Mayor’s Corner
The City is evaluating options to complete the sewer project with minimal financial impact. This process is necessary due to the current cost overruns, additional change orders required and the expectation of further uncertainties which place this project at risk. Unfortunately, the project is currently 40% over the Engineer’s budget with less than 10% of the project complete. Retrospectively the advice the project engineer gave prior to this project commencing was to either rebid, cancel project or go with Aqua Texas. Neverthe-less, the previous administration in a 3-2 vote proceeded on this course. In this week’s Mayor’s corner I would like to present clarifications in order for you to have a better understanding of the options we now face, including the many complex issues surrounding them. It is not as simple as saying that there is either a “City Option” or an “Aqua Option”. In fact, both options now have the City constructing, owning and operating the collection system that will serve Central Wimberley. Both options include the City maintaining 100% control through continuing to retain the CCN and providing service to a small customer base of approximately 100 users. The difference in the two options is whether to have the City continue to build its own costly wastewater plant at Blue Hole Park to service less than 5% of our citizens or to simply send the sewage to Aqua for it to treat at its existing plant that serves the North side of our Wimberley Valley. So it may be better said that there is a “City Option” and “City/Aqua Option”.
In particular, there is seemingly much confusion about the City/Aqua Option – including many false assumptions and conclusions related to costs, project delays, Aqua rates, and CCN control. The following are considerations under this Option:
• No Major Redesign of Collection System and No Project Delay. The collection system currently under construction will be built as designed. But instead of building a new City owned sewer plant in the Park, the collection system would be connected to Aqua for them to treat the sewage at its existing large plant which has the available capacity. Because of the nature of this change from a complex plant construction project to a relatively simple hookup, there should be no delay to the completion of the sewer project.
• City Retains Ownership and Control of its CCN. In this arrangement, the downtown area of Wimberley will simply be one large customer of Aqua, similar to our Wimberley schools. However, the City will maintain ownership and control of the collection system. The individual downtown property owners will be customers of the City. The City will make determinations regarding providing service, controlling growth, billing, and establishing rates for their customers. There will be NO transfer of the existing CCN to Aqua. Aqua would have NO control or say-so over the City’s customer base or their rates. Another view of this is that the City will be the retail provider and Aqua the wholesaler.
• Lower Initial Capital Costs. The cost of building a new City owned plant is $3.1 million. The cost to the City to connect to Aqua is a fraction of the City plant cost and would include only minor engineering changes, Aqua system access (CIAC) fees and capital costs. This will help mitigate concerns over the affordability of projected total estimated cost of the project, which has escalated to over $8 million.
• Lower Annual Operating Costs. Preliminary estimated costs to operate a City built plant were based on $148,000 per year, not including ongoing capital requirements, which will be significant over time; the cost were significantly underestimated. More accurate figures are being projected and unfortunately are expected to increase significantly. The Aqua Texas proposal is a flat $52,000 per year to treat the sewage, which represents the current Texas Public Utility Commission (PUC) tariff rates for the size sewer line the City is planning for its 75,000 gallon per day system. It should be noted that this tariff rate has remained unchanged since 2009 and Aqua has agreed the rate will not increase for at least five more years. Any future changes to Aqua rates to the City will be subject to PUC review and approval. Over the life of the plant, the higher operating and additional capital cost of the City plant totals millions of dollars.
• Lower Revenue Requirements and Customer Rates. Current projections are that the total initial annual revenues required to cover debt service and operating costs are approximately $400,000 - sourced $200,000 from customers and $200,000 from the City contribution. Lower costs will have a significant effect on customer rates. For example, if operating costs can be reduced $100,000 per year, then the City’s currently proposed high customer rates could be reduced by one half. Note that the TWDB revenue bonds require establishing rates adequate to cover costs. Alternatively, the City’s taxpayer burden could be reduced, or some combination of the two.
• Reduced Risk. Operating a sewer plant bears many risks – which are substantial. There is financial risk. The plant will be costly to maintain and operate to environmental standards. Parts will wear out and need replaced (scheduled and unscheduled) and eventually the entire plant will need to be replaced with its 20 year estimated life. Unfortunately, these costs are not included in the current City projections. Furthermore, while paying for a new plant we would still be paying off the worn-out plant for another decade. There are also environmental risks – i.e. a spill could be catastrophic – both environmentally and financially. Transferring these risks to a company with more financial resources, economies of scale, and technical expertise means the City protects itself against such major exposure.
• No Discharge into the Blanco River. The new City plant has a discharge permit into the Blanco. Although the City plans to beneficially reuse the reclaimed sewer water to irrigate at Blue Hole Park, it lacks sufficient storage and irrigable acreage to ensure no discharge. Thus, the City’s plan includes discharge when its limited storage is full. Under its TCEQ permit, the Aqua plant is a NO DISCHARGE facility. Aqua has agreed that it would upgrade its entire plant from Type 2 to better enhanced Type 1 effluent, which would benefit the entire Wimberley Valley including our popular Blue Hole Park.
• Water for Blue Hole. The Aqua proposal offers the option of providing irrigation water to Blue Hole Park. Aqua will make available Type 1 effluent to Blue Hole at no cost. The issue will be logistics, and Aqua has stated that they are willing to work with the City. However, there will be a financial cost, including a reclaimed water line, irrigation storage tank and irrigation system. The benefits of an on-demand option is that the City will only irrigate when needed and not risk muddy soccer fields, excessive runoff into Cypress Creek, or discharge into the Blanco River. This will also be better for the aquifer since more efficient overall irrigation will take place. resulting in a net reduced aquifer drawdown.
These are all important issues that have to be considered in selecting the final path the City will pursue. As your Mayor with a fiduciary responsibility the City’s resources, I am expeditiously gathering facts, updating financial information and projections, and meeting with appropriate government entities, as well as hearing Citizens’ opinions. I understand that we cannot afford to waste any time, however, haste can make waste in itself. Once done and fully vetted, the Council will be presented with the simple unbiased facts so that it can make the most informed and best decision on this important and costly project. I encourage you to accept nothing less from your representatives and I want to thank you for your patience as these important issues are being evaluated.