Council approves bonds for sewer plant

By KATE LUDLOW

In a split vote Monday, the Liberty Hill City Council approved the issuance of $3.75 million in revenue bonds to buy a wastewater treatment plant.

The 3-2 vote came on the heels of the ejection of one mayoral candidate and a local realtor from the Council Chamber, and the anticipated official announcement of the resignation of the City Manager.

With Councilmen Mike Crane and Byron Tippie voting no, Councilmen Jack Harkrider and Charles Canady voting yes, Mayor Michele “Mike” Murphy cast the tie-breaking vote to issue the bonds to purchase the facility from the Lower Colorado River Authority.

The bonds will be financed by BB&T Government Finance at an interest rate of 3.85 percent. Previously, interest rates were quoted as high as 4.5 percent. While the City of Liberty Hill will be the main bond holder, five area MUDs (municipal utility districts) are paying for wastewater treatment from the plant, therby reducing the actual costs to the City of Liberty Hill.

Prior to the vote, the Mayor warned of the repercussions of not accepting the deal.

“Pretty much, we’re getting this plant for the paperwork,” she said. “They’re not really charging us, I mean, they have spent a lot of money getting these contracts together for us. What they have spent getting this together, we could be liable for. So, we have a considerable risk not approving this.”

The Mayor then speculated, with rough estimates from City Engineer Perry Steger, that building a similar plant from scratch would cost the City about $4 million, with possibly $2 million more for various lines and add-ons.

The current plant has a life expectancy of 40-50 years, “and you can easily extend that by maintaining it or expanding it,” said Steger. “There’s plenty of room for expansion on the property. You’re also acquiring some lift stations and collector lines that run up into the city as well. That was probably a couple of million dollars of construction costs for the lines. There’s spare capacity in those lines, so there’s value there as well.”

The plant, which is located off U.S. Highway 183 just south of Seward Junction, became operational in September 2006.  LCRA built the plant for over $9 million.

Some Council members said they did not have time to properly prepare for the vote.

Councilman Crane noted that, “I’m just getting a lot of stuff all at once.”

City Manager Manuel De La Rosa and Mayor Murphy both stated that the relevant information had been in council packets and distributed to officials last Thursday.

“The numbers have not changed since you met in November in Executive Session when you authorized the Mayor to sign that purchase agreement,” De La Rosa reminded the Council. “These numbers have been set, they’ve been hard.”

The Mayor added that interest rates had improved.

The plant is a 400,000 gallon per day treatment facility that is permitted for 1.2 million gallons per day.

De La Rosa said if contributing MUDs do not pay for their service, the City can take legal action.

“When we didn’t think that MUD 19 had been paying, we said we’re not going to lend the City’s credit to their benefit, so we’re just going to take those LUEs to somebody else,” said De La Rosa.

LUEs are the Living Unit Expectancy and represent the number of water hookups a MUD can have, once they have bought into the bond.

Councilman Tippie, who remained mostly quiet throughout the wastewater discussion, was asked by Mayor Murphy if he had any questions. He took that time to express his concerns, attempting to use a vehicle purchase and a home purchase as analogies.

He questioned why LCRA would take a $7 million “hit” on the price of the plant.

“My questions are I guess obvious to anybody, to kind of dumb it down to a car’s perspective. Why is somebody going to take a take a $7 million hit on something? To me, it’s like going out and seeing a 2013 BMW 7 Series for $10,000, and you know there’s something wrong with it,” Tippie said.

Christina Lane, a representative of SAMCO Capital Markets, explained that, “They’re not taking a $7 million hit. We’re paying them the debt that they (LCRA) have outstanding on the plant, plus a profit of $100,000. So they’re making that.”

Councilman Canady, who voiced his support of the project, said, “We need to control our destiny, our growth.  We’re not going to grow if we can’t control our own sewer. We’re going to grow, but we have to control what our destiny is going to be.”

This is the second bond package the City has adopted. In December 2011, the Council voted to issue $2.28 million in water revenue bonds to connect two new water wells, pay off a loan incurred by the Liberty Hill Water Supply Corp., and make additional improvements to the water system. At that time, Councilmen Crane, Canady and Harkrider voted yes, and Tippie voted no.

In other business Monday, the Council accepted the resignation of De La Rosa following a 17-minute executive session.

De La Rosa’s resignation is effective April 20. Last week, he accepted an employment offer from the City of Jonestown to serve as that city’s Administrator.

Under the terms of that one-year contract, which was obtained by The Independent through an Open Records Request, De La Rosa will earn a salary of $85,000. After six months, the salary increases to $90,000 contingent upon satisfactory performance evaluation.

The Liberty Hill Council voted in February to extend De La Rosa’s contract to three years at $86,000 per year.