Council United on SAWS-Vista Ridge Water Deal

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City Council Chambers. Photo by Scott Ball.

City Council Chambers. Photo by Scott Ball.

Mayor Ivy Taylor and City Council spent a long afternoon Wednesday reviewing the SAWS-Vista Ridge water deal that would expand and diversify San Antonio’s water supply by 20%. All indications point to Council unanimously approving the 30-year, $3.4 billion contract on Oct. 30.

“This is a project that is historic, and one we will all be proud of some day,” Robert Puente, SAWS president and CEO, said in his remarks to Council.

“I have had the opportunity to hear more about this than my colleagues have since I sit on the board of SAWS, and as you know, I’ve already voted to support this project,” Mayor Taylor said after Puente’s presentation. “I know the project is complex and innovative, but I still believe it’s important for our city’s growth and economy.”

District 2 Councilwoman Ivy Taylor, right before the meeting that confirmed her as mayor of San Antonio. Photo by Scott Ball.

Mayor Ivy Taylor. Photo by Scott Ball.

Mayor Taylor praised Puente for his efforts to address concerns raised at last week’s public hearing and in numerous other meetings with citizens and public forums.

Wednesday’s briefing and discussion was in sharp contrast to the public hearing held a week ago that drew dozens of speakers speaking passionately in support or opposition to the deal. The Council session was mostly about the numbers, discussion of mitigated risk, and how to restructure water rates so customers who embrace conservation or face economic hardship  do not bear the brunt of the added costs of diversification.

The $3.4 billion figure widely used to describe the 30-year deal is somewhat misleading. $844 million of that sum represents the infrastructure costs for the Vista Ridge Consortium to construct the 142-mile pipeline to deliver the water from rural Burleson County.

“SAWS only pays for water it receives,” said Ben Gorzell, the City’s chief financial officer who led the staff briefing.

City Attorney Robbie Greenblum said SAWS engaged in some “brilliant negotiating” to reduce risk assumed by the water utility, the City and ratepayers. Vista Ridge assumes the risk for securing project financing and construction of the pipeline.

San Antonio City Attorney Robert Greenblum

San Antonio City Attorney Robert Greenblum

“There is risk inherent in a business deal, there is risk in a legal contract, there is risk crossing the street here to City Hall,” Greenblum said. “Our job was to analyze the risk City Council is taking and measure whether the rewards were worth the risks.”

The conclusion, he said, is that the potential reward greatly outweighs the potential risk. Greenblum noted that Vista Ridge is prevented from suing the City and seeking monetary damages over an alleged contractual breach, and any lawsuits against SAWS must be filed in Bexar County and be heard by a judge rather than a jury.

All parties have opt-out clauses in the contract that protect them in the event one side or the other is either unwilling or unable to meet its contractual obligations, Greenblum added.

“When you look at all those provisions in the contract that Robbie (Greenblum) just covered, our recommendation is that we should approve the Vista Ridge contract and we should move forward with the project,” Gorzell said. “Obviously, we recommend that SAWS continue to talk to those third-party entities that might acquire some of that water.”

Ben Gorzell, the City's chief financial officer

City of San Antonio Chief Financial Officer Ben Gorzell

Gorzell said the average ratepayer’s bill would rise from $55 to $76 a month once the Vista Ridge water is delivered, starting in late 2019 or 2020, and other water diversification projects are fully realized. That assumes some of the 50,000 acre-feet will be resold by SAWS. If there are no buyers, Gorzell said, the monthly water bill would rise to $88.

SAWS officials went to great lengths to assure Council members that its staff was working on a new rate structure that would include more pricing tiers to reward conservation, offer a lifeline to ratepayers with low usage and income, and include stiffer price increases for people who consume more water each month.

While council members were generally very supportive of the deal, District 5 Councilmember Shirley Gonzales expressed concerns that an abundance of water would fuel continued suburban sprawl development and all the issues city planners are now wrestling with as a result: traffic congestion, declining air quality, and the cost of extending infrastructure and services to the newly developing areas.

District 5 Councilmember Shirley Gonzales

District 5 Councilmember Shirley Gonzales

Gonzales pointed out her own family’s water bill is less than $50 a month and that her modest inner city home lot is xeriscaped.

“I am concerned that an excess amount of water will encourage continued growth outside the urban core,” Gonzales said. “How does this encourage growth in the inner city?”

Reed Williams, a SAWS trustee who served as the utility’s lead contract negotiator, assured her that pricing would reward conservation and punish excessive use.

“If we send the right price signals, we won’t waste water,” Williams said. “If we don’t send the right price signals, people waste water…If we price this right we have a very good chance of avoiding your worst fear.”

Several Council members cited the importance of securing new water supplies now and not waiting.

