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Complete Forecast for  Jul 24 2008

By ADAM RUSSELL
Staff Writer

WHITEHOUSE — The City Council voted unanimously to reject water contracts offered by City of Tyler Water Utilities during a special meeting Wednesday evening inside City Hall.

The council chose instead to “stay the course” with current plans, which officials hope will secure water for the city and feed the city’s capacity for growth in the future.

City Manager Ronny Fite said projects to make Whitehouse self-sufficient for water have been considered for years and that, in the past year and a half, the city has made strides to make self-sufficiency a reality. With some water well projects complete and a plan to create a system capable of delivering drinkable water from Lake Striker, Fite and Financial Director Jed Dillingham hope Whitehouse’s future water needs will be met and maintained on its own terms.

“Staying with (Tyler water) would have been the easiest thing,” Whitehouse Financial Director Jed Dillingham said during an interview in early April.

However, Dillingham said, research into cost analysis indicated to him that the debt service over 20 years related to the wells — $400,000 per year — and the Lake Striker project — $600,000 per year — would be very close to the amount they would pay Tyler over the same time period but with no return on the investment.

“It’s like renting or buying,” he said. “We will own our infrastructure and will be in control of our system and its rate.”

Fite said the city moved toward self-sufficiency in the past few years by establishing well-water systems for residential use. Fite said four wells currently on line produce 1.8 million gallons per day, and two more wells are slated for completion this summer. Tyler Utilities and Public Works Director Greg Morgan said that, from 2004-06, the test years used during the negotiations, Whitehouse consistently bought around 1.2 million gallons of water per day. He said projections for Lake Striker estimate the city will be able to take up to 3 million gallons from the lake per day. The combination of both projects would allow for significant growth over the next several decades.

“Water is a precious commodity in Texas,” Morgan said. “Cities are scrambling to secure resources.”

Tyler offered varying versions of the new water contract ranging from 10 to 40 years. Whitehouse city officials rejected the initial 40-year offer and requested a contract that would not lock them in to a long-term commitment with no control over increases Tyler water might make.

Tyler recently proposed 10- and 25-year contracts with restrictions on rate increases in response to Whitehouse representatives concerns. Morgan stated in a letter to Mayor Jake Jacobson that he felt the 25-year contract was “the best compromise to address the desires of both cities.” The 25-year contract re-instated a comparably low 2.07 peak day vs. average day ratio Whitehouse gained through consistent consumption, which called for a monthly demand rate of $19,524 each month before the first gallon of water is consumed.

The 10-year contract, a more viable timeframe for Whitehouse officials, would have required that the city pay a ratio documented between October 2006 and October 2007, during which time Whitehouse was not under contract with the city, of 4.46, costing the city $50,187 each month plus the $1.28 per 1,000 gallon rate. That would add more than $18 a month to the water bills of Whitehouse residents, Fite said, and that was unacceptable.

Morgan, a longtime “water man,” expressed concern about Whitehouse’s move from receiving 90 percent of its water to producing and maintaining its own system, calling it a “big step.” He said elected officials of Whitehouse are expected to look out for the best interest of their citizens and that they should make their decision based on all the facts and figures.

Jacobson said the risk involved with relying on wells and the uncertainty of the Lake Striker project could put the city at risk for shortages. He said the belief that the project will come in on time and on budget is misguided and hoped the city would allay short-term concerns with the 10-year contract while continuing work on Lake Striker for the long-term.

Economist.com Managing Director Dan Jackson, who was hired as a consultant, told the quorum that signing either water contract with Tyler would inhibit any future plans and that it was an either/or scenario they faced. He said paying Tyler rates and funding construction of the Lake Striker project was not viable.

Another concern for the city is that Lake Striker is not yet permitted for residential use, but Fite, Dillingham and most of the council members are confident the permit will come through so their plans can go forward.

Neither Fite nor Dillingham denied the risk involved in choosing to become self-sufficient, but pointed out the risk associated with signing the 10- or 25-year contract with Tyler. Dillingham wondered aloud what would be done if the contract was signed and then 10 or 25 years down the line what Whitehouse would do. He said the city would be in the same place and without anything to show for it.

“We’re gambling for our aquatic independence,” Dillingham said after the meeting had concluded, smiling and rubbing his hands together. “But it’s really not a gamble because we have thoroughly thought this through and believe it is in the city’s long-term interest.”