the end of the fiscal year we should look at appropriate departments' budgets first.
>> we might look at other memberships.
other membership interlocal agreements that we have.
>> that would require another posting and another day.
Commissioner Huber?
>> has legal had an opportunity to look at the proposed interlocal on udc?
do you have any comments about it as it relates to any liabilities?
>> it essentially just obligates you to pay the $12,000.
anything after that is at your total discretion.
>> those are my questions for now.
>> Commissioner Eckhardt?
>> I share the concerns of Commissioner Huber and this group here that I too have a huge problem with selling off control of what is essentially a common pool resource to a common for profit structure.
and it calls to mind an analogous circumstance a few years back, about four years back, of selling off the common pool resource of our highway system to a private, for-profit entity over which we would have no control.
and selling it at a price that considered 50 years' worth of profit.
so I see many similarities there.
and perhaps some of the solutions could be similar as well.
what I'm hearing here is the notion of putting together very swiftly a system financing of donor water systems and recipient water systems in a knot for profit structure, is what I'm hearing, which is essentially what lcra tried to do a few years back, correct?
wasn't this about that essentially?
>> you know, I have a good two and a half hours' worth of comments on that particular issue, but I think sometimes I'm not sure what they were trying to do.
I think it's a mistake to go in the retail basis in the first place.
I think they should have remained a wholesale provider.
essentially they were trying to rescue systems. There was a great interest in being able to be positioned to be a provider or help with water and wastewater resources in the region?
how that was, you know, enacted was a different story.
>> with regard to -- this could be a helpful analogy or it could be a dangerous one because where I see a real difference and perhaps you're uniquely qualified to answer this considering you have one foot in the water world and one foot in the transportation world.
I see a real difference -- yeah.
you've got quite a straddle?
>> I better quit crossing my legs.
>> I see a real difference in the analogy in that previously our highway system was entirely publicly owned and publicly financed, whereas the state of Texas has tolerated for generations a mix of public and private ownership and control of the distribution system for water.
so it's a different world in that regard.
I'm trying to wrap my brain around it.
I think the intent and the content -- the intent is absolutely there and you have a friendly court here.
but I want to be careful with regard to kind of leaving the trail, the paper trail of a good policy resolution to this.
I don't have any indication from y'all that you're in -- you're not in panic mode, you're in speed mode, but not panic and it seems very well thought out.
but I would like some time to understand it to the fullest I can since it really hasn't been within our bailiwick to do water and wastewater distribution previously: we've got somebody in the audience back there.
you have to come up to the mic for the record.
while he's coming up, what is our time frame for looking at this?
>> I would say before the August 3rd would be probably an appropriate deadline.
I think being able to make it known to the lcra board that Travis County has taken a position on this prior to that August 3rd date would be the deadline, if you will.
>> mid to late July is the latest for the resolution.
>> your name, please?
>> ladies and gentlemen of the board, my name is jim rumbo, I'm the chairman of the water committee of the glen lake system as its it's posted.
I've listened with great interests, but I can add some comments that clarify the role of udc and its value to me personally.
I'm a resident of glen lake.
at the time I moved in to glen lake we had a water supply corporation that had the competency and the vision and wherewithal to supply the neighborhood residents with water.
it's not a wastewater system, it's strictly water.
through its evolution, that system created equity arrangements with river place m.u.d., which is located adjacent to it, and embedded agreements for 40 years.
if you look at the supply of water that occurred as a consequence of those agreements, what happened was we had a wholesale arrangement.
we had a wholesale sale of water from the lcra to river place m.u.d., who in turn wholesaled through an interlocal agreement to glen lake water supply corporation.
when we determined that we needed to expand and the system was taken out, we also determined that we could not -- we could no longer do business with river place m.u.d.
because of their bonding circumstances?
in other words, the public-private share of funds was violated.
so in that circumstance the lcra stepped up as a retail provider of water and took over.
we have a sunk cost in our water system, its mature system, hardly any development left.
and as a consequence of where we are, the lcra is attempting to sell our system for a rate based on how much revenue they can collect from us every month.
that makes no sense in terms of where we stand there, also with regard to the improvements that need to be made and operation and maintenance to our system.
so through the value of the udc what we have at our disposal is now a range of options that we otherwise wouldn't have as disparate customer.
we are now -- absent udc, we are now disparate customers.
we're like -- I'm dick and harry, all having retail arrangements with the lcra.
with udc we now have a system.
it affords us several options.
for example, we can probably figure out a way to do business with wc and id 17.
we might be able to figure out how to do a business with it yet undeveloped public entity.
we may be able to figure out a way to do business with a city of Austin, all of which make a whole lot more sense in the context of water supply to us, long-term, than a third party private entity.
>> you mentioned something that I had down on my notes to ask about.
it sounds like the genesis of the relationship between your system and the m.u.d.
going to the lcra was an issue with bonding capacity and bonding authority?
>> no.
it had to do with a public-private legal requirements.
in other words, they would lose their tax exempt status if they did business with the water supply corporation.
so in order to keep that and not be penalized, lcra stepped up and assumed ownership of our -- of our water utility?
which they got for $10.
>> and this is why I say that -- there's a great deal of sympathy on this court.
I would like to take more time to understand fully some of those intended and unintended consequences of state law with regard to nonprofit and -- with regard to tax exempt status, bonding capacity and authorities.
because I think that because -- unlike the transportation world where it was always public and publicly funded, the water world is a strange animal that the state has tolerated a level of xantium that I'm still trying to figure out.
but I hear what you're saying.
and I would like to understand more as far as the udc's potential authority for bonding and capacity for bonding, both in the tax exempt and taxable bonding world because I think that's really ultimately where you're going as far as being able to finance this proposed system.
of the 30 systems, about how many of them are part of the udc?
>> county judge down has been in contact with us --
>> virtually all of them?
>> virtually all of them, yes, sir.
>> Commissioner Huber?
>> I just want to say prior to my motion that I think that given the water challenges that we're facing that it is -- I believe it's time for Travis County to take the next incremental step.
and I think that this group has demonstrated that they are trying to cover all the bases, look at all the options and I think we need to continue to support this group.
so therefore I move that we execute the interlocal agreement to join the udc and that we make the contribution provided the funds -- I'm not sure where the funds will be coming from.
from identified source of funding.
for $12,000.
and that we direct staff and legal to work with the possibility of bringing back a resolution that further details the role of Travis County.
>> second.
>> seconded by Commissioner Gomez.
so between now and next week for those who want to tweak this resolution or come up with another one for Travis County, feel free to do so and work with legal and I guess staff.
>> and judge, I'm available if I need to be.
>> mr. Howell and others.
and what we hope to do next week is approve a resolution, and if we want to do the interlocal, I guess do it too and identify a source of funding.
and I believe that ought to take us five minutes or less next week.
>> yes, sir.
>> okay.
the other thing is that in my view since you have so many other public entities involved in this, it's important that they understand all of the specifics a lot more than we.
we're supporting this effort because water is indispensable and afford water is even more critical in this day and time and we should support that effort and to the extent that we can contribute a modest sum of financial support, then I think we ought to.
any more discussion on the motion?
all in favor?
that passes by unanimous vote.
>> thank you.
>> thank you.
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