Mineral Wells Area News

By Amy Bearden / Mineral Wells Area News

Leaders of the Palo Pinto County Municipal Water District #1 were in Austin on July 23rd for the Texas Water Development Board meeting to learn the fate of their funding application of low-cost loans provided through the State Water Implementation Revenue Fund for Texas for the completion of Turkey Peak Reservoir. The project has been a hot topic across the community for decades and is designed to bring water security to the region.

PPMWD#1 expected to hear quickly if there would be any resistance to their application but during the meeting, anticipation grew deeper when TWDB Chairwoman Brooke Paup decided to bump the District’s funding approval down from agenda item #14 to the bottom of the list, for what she called “intense online interest.”

PPCMWD#1 board members and other local leaders had to wait through item #31 to hear the discussion of their TPR funding request. Mineral Wells Mayor Regan Johnson and multiple City officials, the District’s General Manager Howard Huffman and his board members all waited patiently and listened as funding decisions were made by the TWDB for other various water projects across the State.

When their time finally came, TWDB Executive Staff Member Tom Barnett gave a history of the TPR project to the three-person decision making panel and discussed the funding request and details of the various projects to be funded by the District’s $200 million loan request.

Barnett explained the need for the completion of the new reservoir, citing the community’s existing main water supply, Lake Palo Pinto, which was built in 1964 had diminished in its original capacity because of sedimentation. He said additional water supply capacity is needed in the region to provide drought resiliency and meet the current water demands of the District’s customers.

“The Turkey Peak Reservoir project consists of the construction of a new earthen dam, concrete intake and outlet structures, concrete spillway and rockline outfall channel on Palo Pinto Creek, directly downstream from Lake Palo Pinto. A small section of the existing Lake Palo Pinto spillway will be removed to connect the two reservoir pools and manage them as a system. Ultimately, the big project will increase the combined storage capacity of the two reservoirs to be greater than what the district was permitted to impound when they first received their water right back in 1962,” Barnett stated.

The project also includes necessary road construction associated with the new reservoir footprint, as well as downstream mitigation activities including stream restoration and invasive species management as required in the 404 permit the District received from the US Army Corps of Engineers in 2018.

Barnett said the TPR project plan has been in the State’s water strategy plan for a long time, indicating the project had been deeply vetted to get this far in the approval process.

“It goes way back. It was in the the 2001 Region G regional water plan. It was first recommended as a strategy in the 2006 plan and it’s been recommended every subsequent plan,” stated Barnett.

“This request for a new multi year commitment is for the construction funds to implement this long plan project. The district plans to start construction in 2025 and complete the project by 2028. The Executive Administrator recommends approval of this item,” Barnett said.

Chairwoman Paup then moved to the public comment portion of the procedure and introduced people who filled out visitor registration cards. Mayor Johnson was the first to speak, saying City officials were excited about the future of Turkey Peak Reservoir.

“The cost of water is not free as you as you know. So we do have some local, you know, opposition from that and I understand but this is our water security for our future and we’re very excited to see this project forward,” Johnson stated while thanking the TWDB.

Next Paup called Howard Huffman up, who had just listened to the TWDP dole out more than a billion dollars for water projects around the State.

“l’ve heard some interesting comments here today, especially one that caught my ear about economic development. As this system has gone through two severe droughts in the past decade, this project is not about economic development. In my personal opinion, it is simply economic survival,” stated Huffman.

“This region is growing. The past census, due to COVID and we’re a rural county and we weren’t counted, we were estimated. All of these factors work against us to tell the true picture, but growth is happening down the I-20 corridor into our county.”

Huffman continued addressing the panel, “This lake went on the State water plan early in the 2000’s. That was preceded by 15 to 20 years of intense planning and study to make sure this was the solution. I don’t have to explain to any of you the complexities of building a reservoir and how they actually come to construction. But starting in 2008 we did start our permitting process with the Corps. In 2018 that process was completed. We have TCEQ’s approval on our dam design. We have the Texas Water Development Board’s approval on our dam design. We have all permitting up to date and in place to support construction. And to this the $37 million you’ve already loaned us, we have completed land acquisition sufficient to start construction, the full design work. We’ve done everything that was asked of us to do,” finished Huffman.

Attorney for PPCMWD#1 David Klein also submitted a card to speak but asked to reserve his time until the end if he needed to respond to public comments, which was permitted.

According to the meeting moderator, four people submitted written comments opposing TPR which were added to the file. Those comments came from Luke Dolson and Leah Burns as well as Lisa Jones and Gayla Wigley, the later two were present online, but did not address the Board. Richard Watts, who signed up to speak to the panel but did not, submitted written comments online opposing the project. The final voice of opposition to the project was Richard “Dave” Jones, a resident of Lake Palo Pinto since 2020, who addressed the panel virtually.

Jones explained his concerns about the loss of water to the pump station from the creek which he read about in a 1989 study that was published on the TPR website. He also was concerned that the District never provided his group with detailed cost analysis information for alternatives to Turkey Peak.

Jones also mentioned the two rate appeal cases currently filed with the Public Utility Commission between the City of Mineral Wells and the out-of-city customers, as well as the Santo SUD/Sturdivant Water Supply Corporation. Jones claimed the City was being investigated for illegally raising the water rates. He also questions the financial transparency of the project.

“This project will be not be $200 million. It’ll be $500 million or $1 billion when it’s over. That’s a cost to the the taxpayers. And this will be a massive cost overrun to the state of Texas and you will not, you will not get your money back on these loans. Because the town of Mineral Wells and around this area cannot support that. They’re under 146% rate increase to pay for this,” ended Jones.

