Property owners want a taxing district to save four Texas lakes

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Homeowners and businesses left high and dry by plans to drain four central Texas lakes are working to create taxing districts to repair hazardous dams.

The decision to drain the lakes on the Guadalupe River came in an Aug. 15 announcement that four dams on the river were deemed unsafe after the failure of two others in the past three years. As a result, the four remaining lakes would be drained or “dewatered,” leaving the river to flow in its natural channel.

The Guadalupe Blanco River Authority, which has no outstanding debt for the dams, owns and operates them as small hydro-electric power generators. The 90-year-old dams were privately built and turned over to the river authority in 1963. Without any taxing power or sufficient revenue from electricity sales, GBRA does not have the means to issue bonds to replace or repair the dams, officials said.

“We understand this is an unpopular decision, but one that we feel is unavoidable given the dangers associated with these dams,” said GBRA general manager Kevin Patteson. “GBRA is committed to working closely with the lake associations and the community to mitigate the impact of this difficult, but necessary decision.”

The dam on Lake Wood failed in 2016, followed by the dam on Lake Dunlap last May.

The remaining lakes are Gonzales, the last lake in the chain, preceded upstream by Meadow, Placid, and McQueeney. The lakes flow through Comal Guadalupe and Gonzales counties between Austin and San Antonio. The river near the Comal County seat of New Braunfels is a popular tubing site.

Repairing the six dams would cost about $179 million and take years to complete, according to GBRA. The project would require replacing 15 spill gates, reinforcing concrete and sealing earthen dams in concrete.

GBRA sells an average of $2.6 million of electricity per year to one customer, chief financial officer Randy Staats told The Bond Buyer. Since Texas deregulated power sales, the hydro-electric facilities have lost money, he said.

“Our core industry is sale of water and waste water,” he said. “Hydro-electric is the only one of our businesses that is not self-sustaining.” GBRA's water sales come from Canyon Lake, upstream from its six lakes. Water sales will not be affected by the loss of the lakes, Staats said.

GBRA’s sole customer for power, the Guadalupe Valley Electric Coop, notified the authority that it would not renew its hydro contract in 2023, Staats said.

Because the dams are not used for flood control or drinking water supply, they do not qualify for grants from the Texas Water Development Board, Staats said. Their primary value is recreation, he said.

Property owners estimate a taxable value of more than $1 billion on Dunlap, McQueeney and Placid. Lake Gonzales is the largest lake in the chain but does not have as many high-dollar homes as those upstream, officials say.

At an emotional GBRA meeting that drew a packed house last week, owners of homes and businesses sought an alternative to draining the lakes beginning Sept. 16.

“The damage you’re doing to people like me is enormous,” said Thomas Belton, who lives and works at Lake McQueeney. “What will happen is that my job is gone. My way of supporting my family is gone. Everything I’ve done for 36 years is gone.”

The property owners have formed a coalition called “Save Our Lakes” that has reached out to Gov. Greg Abbott’s office and commissioned a $30,000 study from The Perryman Group on the economic impact of draining the lakes.

The starting assumption is that property values will fall dramatically, affecting the revenues of cities, counties and school districts. GBRA's headquarters in Seguin is north of suburban San Antonio. New Braunfels, a San Antonio suburb is one of the fastest growing cities in the nation.

“Values could drop by as much as 50%,” Bob Worth, a homeowner on Lake McQueeney told the GBRA. “The school districts will be really hard hit.”

Property owners on the six lakes, including the two that have already drained, are collecting petition signatures in hopes of making the November ballot with initiatives to create municipal utility districts. With their own districts, the property owners could assess taxes to support municipal bonds to finance dam repairs.

Lake Dunlap property owners have enough signatures to make the ballot, the head of their association said.

A group of Lake McQueeney property owners hired the law firm Kelly, Sutter and Kendrick, which issued a notice for a class action suit against GBRA, claiming the river authority’s actions and failure to maintain the dams represent an illegal taking of property.

“The GBRA has already deeply involved itself in the taking of the property owners’ real properties and exposing the public to the loss of life and limb,” J. Douglas Sutter wrote in the notice. “It is far too late for GBRA to avoid its exposures to liabilities for such wrong-doings by attempting to dump on the property owners the assets it knowingly and intentionally allowed to deteriorate to the point of ‘imminent’ failures.”

The Lake McQueeney property owners are now demanding GBRA “cease and terminate all plans” to build new offices in New Braunfels at a cost they estimate at $7 million and use all the fundsfor repairs on all six dams.

Sutter wrote that the organization also “immediately assume (probably for the first time) its chartered responsibilities and obligations” to repair and replace the dam levees.”

Citizens United for Lake Placid, with 250 members, is working to raise about $80,000 to hire an attorney and file an injunction against GBRA to delay the draining.

The Lake Placid group would need to raise another roughly $70,000 to create the special taxing district and hire real estate and engineering experts to further assess the dams.

GBRA officials have promised to work closely with the lake associations to find ways to replace the dams as the authority exits the hydro power business. GBRA has set up a web site to keep residents posted on developments.

“I don’t see the relationship going away,” Staats said. “This is really a starting point.”

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Municipal utility districts Water bonds Texas
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