Some San Angelo Leaders May Put Brakes on Expensive Water Projects

Mike Boyd, Chairman of the City of San Angelo’s Water Advisory Board, faced the public in an informal question and answer session organized by Councilwoman Elizabeth Grindstaff Tuesday evening at St. Mark’s Presbyterian Church on University Ave.

His talk provided a look into the thoughts and insights of the board chairman whose committee is assigned to vet the City’s next move in securing more water to supply San Angelo. Boyd isn’t seeking election or re-election and is immune from the whims of this political season.

His thoughts right now are to slow down and to make a solid long-term plan.

The Water Advisory Board researches and vets water issues and provides recommendations to the City Council. Council takes the recommendations under advisement to enact ordinances, spend money, raise taxes, or raise water rates. Boyd’s board has no authority to do anything but advise council.

Boyd said that his board continues to evaluate the options for providing a workable solution for San Angelo’s long-term water supply challenges, and he personally is not ready to make a determination of what exactly it will look like.

He wants to move quickly in vetting the options, though. Expect his Board to make news on that front in August, he said.

The options being evaluated include expanding the Hickory capacity, water reclamation, fixing the pipeline that supplies water from E.V. Spence Reservoir, fixing the water mains underneath San Angelo, or some or all of the above. All of these projects will require significant capital investments and likely require debt instruments to finance.

The Pieces

Expansion of the Hickory Aquifer Water Supply Infrastructure. Boyd started his talk listing the virtues of expanding the Hickory water transport and treatment facilities.

“It’s treatable; it’s self-sufficient; and there is no reason why we shouldn’t be looking at drilling more wells and increasing the Hickory water supply,” he said.

Citizen Chris Cornell wanted to know why the Hickory reserves were not included in the City’s published water supply numbers. The City publishes the days of available water supply. It currently sits around 30 months, and determines the drought stage (see bottom of this City of San Angelo web page).

The number, however, doesn’t include the 40,000 ac-ft. of ground water “banked” deep inside the Hickory aquifer that can supplement San Angelo’s water supply, Cornell said. The Hickory treatment plant can treat water at a rate of 8 million gallons per day (MGD) of the 14 MGD of average daily water use.

A discussion ensued that the exclusion of the Hickory water volume confuses the water debate.

The water treatment plant itself.  “I wish everyone could tour the plant,” Boyd said. Describing the facility approaching a century old, he added, “We reach our water quality standards by just this much.” He pressed his index finger to his thumb.

Boyd sees opportunity in improving the taste of the water with a modern filtration system a new water treatment facility will feature. He said by looking at a variety of requirements, including debt runoff, San Angelo might be able to build an entirely new plant that isn’t the answer to every foreseeable challenge right away, but is modular in design, or extensible and expandable to meet future demands.

For example, we may not need water treatment capabilities to treat sewer water to tap right away.

“I think we can build a plant that greatly improves the water quality, and add to it over a period of time,” he said. Then, if water volume needs arise because of population growth in later years, a water reclamation capability could be added. Boyd added, “We should only have to deal with this issue (a coherent, workable comprehensive plan) once over the next 25 or 30 years.”

Water reclamation.  “Sometime in the future, we’re going to have to use ‘reuse’,” he said, referring to water reclamation, or the process of treating sewer water into tap water. Boyd is open to using either direct reuse or indirect reuse. “Indirect reuse” is where sewer water is treated and then pumped into a reservoir like Lake Nasworthy to supplement the surface water’s acre-feet. “Direct” reuse treats water and distributes it directly into the city’s water mains. He cited Big Spring and Abilene as municipalities that have successfully implemented indirect reuse.

Boyd said not only the city, but also the county, requires a more sustainable water supply. “We’ve got to put in in our mind, whenever it is, whether it’s 10 years from now, we’ve got to consider reuse,” he said.

Leaking Water Distribution System. Boyd said 12 percent of the water is distributed by broken water mains and pipes underneath the city. He would like to review and revise a systematic approach, or plan, to fix those pipes.

A banker’s approach to debt and capital investment. Revenue bonds come from water rates, Boyd said. But Boyd does not desire the City to quickly take on more debt. 

“I’d like to see us build a cash reserve (in the City water enterprise fund). We don’t have much of a cash reserve,” Boyd said. “We’ve got to get the water enterprise fund to be self-sufficient.”

After building a cash reserve, Boyd wants to examine how quickly previous debt is retiring, or being paid off, before incurring more.

“As a banker, I want to look at [the] total debt, and when it runs off, before we add more debt,” he said.

Stephen Brown, former city manager, asked if the City can support an additional $150 million debt load, the estimated cost of building a water reclamation (or reuse) treatment plant. Current City Manager Daniel Valenzuela was in the audience and indicated the city can.

“Our credit rating is very important to us. If we want to get these loans at a low interest rate, we want to make sure we have a good credit rating,” he said, explaining that the city will not overuse credit under his watch.

He said that a $136 million loan was assumed when the City hiked water rates late last year.  Boyd added that the water rates assume cash flow required to handle the increased loan capacity.

The conversation drifted into comparisons of the City of San Angelo’s debt level to comparable Texas cities. After the meeting, Grindstaff provided LIVE! with the City comptroller’s analysis of the City of San Angelo debt load when compared to “companion” cities. City staff views debt in two categories:

• “Tax supported” means the debt is secured by the estimated cash flow from taxes, the tax rates, and value of property within the taxing authority.
• “Revenue supported” means the debt is secured by a City enterprise, such as its water treatment and distribution operation that generates cash flow by selling water to customers.

Debt Per Capita - Comparison with Other Cities as of Sept 30, 2014. Excludes future issues and revenue-supported debt. Source City of San Angelo Comptroller.

Capturing Red Arroyo runoff into deep wells. Boyd said, in his mind, the City should scratch the Red Arroyo proposal off the list for the immediate future. The reason is the current water treatment plant is incapable of treating Red Arroyo runoff to TCEQ turbidity standards.

In May, water treatment plant manager Tymm Combest told the Water Advisory Board that turbidity of Red Arroyo runoff is in the 50-3000-npm ranges. TCEQ mandates turbidity in drinking water to be treated to the 0.3 npm level.

No one at the meeting complained about the City Council’s decision to spend $315,000 to hire a consultant to develop a master water-planning document. Proponents of the study believe it will help the City make a wise move in deciding the future water procurement policy and investments.

“We ought to be able to figure out how to make this happen from a citizens’ standpoint,” he said. Boyd’s ingredients: determine the proper debt load, find reasonable ways to service that debt, and then implement a comprehensive water supply program over a long period of time.

Grindstaff is up for re-election in a July 2 runoff for her SMD 5 city council seat. After the meeting, Grindstaff said she is not convinced that the City should spend anything at this point on either water reclamation or expanding the Hickory. The jury is still out, she said.

Her opponent Lane Carter was not in attendance.