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LCRA seeks buyer for water/wastewater utilities
Customer Contacts:
Hill Country Region systems: Darrin Barker
(325) 372-3875
West Travis County and Southeast Region systems: Janet Stephenson
(512) 473-3334
Williamson County systems: Monica Masters
(512) 473-3541
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Feb. 24, 2012
LCRA moving forward with sale of water and wastewater utilities
LCRA's Board of Directors Wednesday decided to negotiate to sell the Rollingwood Wastewater Utility system to the City of Rollingwood. The Rollingwood City Council must approve a memorandum of understanding for LCRA and the city to negotiate a definitive purchase agreement by June 23, 2012. The city council also will consider calling an election for May 12, 2012, to approve issuing bonds for the purchase. LCRA anticipates selling the system by August 2012. Read the Rollingwood resolution.
LCRA also added two more utility systems to the group it is negotiating to sell to Corix Infrastructure Inc. and extended the deadline to come to an agreement to March 30. LCRA's Board agreed Wednesday to add the Windmill Ranch Wastewater System and the Windmill Ranch Raw Water System to the negotiations with Corix. Read the Corix resolution.
LCRA is now negotiating to sell 20 systems to Corix, a North-American focused multi-utility company that currently provides service to more than 220 water and wastewater systems that serve 650,000 people in North America. Corix recently announced its agreement to acquire another water and wastewater utility outside of Texas that serves more than 290,000 people in 15 states. When LCRA's transaction closes with Corix, it will have water and wastewater utility operations across 18 states and in Canada and serve approximately 1 million people. Corix, through its utility services division, has been operating in the Austin area for almost 10 years. The retail utility systems included in LCRA's negotiations with Corix are:
In the Hill Country:
- 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, Lometa Water System and the Lometa Wastewater System (both subject to right of first refusal by the City of Lometa), Tow Village Water System and Bonanza Beach Water System.
In the southeast region:
- Camp Swift Wastewater System; McKinney Roughs Wastewater System; Alleyton Water System; Alleyton Wastewater System; Matagorda Dunes Water System and Matagorda Dunes Wastewater System.
In November 2010, the LCRA Board directed staff to seek buyers for the systems. At that time, the Board pointed out that a water utility made up of multiple systems does not leverage the strengths of LCRA as a regional infrastructure provider. The Board also stated that current rate revenues from the water and wastewater utility do not cover the full cost of operating the utility and meeting established Board financial policy would require ongoing rate increases. As a result, water utilities are not the best match for LCRA's policies and financial guidelines.
LCRA purchased and developed community water systems in the Hill Country and along the Colorado River, mostly in the past 10 to15 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.
In November 2010, the Board set four criteria 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.
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