- Associated Press - Thursday, March 5, 2015

AUSTIN, Texas (AP) - As some local governments across Central Texas fret over whether they’ll have enough of a water supply for growth, Austin appears likely to double down on its ties to the Colorado River.

That’s because more than 15 years ago, a Kirk Watson-led City Council inked a $100 million agreement to guarantee Colorado River water to Austin through at least 2050.

The Austin American-Statesman (https://atxne.ws/1BbchnC ) reports the deal cemented the relationship between the city and the river that runs through it, confirming the Colorado as the sole source of water for the hilly gem of a city.

And it’s paid off: By one city estimate, Austin has saved an additional $50 million beyond what was forecast with the deal, which already offered a steep discount to Austin in honor of the deal’s length.

“Very foresighted deal,” said Austin Water Utility Director Greg Meszaros. “It was an excellent investment by the city, a bold, affirmative step.”

Even officials with the Lower Colorado River Authority, the agency on the other side of the table from Austin, concede that the deal has worked in Austin’s favor.

Still, the length and intensity of the drought has some saying Austin is too reliant on a single water source, leading the city to consider new conservation and storage measures.

The success of the deal, for Austin, also has policy implications as the city now grapples with how or whether to pay for new supplies.

Even as competing water suppliers and some activists press the city to rely a little less on the Colorado and a little more on groundwater and other sources - to diversify, in water planning parlance - the city is likely to do just the opposite, putting its energy into warding off competitors for Colorado River water.

“It shows how important it is that we secure our water supplies,” Meszaros said, meaning the river water the city pulls out of Lake Travis. “It doesn’t matter how much we prepay - if the water isn’t there, it isn’t there.”

At the time the deal was made, both utilities had something to gain: Austin had secured water only through 2020, not far away for a burgeoning city at the height of the dot-com boom.

The Lower Colorado River Authority, meanwhile, was on the lookout for cash. It had just made the savvy move of buying water rights from the downriver Garwood Irrigation Co. - a move then-General Manager Mark Rose says was critical to keeping the water from being purchased by San Antonio - but that $75 million transaction put the LCRA in a cash hole. (With the deal, LCRA purchased the right to withdraw enough water each year to fill Lake Austin five times.)

“I don’t know that I remember who made the first call, but I’ll jokingly say it was minutes after the Garwood (rights) purchase,” Watson told the American-Statesman. “I only say that half-jokingly. It was probably the next day or day after that. . We were all thinking the same thing.”

Watson credits the deal with ramping up water conservation in Austin by way of a financial incentive. Once Austin consumes 201,000 acre-feet of water two years in a row, it will pay a hefty surcharge.

When the contract was inked in 1999, officials calculated that trigger would be reached in 2021. Now Austin officials figure they won’t reach that trigger until around 2035.

“We have a motivation to stretch out that trigger - every year we go farther saves us tens of millions of dollars,” Meszaros said.

As Austin’s new City Council finds itself dealing with a persistent drought and questions about long-term water supplies and rates, the deal will shape their decision-making.

At an Austin City Council meeting in February, Sharlene Leurig, who directs the sustainable water infrastructure program at Ceres, a nonprofit that works with institutional investors to promote sustainability, warned about the danger of relying on the Colorado River.

“Austin is the only city in an arid landscape in the western United States dependent on a single source of water,” Leurig said. “We now know, looking at the Highland Lakes, that it’s a critical vulnerability.”

Financially speaking, the terms of the agreement mean it will be cheaper for the city to conserve water than to expand its supplies beyond the Colorado River.

(A supplemental agreement between the city and the LCRA in 2007 also clarified that Austin could only delay that trigger by conserving and reusing water, not by bringing in water from somewhere else.)

Austin Mayor Steve Adler said the city could “bank” some of the water it secured with the contract but hasn’t used, as Austin has stayed below the trigger. Citing a report by a city task force on water that was completed last summer, Adler said the city could store that water in aquifers and take it out for use at a later time.

“At this point, it’s not so much about the contract as it is how much water is in the lakes, how much water we’re using,” Adler said. “I just think that this city needs to be a lot more engaged, and it needs to be forward-looking, on water reuse strategies, on aquifer storage and recovery, and other innovative solutions.”

Such sources might include capturing stormwater or using Lady Bird Lake, Lake Austin and Lake Walter E. Long as reservoirs that take in rain that falls downstream from the Highland lakes, said Jennifer Walker, water resources coordinator for the Sierra Club. Or it could include searching for water outside the city, she said.

“Yes, we have this really great water supply that looks great on paper, but maybe it’s not going to be enough for us,” Walker said.

Some of the 1999 contract’s critics are still skeptical of how it was negotiated. After the contract was signed, the Austin water utility director and city manager left to work at LCRA.

The LCRA soon angered environmentalists by pivoting from the water deal with Austin to building a pipeline into the Hill Country, setting the stage for further suburban development. Save Our Springs Alliance head Bill Bunch and environmental lawyer Stuart Henry, among the contract’s detractors, say they never got a straight answer from the city on whether it needed to purchase the amount of water it did or if it already had rights to some of that water.

Bunch does admit that at least one of his fears never came true: that because the deal assumed the city would rapidly increase its water usage, Austin would do just that.

“Thankfully, that concern did not play out,” Bunch said.

In 1999, the LCRA and Austin calculated the value of the contract at $148 million; the river authority then gave the water utility a 33 percent discount for locking in a long-term contract and paying cash, making the final contract amount $100 million.

But given rate increases along the Colorado River, the Austin Water Utility now estimates that contract to be worth about $196 million, making the discount, in retrospect, worth about 50 percent.

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Information from: Austin American-Statesman, https://www.statesman.com

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