Bottom line: Kyle water rates may skyrocket

Graham Moore, the executive director of the Hays Caldwell Public Utility Agency (HCPUA) tends to be long-winded in his presentations to the point of extreme tedium. However, I’m hoping he has all the time he needs Tuesday evening to inform the City Council and the rest of us about an item on the council’s agenda that involves the spending of a whole lot of money, money that may only be available to the city through a drastic increase in water rates.

I’m only guessing, because there isn’t a whole lot of detail contained in the agenda packet — only the mention that the council plans to discuss and possibly give some direction to the city’s staff over what appears to be at least two and possibly as many as six different options for funding (i.e., the issuing of debt to pay for) HCPUA’s Capital Improvement Project (CIP) costs designed to provide an interim water supply from Kyle to Buda and a eventually water from the massive Carrizo Wilcox Aquifer for all HCPUA members: Kyle, Buda, San Marcos and the Canyon Regional Water Authority. To give you an idea of how big this aquifer is, it extends from the Trinity River southwest to the San Marcos River and lies under all or parts of Bastrop, Brazos, Burleson, Caldwell, Falls, Fayette, Freestone, Gonzales, Grimes, Lee, Leon, Limestone, Madison, Milam, Navarro, Robertson, and Williamson counties.

It appears the HCPUA plans either three bond sales, $32 million this year, another $85.88 million two years from now and a third one for $96.56 million in 2021; or possibly each of those are the total costs for the project depending on the year the bonds are sold. I hope it’s the latter, but the agenda doesn’t provide enough information to make that determination.

At any rate, the council will be asked to give its collective input on whether it wants to repay this debt over a 20 or a 30-year period and if my second assumption above is the correct one, council members could also possibly recommend what year it believes the bonds should be issued. The advantage of the 20- year option is that the total cost of the repayment is less; the advantage of the 30-year option is the annual payments are smaller. If my second option is correct, the only advantage I can see to delaying the sale would be to forestall whatever water rate hikes would be necessary to repay the bonds or possibly even more likely, to phase in those rate hikes over as long as four or more years.

Regardless of what plan the city chooses, my estimates are that it involves borrowing money in amounts that dwarf the city’s 2013 road bond project. And this debt will be repaid from the Water Utilities Fund, which derives its income from the water bill payments it collects from its commercial and residential customers.

If I read the charts correctly, Kyle’s total cost for the 2017 sale of $32 million in bonds will be $11.7 million under the 20-year option and $14.7 million under the 30-year schedule; for the 2019 sale of $85.88 million, $32.4 million for 20 years, $40.8 million for 30 years; for the 2021 sale of $95.56 million, $36.7 million for 20 years, $46.8 million for 30 years. We’re talking big bucks here and a major water bill hike will be needed to pay for it. Perhaps we’ll even learn Tuesday how much a hike will be needed under each of the above described scenarios.

Like I said earlier, Moore tends to overly verbose in his council presentations. This time I want him to take whatever time he needs to clarify all of this.

Other items of interest on Tuesday’s agenda include:

• A resolution to create a PID for the Blanco River Ranch development. The language of the resolution begins rather specifically – saying PID revenues will be used to pay for "acquisition, construction and improvement of sidewalks, streets, other roadways, and rights-of-way; acquisition, construction, and improvement of water, wastewater and drainage facilities; landscaping; establishment of parks and open space;" and "acquisition, construction, and improvement of off-street parking facilities;" before de-evolving into the more general "other projects similar to those listed above" before finally dissolving completely in the catch-all "other improvement projects not listed." To be absolutely clear, none of these are "improvement" projects by any accepted definition of the word; they are "development" projects. Here’s the basic injustice of it all. The person seeking the PID is owner of the Blanco River Ranch Properties partnership, but that owner will not be the one responsible for repaying the $100 million loan; that will be the responsibility of the owners who eventually purchase the developed property on the ranch. In other words, the owner is being given permission by the city to place future property owners in debt in excess of the actual costs of their properties.
• The second reading of the ordinance that will finally put into place, once and for all (‘for all," in this case, being that time between Tuesday and when the 2020 Comprehensive Plan revisions are adopted) the "mid-term" amendments to the 2010 version of said plan. This should be on the consent agenda but failed to pass unanimously the last time it appeared on the agenda because of the tunnel vision of a council minority.
• The awarding of a $468,755.27 contract for the micro-resurfacing of four streets — Spring Branch Drive between Hogan and Burleson streets, Lake Washington Drive between Goforth Road and Spillway Drive, Indian Paintbrush Drive between Windy Hill Road and Dandelion Loop, and Kohler’s Crossing between FM 1626 and Kyle Crossing — as well as new layer of asphalt on Spring Branch Drive between Hunter and Burleson streets. The four micro-resurfacing projects are scheduled for October and the Spring Branch asphalt application, according to a staff memo, "will be completed during the summer months while school is out." The exact year of those aforementioned "summer months" was not mentioned (come to think of it, exactly which October wasn’t specified either), but hopefully City Engineer Leon Barba will be more specific on that at Tuesday’s meeting.
• If the agenda for the council’s executive session is any indication, economic development projects appear to be on a major uptick in the city as the council is expected to be briefed on no less than eight such planned projects during the closed-to-the-public session of Tuesday's meeting. How many of these are job creation projects is anyone’s guess, but I prefer to be optimistic. It’s interesting to note that the controversial project, dubbed "Just Peachy," which led to an aborted ethics inquiry involving council member Daphne Tenorio, is not on the list of the eight to be discussed Tuesday. Hopefully that means that deal, which I understand consists of a public-private partnership to provide a major athletic complex, perhaps even a privately funded recreation center, is close to being a done deal.