FULSHEAR, Texas (Covering Katy News) — Fulshear will avoid about $40 million in planned water plant improvements after securing a new source of surface water, part of a broader effort city officials say has cut roughly $90 million from planned water and wastewater projects.
City Council on Sept. 15 approved an agreement with the North Fort Bend Water Authority to provide at least 1.4 million gallons of surface water per day to Fulshear. The additional supply means the city no longer expects to need approximately $40 million in improvements planned for the McKinnon Water Plant.
But McKinnon accounts for less than half of the reductions city officials say they have identified.
Council Member Camron Miller, who led a committee that studied the city's water and wastewater needs, said the broader effort has reduced planned capital projects by approximately $90 million. Council members Randy Connor and Richard Russell also served on the committee.
"We've shaved about 90 million from the capital improvements projects associated with water and wastewater," Miller said.
The $90 million represents reductions in planned capital improvements, not money Fulshear had already borrowed or spent.
$40 million McKinnon project comes off the list
The North Fort Bend Water Authority agreement provides a clear accounting for about $40 million of the reduction.
Fulshear had planned significant improvements at the McKinnon Water Plant to help provide additional water capacity as the city grows. The new surface water supply means those improvements are no longer expected to be necessary.
During the council discussion, officials said money previously allocated for a McKinnon pilot well can be redirected to other projects, while the larger buildout can be removed from a future bond program.
"That was $40 million that we saved from having to spend," Miller said.
The distinction is important. Fulshear is not receiving $40 million or paying off $40 million in existing debt. The city is avoiding a major future capital expense that it previously expected would be needed.
The city's staff report said eliminating the McKinnon improvements could reduce future utility bond needs or preserve that borrowing capacity for other critical infrastructure.
New source will provide surface water
Under the agreement, the North Fort Bend Water Authority will provide at least 1.4 million gallons of water per day, measured on a 30-day average.
The additional surface water is expected to begin reaching the Fulshear Bend Water Plant by Dec. 31, 2027, with service to the city's existing FM 1093 Water Plant targeted by Dec. 31, 2028.
Miller said securing another dependable water source was a major objective of the committee's work.
"One of the main objectives is to secure reliable and clean water for all residents in Fulshear, and this agreement will do that," Miller said.
The agreement has an initial 20-year term, followed by automatic three-year renewals unless either party gives notice that it intends to end the agreement.
There is a financial tradeoff for Fulshear.
The agreement is structured on a "take-or-pay" basis. The city generally will pay for the full 1.4-million-gallon daily commitment even if it uses less. Fulshear based the amount on its average winter water demand, when irrigation and other seasonal use are lower.
The price of the water is not fixed for 20 years and will remain subject to the authority's applicable rates and fees.
That means the roughly $90 million reduction in planned capital projects should not be viewed as $90 million in direct savings to utility customers. Fulshear is avoiding infrastructure it previously expected to build, but will incur the ongoing cost of purchasing surface water.
Agreement could help end water-rate dispute
The agreement also could help resolve a long-running legal dispute between Fulshear and the North Fort Bend Water Authority.
The two sides agreed to work toward resolving pending litigation involving the water authority's rates and the Public Utility Commission of Texas, including an appeal before the state's Fifteenth Court of Appeals.
Within 60 days, the authority also agreed to complete an independent rate study and publicly present its findings.
It will also authorize additional analysis of whether the difference between its Surface Water Fee and Groundwater Reduction Plan Fee could be eliminated in favor of a uniform rate. The agreement does not require the authority to ultimately make that change.
Connor said the agreement gives residents greater certainty about Fulshear's future relationship with the water authority.
"The good thing is that we finally have something that we can go to the residents and say, this is how this North Fort Bend Water Authority is going to work going forward," Connor said. "And I think that's very important."
The agreement changes Fulshear's long-term infrastructure strategy by allowing the city to purchase more surface water rather than build all of the additional groundwater capacity it once anticipated needing.
For McKinnon alone, that means approximately $40 million in planned improvements can come off the city's list. Miller said the broader review of Fulshear's water and wastewater plans has reduced anticipated capital projects by roughly $90 million.