Attorney David Klein chose to address the panel regarding Jones’ claims.

“First of all, in terms of transparency and making information available, the District put its application that it’s submitted here with the Water Development Board on its website. It has been there for the public to see and and as you all have already asked and been told or have been answered that this is a project that’s been on the books for a long time. It’s been a lot of planning.There’s been a lot of experts. The District has financial engineering experts that are putting together these cost estimates, putting pen to paper and figuring out what the costs are and adjusting them over time while this application has been pending,” stated Klein.

Klein explained to the Board that the District has three customers, including the Lake Palo Pinto Water Supply Corporation, the power plant owned by Brazos Electric Power Cooperation and the City of Mineral Wells, whose residents make up the bulk of the people served by the District’s water supply. Besides its residential customers in Mineral Wells, as well as the roughly 200 out-of-city customers on the outskirts of town known as the Extended Territorial Jurisdiction(ETJ), the City also has seven wholesale customers they sell water too for surrounding communities. The District provides water for almost 35,000 people in Palo Pinto and Parker County.

Klein was asked by the Board panel to explain the Public Utility Commission rate cases to help them understand the legal situation the City faces. He explained there were two wholesale customers, who filed an appeal, as well the ETJ group who had filed a rate appeal case with the PUC.

“Of the numerous wholesale customers, two of them have filed protests at the Public Utility Commission. That is true, but it’s not that the rates are illegal and there is no investigation. They filed an application to appeal those rates annd that application has been sitting for six months and those two wholesale customers haven’t done anything for six months about these rates, and so all in all, those, two wholesale customers, and I think it’s less than 30 of the “out-of-City” retail customers of the City that are against this. They makeup a very, very small portion of the population served and so I don’t think the repayment of the debt service on any of these bonds calls for any concerns whatsoever,” explained Klein.

The Board pushed for more information regarding the appeal rate cases which were filed by Santo Special Utilities District and Strurdivant Water Supply Corporation, as well as the ETJ customers, so Klein continued his explanation.

“So there are two for appeals of the city’s rates that have been filed. And again, one of them is by a subset of the “out of city” retail customers, which again, it’s a small percentage of a small percentage of the big puzzle here. And as far as the wholesale customers go, the City has six or seven wholesale customers and these are just two of them. And yes, they filed the appeal with respect to these wholesale customers. But again, that’s also a small piece of the big puzzle in terms of revenue generating to pay debt service on debt. But again, if you file an application you want to appeal a rate at the Public Utility Commission, you usually need to take action to move your application along. And there’s a dispute as to the nature of the rate, whether it’s rate charge pursuant to a contract or not. And because of that, Commission rules say that you have to go to court, a District court essentially make a ruling on that fact. And it’s been up to those wholesale customers to do something about it and for six months, they haven’t done anything. So yes, you could say that there’s that case pending, but until something’s done, it’s really it’s, it’s just collecting dust.”

According to public record filings, the PUC rate appeal case between the ETJ customers and the City has been ordered into mediation to resolve the appeal, but has not occurred at this point.

As the public discussion wound down, the Board, which is comprised of Chairman Paup, George Peyton, and L’Oreal Stepney, also asked Tom Barnett to address the financial rating on the application submitted by the PPCMWD#1.

He explained the original internal risk score for the project was due to the low coverage ratio that the District had in their fiscal year 2023 financial audit. He said that low coverage rating was because the last audit for review that was included in the application was not reflective of the new rates, so they they took a big hit in credit rating. However, the rate increase at the end 2023 changed the overall credit scenario. The new water rates were able to meet coverage necessary for repayment according to Barnett.

The Board seemed to agree with Klein.

“I trust our financial team to have done their their research on this and yes, it’s not the high rated credit we’ve seen come across the desk, but we’re also very conservative in our underwriting standards,” stated Board member George Peyton.

Chairwoman Paup concurred with Peyton on the assessment of financial risks.

“We are very conservative and the credit score was taken before the new rates were implemented, so it is a very different picture today,” said Paup, who then called for a motion on the resolution for the funding request.

The resolution to provide the District with $200 million in low-cost loans to complete Turkey Peak unanimously passed, allowing many in the community to breathe a sigh of relief, including State Representative Glenn Rogers.

“I was very pleased to see the Texas Water Development Board approve the $200 million funding package for the Turkey Peak Reservoir Project and congratulate the City of Mineral Wells along with the Palo Pinto County Municipal Water District #1 on their accomplishment. While I have been a long-time supporter of the project, and look forward to seeing it come to fruition, I hope we all remember it is a component of the entire package we need to bring long-term water security of the area,” wrote Rogers.

PPCMWD#1 Board members echoed the excitement of the funding approval.

“Receiving the final funding approval from the TWDB validates the District’s plans to be self-sufficient regarding our most important natural resource, water. We re very appreciative of the support and guidance from the State of Texas in accomplishing this rare feat,” said Rich Kidwell.

Board member Don Crawford spoke about the accomplishment as well starting, “We are finally ready to start construction on Turkey Peak! It has been such a long road to get here. Our perseverance paid off!”

Howard Huffman spoke to Mineral Wells Area News and indicated that funding should hit the bank in November and then they will begin vetting qualified contractors to award the bids. He said the first task at hand once a contractor is identified will be to relocate utilities and complete necessary road work. Constuction will begin in Spring of 2025 and is expected to take three years to complete.

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