A Nice Bouquet of Flowers

Kendall County benefits at SAWS' expense

Posted: Tuesday, April 18, 2006 12:00 am

By DAVE PASLEY

Editor's note: This is the fifth in an on-going series of articles about a multi-million dollar project to bring treated drinking water from Canyon Lake to Kendall County.

Anyone favoring growth and development in Kendall County ought to send the San Antonio Water System (SAWS) a nice bouquet of flowers.

The Star's analysis of the Guadalupe Blanco River Authority's (GBRA) Western Canyon Regional Water Supply Project suggests that SAWS could end up paying more than $100 million of the $172.5 million cost to pay off the bonds sold to build the project.

But when those bonds are paid off in 2033, SAWS' guaranteed take from the project will be only 35 percent. Furthermore, when the current operating contract expires three years later, in 2036, SAWS will lose all of its rights to buy water from the Western Canyon Project that could not have been built without SAWS' help.

After 2036, if SAWS wants water from the pipeline it helped to build, it will have to pay the GBRA $4,000 per acre-foot ($15.8 million), adjusted for inflation, to get back in the project.

The corollary is the Kendall County partners in the Western Canyon Project - Boerne, Fair Oaks Ranch, Cordillera Ranch and Kendall County/Tapatio Springs utilities - are benefiting at SAWS' expense.

The Star's analysis also suggests the Kendall County partners in the project will pay about half of what SAWS will pay toward the project's construction and financing costs but will end up with the rights to buy 26 percent more water than SAWS, once the project is paid for. Plus, the non-SAWS utilities will not have to pay a re-entry fee, which for SAWS adds up to $15.8 million.

Furthermore, if SAWS passes on the option to buy back in to the project after 2036, then the 3,950 acre-feet of water SAWS was buying will be available for sale in Kendall and Comal County.

Implicit in the Star's projection is an assumption that the non-SAWS participants in the project, collectively, would gradually purchase more treated water each year. The Star developed a simple, straight-line projection of SAWS financial participation in the project that assumed a consistent annual decline in water purchased by SAWS, from 8,900 acre-feet in 2006 to 3,950 acre-feet in 2033 when the bonds will be paid off.

If the non-SAWS partners in the project choose to increase their take of treated water more rapidly in the early years of the project, then SAWS would pay less of the cost of financing the project, and vice-versa.

The addition of new participants in the pipeline, such as the Legacy development on SH 46, would also result in SAWS buying less water and, thus, paying less of the total project cost.

But regardless of how much SAWS ends up paying, the guarantee that SAWS would buy the water that other project partners could not buy was crucial to selling the revenue bonds that financed the project's construction.

SAWS role in bankrolling the Western Canyon Project has not gone unnoticed, or unappreciated.

“(The Western Canyon Project) would not have happened without SAWS participation,” Fair Oaks Ranch Alderman Dan Kasprowicz flatly acknowledges.

“SAWS is a valued customer in this project,” wrote GBRA spokesperson Judy Gardner, “because Bexar County participation ensures the use of the total plant water production in the early years of the project. It also provides economy of scale which results in a more affordable water cost to all participants.”

From an operational perspective, GBRA General Manager William E. (Bill) West, Jr. describes SAWS as the system's “shock-absorber” because the massive SAWS distribution system allows it to receive and use any amount of water, up to the plant's capacity, at any time of the year.

SAWS Director of Water Resources Calvin Finch says one reason SAWS is participating in the Western Canyon Project is because it needs water from a source other than the Edwards Aquifer to fill gaps in its long-range water resource plan.

“We need the water right now. It's very valuable to us,” Finch says, noting that the amount SAWS is allowed to pump from the Edwards Aquifer is declining while the number of SAWS water customers is growing, “(Water from the Western Canyon Project) is water available now, and it is water that we need now.”

Finch also says the SAWS Board of Directors have a policy to partner with smaller utilities to help them develop alternative water resources.

“Our board has made it clear we are to assist the other communities in the area, within reason, to meet their water needs. We have the ability to back up big projects and we are to consider doing that when asked,” Finch says.

GBRA plans to treat and pump no less than 11,200 acre-feet of lake water per year. Because the same amount of water comes down the pipeline every day, the plant produces far more water than Kendall County can use on a regular basis.

SAWS, which pumps roughly 200,000 acre-feet of water per year from the Edwards Aquifer, has agreed to buy whatever amount the other participants in the project do not want or can not receive, because of operational problems, on any given day.

The water plant is opening at about 66 percent of capacity. GBRA officials say the plant can be expanded to a maximum annual production of 16,500 acre-feet, more than three times the amount of groundwater local officials estimate can be safely pumped from the Trinity/Cow Creek Aquifer in Kendall County.

Thus, to the extent that water is a critical component underpinning growth and development, it appears that SAWS ratepayers are subsidizing growth and development in Kendall County.