District 2 Councilmember Keith Toney

District 2 Councilmember Keith Toney

“I think the political risk for us is to kick this can down the road and miss this opportunity,” District 2 Councilmember Keith Toney said. “This would be another Canyon Lake missed opportunity for us,” a reference to a past City Council decades ago that passed up the opportunity to purchase Canyon Lake water to augment the city’s Edwards Aquifer supply at a price that now appears to be almost negligible.

The SAWS-Vista Ridge contract and its importance appears to be uniting inner city and suburban officeholders.

District 9 Councilmember Joe Krier praised Puente for his years of leadership at SAWS, and was equally complimentary of Williams and SAWS Board Chair Berto Guerra. Those remarks are markedly different than business community critics of Puente who in the past have said SAWS was moving too slowly to diversify its sources of water.

District 9 Councilman Joe Krier

District 9 Councilmember Joe Krier

Krier noted in a letter to his constituents that he has followed water policy for nearly 40 years and seen a sequence of long-term water planning initiatives by SAWS fall short.

“Never have I been more excited about the future of our city than with the recent action by the SAWS board to approve this contract with Vista Ridge, which will secure San Antonio’s long-term water future,” Krier wrote.

“I’ve had the opportunity to bring up this matter to a number of neighborhood associations…and in the business community, and they want this deal to happen,” said District 10 Councilmember Mike Gallagher. “There will be other entities after this supply. If we don’t go after this now we are making a very big mistake. This is probably one of the most important decisions we will make on this Council.”

District 10 Councilman Mike Gallagher

District 10 Councilmember Mike Gallagher

Guerra, with a penchant for memorable pronouncements, put the final exclamation point on the discussion. He asked the Council for a unanimous 11-0 vote on Oct. 30.

“Delay equals defeat. Defeat equals failure. Failure is not an option for our city.”

*Featured/top image: City Council Chambers. Photo by Scott Ball. 

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4 thoughts on “Council United on SAWS-Vista Ridge Water Deal

  1. The $3.4 billion figure is not misleading. The current estimate of the cost of the water, delivered into SAWS system, is $2,200/ac-ft. If the provider can send 50,000 ac-ft/yr down the pipeline as per the contract, SAWS ratepayers will give that amount to the provider. What is misleading about that? What is misleading is SAWS and others who tout this as “tomorrow’s water at today’s prices”. $2,200/ac-ft is 2 to 4 times today’s price. What we are doing with Vista Ridge is buying tomorrow’s water at tomorrow’s prices, today. And, we are buying it in quantities that far exceed our needs over the coming decade or more. From my perspective, we are speculating in a very distorted water market and stacking water rights at high cost. In the rush to grab water before someone else gets it, it is very unclear that our business community cares in the least about the details and the business case for Vista Ridge. If they ran their own businesses that way, they would be unlikely to be in business very long.

      • NPVs are good for comparing alternative scenarios and cost/benefit analysis. This is more like buying a house and taking on a mortgage. You judge affordability (actual cost to you) based on the periodic payments (mortgage, taxes, etc) and not on the house price, which is the equivalent of NPV in this discussion. I would like to see the comparative analysis between the case for SAWS building the pipeline vs the BOOT project with Abengoa that provides the numbers to back up the case you make based on risk. Did you note that Abengoa has just shifted some of that risk back to SAWS in the recent contract updates? There is now a price escalation mechanism around water permitting. No longer is the price fixed as was maintained as being an essential element of the SAWS risk avoidance strategy.

  2. Is Abengoa related to the one la Bolsa de Valores de Espana and other financial institutions showed concerns about? How can one find how many acre feet of water (water rights) and owned properties leased belonging to Bexar Met were transfered to SAWS? Is it true Bexar Met was smart enough to acquire water rights and properties at lower prices? Is a Comprehensive Sabine Watershed Management Plan Report correct in stating the following,”” Ground water velocities in the Carrizo-Wilcox are about 10 feet per year. Properly constructed wells in the Carrizo-Wilcox can produce as much as 800 gallons per minute (gpm) in many areas. The overall rate of recharge to the Carrizo-Wilcox is estimated to be approximately one percent of the average annual rainfall over the outcrop area, which corresponds to between 40,000 and 50,000 acre-feet per year. About half of the water recharged within this area moves to the adjoining Neches River Basin.” ? What have we learned from the SAWS ASR Project (which requires a 1000 foot deep well), that when placed online caused existing 100 foot wells to go dry, compelling SAWS to dig deeper wells for distraught well owners? Are Texas Parks and Wildlife reports/studies and other USGS, TWBD reports related to Aquifers true? Whom are we suppose to believe? Will we “give away the farm” again like with…

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