Executives from Garney Construction and Abengoa Vista Ridge listened to a presentation given to the SAWS board of trustees on Tuesday which laid out next steps for the Kansas City-based construction firm’s acquisition of 80% of the Vista Ridge water pipeline project.
As the business community, environmental advocates, and even local police and firefighter unions have entered the debate over whether to move forward with the project approved in October 2014 by City Council, SAWS will be hosting several informational meetings to the public and stakeholder organizations in the next several weeks before the SAWS board takes a vote on the new contract later this month or in early May. The new contract keeps practically all of the original terms in place including that SAWS and its ratepayers are protected from financial risk should the project fail to provide water.
“SAWS will only pay for the water it receives,” has been SAWS President and CEO Robert Puente’s mantra and its one that he can still say under the new contract.
City Council and the public will be briefed on the new contract with Garney this Thursday during a public briefing at 9 a.m. and SAWS will host a public meeting on Tuesday, April 12 at 6 p.m. in the SAWS board room at its headquarters.
Between those dates, SAWS will also be reaching out invite citizens as well as members of chambers of commerce, the Sierra Club – which has been adamantly opposed to the project for years – and police and fire unions to the public meetings, said Donovan Burton, SAWS vice president of Governmental Relations and Water Resources.
“We’ll be identifying what issues are out there and reaching out to those communities and making sure that they understand the project, this new step (contract), and that we understand what the community is looking for as well,” Burton said, adding that SAWS will also be using social media to engage in conversations.
The unions are a bit late to the game, leading an effort to collect 6,000 Bexar County resident signatures after the deal was unanimously approved by City Council, but have entered the conversation nonetheless claiming that rate increases associated with the Vista Ridge project are unacceptable. The average customer’s monthly bill went up $6.85 to $58.60 this year. By 2020, the average bill will climb to $81.73. Union representatives presented the petition and signatures to the Public Utility Commission on Wednesday and are undergoing a certification process that is expected to be completed this week.
“There are some groups that have been providing misinformation,” said Mayor Ivy Taylor, who has an ex officio seat on the SAWS board. “We need to be robust in our efforts to reach people beyond these meeting settings.”
Taylor called for an aggressive and transparent approach to explain the Vista Ridge project to the public.
Union leadership denies that its membership’s involvement in the sudden opposition has anything to do with its stalled contract negotiations with the city, or the pending lawsuit filed by the City against their contracts’ evergreen clause.
Meanwhile, Garney will be organizing its internal reports needed to sign off on the deal and SAWS staff will be working on its own due diligence by checking out the financial and construction details, Burton said.
“Many conditions are still needed,” he said, such as the financial model, finance agreements, and even payments to contractors and banks that have already started working and spending money on the project. “There are a lot of contractors that have been left holding the bag that haven’t been paid for a while.”
Abengoa’s parent company Abengoa Sociedad Anónima filed for protection against its creditors in November last year. The project has been in a kind of holding pattern ever since, but Burton said major construction on the project could still begin on schedule in the September/October timeframe.
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Abengoa would remain a 20% silent partner in the estimated $3.4 billion project, but Garney – which is already the project’s construction firm – would take over the equity of the project. Garney has a 30-year history of working with SAWS and, Puente said, will produce a higher-quality product.
The project may actually end up costing less than expected due to a drop in interest rates, he added.
“Part of the original contract allowed us to lock in interest rates on May 4,” Puente said after the meeting.
SAWS estimates Garney will invest $55 million to get the contract to financial close that could come as early as August while about $800 million will come from a “mini-perm,” or short-term financing, loan from a consortium of banks.
Representatives from both Garney and Abengoa that attended the meeting declined to comment but Mike Heitmann, Garney Construction president and CEO, stated in an email Tuesday afternoon that “Garney intends to see the project all the way through construction and commercial operation.”
The 142-mile water pipeline would bring 16 billion gallons of water from Burleson County’s Carrizo Aquifer to San Antonio every year for 30-60 years.
“At the end of the day the project still remains a very viable and desirable project” to ensure San Antonio’s water security well into the future, Burton said.
SAWS still retains a large amount of oversight over the project, Puente said. “Part of the contract is that we get to see and be involved in the construction as far as materials and workmanship. All through the process we will be there overseeing the project. We are ultimately the owner of the project, so we get to see what’s going on.”
CORRECTION: SAWS will not be hosting public meetings beyond what has been scheduled but will send staff to meetings to explain the new contract by request from citizen groups and/or Council members.
Top image: A 60 inch pipe is installed by Garney Construction for the BexarMet-SAWS Water Resources Integration Program. Photo courtesy of Garney Construction.