DALLAS – Dallas and the Tarrant Regional Water District will share financing on a $1.6 billion pipeline that will carry water 149 miles from Lake Palestine in East Texas.

The Tarrant water district, in Fort Worth, approved the plan this week and the Dallas City Council gave it a green light last week.

The two water providers are expected to issue bonds to finance the project, with construction beginning in 2013. Costs could rise as high as $1.9 billion.

The TRWD board also approved $16.3 million in payments to five contractors for engineering work on nearly 95 miles of the pipeline.

The pipeline could serve as a model for future projects, such as bringing water from Oklahoma, Northeast Texas, or the Louisiana border to the growing metro area of Dallas-Fort Worth, according to Wayne Owen, planning director for TRWD.

The pipeline will connect Lake Palestine to Lake Benbrook in Tarrant County, providing water also to Dallas. The district will be able to pump an additional 197 million gallons per day from the Richland-Chambers and Cedar Creek reservoirs, near Corsicana, to Benbrook Lake. Dallas will be able to pump up to 150 million gallons per day from Lake Palestine to Joe Pool Lake.

If construction develops as planned, water could be flowing by 2018, officials said.

The water district will build the pipeline, paying $980 million, with Dallas paying the rest.

The district supplies water to 11 counties, including most of Tarrant.

Earlier this year, TRWD suffered a setback in its goal of piping water from Oklahoma to North Texas when a federal judge dismissed the district’s lawsuit to overturn Oklahoma’s objections to the plan.

Oklahoma Secretary of the Environment J.D. Strong said the judge’s ruling strengthens Oklahoma’s right to control the use of its water.

The water district had sought to divert more than 130 billion gallons of water from river basins north of the Red River separating the two states.

Dallas Water Utilities, the North Texas Municipal Water District, and the Upper Trinity Regional Water District joined the suit on TRWD’s side, as did Texas Attorney General Greg Abbott.

TRWD won a Standard & Poor’s upgrade to AAA from AA in 2009 with a stable outlook. With a 2009 issue of $77.5 million, the district had $8.5 billion of outstanding debt.

Moody’s Investors Service rates TRWD’s senior debt Aa1, while Fitch Ratings rates the district AA.

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