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November 22, 2011
LCRA negotiating to sell 18 water and wastewater systems to Corix
LCRA's Board of Directors on Nov. 21 authorized General Manager Becky Motal to negotiate the sale of 18 retail water and wastewater systems in the Hill Country and LCRA's southeast service area to Corix Infrastructure Inc.
The 12 Hill Country systems involved are:
- Lake Buchanan Water System, Spicewood Beach Water System, Smithwick Water System, Ridge Harbor Water System, Ridge Harbor Wastewater System, Paradise Point Water System, Sandy Harbor Water System, Quail Creek Water System, Lometa Water System (subject to right of first refusal by the City of Lometa), Lometa Wastewater System (subject to right of first refusal by the City of Lometa), Tow Village Water System and Bonanza Beach Water System.
The six southeast systems involved are:
- Camp Swift Wastewater System, McKinney Roughs Wastewater System, Alleyton Water System, Alleyton Wastewater System, Matagorda Dunes Water System and Matagorda Dunes Wastewater System.
Monday's 13-0 decision at a specially called Board meeting follows the Board's decision last week to negotiate to sell the West Travis County Regional Water and Wastewater Systems to the Coalition of Central Texas Utilities Development Corporation. The Board set Feb. 21, 2012, as the deadline to negotiate the purchase and operations agreements with Corix, an international company that provides service to more than 220 water and wastewater systems that serve 650,000 people in North America.
"Corix is a well-respected utility company with a proven track record," said Motal. "The Board took a hard look at the company and judged it was appropriate to move forward with negotiations."
The Board's decision was an important step in LCRA's efforts to sell its retail water and wastewater systems. The Board decided in November 2010 to sell the 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.
LCRA purchased and developed the community water systems in the Hill Country and along the Colorado River, mostly in the past 10 to 15 years, and has since invested more than $300 million to improve the systems' infrastructure. In many cases, LCRA purchased the systems to help meet the environmental needs and economic development goals of the local communities. However, despite cutting costs and raising rates, these systems do not cover their costs and are subsidized by more than $3 million a year.
The two entities the Board chose for final negotiations best met the four criteria the Board set for choosing buyers:
- 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.
"The Board has set criteria to ensure that high-quality, financially sound entities are brought in that can serve the area well," said LCRA Chair Timothy Timmerman. "LCRA started the process of divesting the water and wastewater utilities two years ago when it divested the Brushy Creek Regional Wastewater System. With today's decision, approximately 96 percent of the customers served by LCRA before divestiture began are slated to go to systems owned by the customers or their communities or will remain with LCRA."
Read the Board resolution.
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