Correcting Our Mistakes!

Way back in January, we wrote an article about builders and utilities squaring off on proposed changes to the process of authorizing certificates of convenience and necessity. Somehow we implied in our PRINT edition that attorney Mark Zeppa had "reiterated" the mantra that some CCN holders cannot and have no intention to serve the area for which they are certificated.

The fact is - and we knew it - Zeppa REFUTED the mantra that some CCN holders cannot and have no intention to serve the area for which they are certificated. INDEED (as we had continued), Zeppa "explained that the system was created to allow CCN holders to charge developers for nonstandard service (such as providing for new subdivisions and adding treatment capacity)."

While we do not challenge Mr. Zeppa's statement or his position, we do begin to wonder when we come across a case like the recent land swap (of sorts) between the city of Austin and Hornsby Bend Utility Company, Inc. The land swap, it appears, helped seal the deal between the two utilities and pave the way for Hornsby Bend to drop other objections to the city's broad plan for restructuring service areas (as approved by the Texas Commission on Environmental Quality on February 23).

Surely, representatives of Austin Estates Limited Partnership - who are still fighting the transfer of the bulk of their 1,500-acre property south of Manor from Hornsby Bend's CCN to that of the city of Austin - would be tempted to argue that Hornsby Bend had no intention of providing service even after signing a contract with AELP and accepting a $25,000 initial payment that was supposed to guarantee access to Hornsby Bend's existing wastewater treatment plant. After all, they voluntarily gave up their right to serve AELP's land.

AELP is also now claiming that Austin, too, has no intention to provide service to their planned development but rather purchased rights to serve their property as a means of controlling the direction of that development or stifling it altogether. Among their claims is that Austin does not have, and has yet to propose to construct, any wastewater lines or infrastructure to the 4,000-plus lots on which AELP hopes to build houses. [Well, without an agreement with AELP, Austin has no reason to do so.]

It will be interesting to see how this case ultimately plays out. Will AELP cave in, given the urgency of development that would coincide with the opening of portions of State Highway 130, which has a planned exit ramp right at the development site. Protracted litigation may not be in AELP's best interests. On the other hand, both utilities must be satisfied with the deal they worked out that provided Austin a free ride to approval of their desired CCN amendments. Not so AELP, whose development costs may have just escalated.

We shall learn how dearly Austin wants to serve the AELP development. AELP is supporting an application by Central Texas Water Solutions, LP, for dual certification for its property (including land not part of the deal between Austin and Hornsby Bend). Inasmuch as Austin paid Hornsby Bend about $1.6 million ($400 per living unit equivalent for about 4,000 LUE's) as part of the settlement agreement, it would be surprising if the city just wrote off that investment without a fight.

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