City Council examines cost of delay at water treatment plant

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The Austin City Council voted today to consider what the costs would be to halt construction on Water Treatment Plant No. 4 for five or more years.

The resolution passed 5-2 with Mayor Lee Leffingwell and council member Mike Martinez voting against the measure.

As of June the project has cost the city $123 million. Costs currently under contract or already spent total $427 million of the $508 million project, and the plant will be completed in 2014 if construction continues.

The vote allows until Aug. 18. for the city’s bond counsel, legal counsel, a third-party engineering firm and city staff to collect a cost estimate for stopping construction on the plant.

Steve Lynk of CDM Group, a consulting firm, estimated in the meeting that it would take two years and more than $100 million to secure the site to a point where construction can resume later.

Concerns over finishing the plant relate to the high cost of the project, that the plant does not address environmental or sustainable goals of reducing water usage, and increasing performance of the existing water utility, and that the capacity of the plant outweighs the city’s need.

A major concern in interrupting the plant’s progress is that the council risks damaging the city’s bond rating, said city bond attorney and financial adviser Bill Newman.

Similar to a bad credit score, a downgraded bond rating would increase the interest the city pays on its debts, Newman said. He said a downgrade from the city’s high bond ratings would cost the city millions in interest payments.

“I just think that we need to continue with our commitments and move forward with the project,” said Martinez. “If our bond rating takes a hit, we face issues as a city, it would affect all of our existing debt, not just the water utility’s debt.”

The construction site, located near RM 2222 and RR 620, will use water from Lake Travis to supply Austinites in the northern areas of the city.

If the council does not decide to halt construction, progress will begin again on Sept. 2.