April 2, 2012

LCRA and Corix come to agreements on 20 water systems

LCRA has signed purchase and operations agreements to sell 20 retail water and wastewater systems to Corix Infrastructure Inc. This marks a major milestone in LCRA's efforts to find qualified buyers for its retail systems. The sales agreement is contingent upon continuing due diligence efforts.

Under terms of the agreements signed Friday, March 30, Corix will operate the systems for LCRA beginning July 2 until the sale is closed, which is expected to occur by December 2013. At that point, Corix, a North-American focused multi-utility company, will take ownership of the systems. Prior to closing, Corix must apply to the Texas Commission on Environmental Quality for approval required for the sale, transfer or merger of a public utility as well as seek other regulatory approvals and consents for certain contract transfers.

"LCRA has been working for more than a year to find buyers for its retail water and wastewater utilities that can bring a high level of professionalism and service to the communities we currently serve," said LCRA General Manager Becky Motal. "With these agreements, we have come to terms with a well qualified firm to take 20 systems."

Special conditions apply to several of the systems involved in the agreements. They are:

• Tow Village Water System and Bonanza Beach Water System - In both instances, the communities served by the systems or their counties (Llano County for Tow Village and Burnet County for Bonanza Beach) have the right to match Corix's offer and buy the systems. In both cases, LCRA is not asking Corix for any money for the systems, and the communities and counties will be given the opportunity to take ownership under the same conditions.
• Lometa Water System and Lometa Wastewater System - The City of Lometa has 90 days to match Corix's offer on the systems.

The other systems involved in the agreements are: Lake Buchanan Water System, Spicewood Beach Water System; Smithwick Mills Water System; Ridge Harbor Water System; Ridge Harbor Wastewater System; Paradise Point Water System; Sandy Harbor Water System; Quail Creek Water System; Camp Swift Wastewater System; McKinney Roughs Wastewater System; Alleyton Water System; Alleyton Wastewater System; Matagorda Dunes Water System and Matagorda Dunes Wastewater System.

Corix is a highly experienced and successful multi-utility company that has more than 2,000 employees in 60 locations in the United States and Canada and owns and/or operates more than 220 water and wastewater utilities serving more than 600,000 people. Corix has a proven track record of owning utility assets and of public-private partnerships with local communities, state and federal government agencies to ensure water and wastewater systems provide quality, reliable water and wastewater service at a fair price. Corix, through its utility services division, has been operating in the Austin area for almost 10 years.

Under the terms of the agreements, LCRA will retain the rate setting authority over the systems until the sale is closed. In support of its operation of the systems pending closing, Corix has agreed to make offers to LCRA's employees that currently operate the systems.

Friday's signing is the culmination of more than a year's effort to find the right buyer for the systems. LCRA's Board of Directors decided in November 2010 to sell its water and wastewater systems, pointing out that a water utility made up of multiple systems does not leverage LCRA's strengths as a regional supplier of raw water and wholesale power. With the help of an outside firm that specialized in utility sales, LCRA went through a comprehensive and objective bid process to find buyers that met the Board's four criteria:

• Ability and commitment to provide reliable, quality utility services;
• Ability to invest capital for needed infrastructure;
• Commitment to meeting state regulatory requirements; and
• Willingness to compensate LCRA for its investment.

On March 19, LCRA hit another significant milestone in the process when it transferred operation of the West Travis County Water and Wastewater systems to the West Travis County Public Utility Agency (PUA). There are several more systems that have recently closed or are scheduled to close soon.

• Glenlake Water System - closed the sale with the City of Austin on March 28;
• Liberty Hill Wastewater System - closing with the City of Liberty Hill is scheduled for May 1;
• Whitewater Springs Water System - closing with the Whitewater Springs Water Supply Corporation expected in April or May.

"This has been a long and difficult process, but the hard work is paying off," said Motal. "We are finding buyers for these systems that meet the Board's goal of serving the communities well."