1998-01-26 Workshop and Regular Meeting of City Council

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• • Opportunity The City of Galveston has a relationship with Gulf Coast Water Authority similar to La Porte and LPAWA. During the summer of 1996, the City of Galveston, owner of 16 mgd through the Gulf Coast Water Authority, experienced difficulty in taking its capacity. This was due to the extreme demand experienced during this period, as well as Galveston's location at the end of a long transmission line. Studies indicated that Gulf Coast Water Authority could expand its Texas City Plant and construct new transmission facilities at a lower cost than receiving water from the Southeast Plant. The situation mentioned above requires Galveston to sell its capacity at the Southeast Plant. The Gulf Coast Water Authority began discussion with Co -Participants at the Southeast Plant to determine interest in the purchase of Galveston's capacity. On August 13, 1997, the LPAWA board of directors indicated an interest in purchasing additional capacity. At a subsequent meeting held August 27, 1997, the Board passed a resolution indicating an interest in purchasing 2.5 mgd of additional capacity at a price of $1.1688 per gallon, which is the price paid by the Authority in 1987. Four other Co -Participants indicated a willingness to purchase capacity, with the five requests totaling 15.5 mgd. The LPAWA subsequently indicated an interest in the remaining .5 mgd, for a total request of 3 mgd. As mentioned in the previous section, the original purchase of water from the Southeast Plant buy -in was expected to last the City until 1999 but population growth has extended the date to 2003. It was assumed in the study that plans would be made for additional capacity by that time. At this time, there are no plans to expand the Southeast Plant. Since we are at 88% of our capacity, this causes the City great concern and hampers our ability to provide long term planning and commitments for certain areas. For example, you might recall that several recent water agreements to our industry clients have had term limits on them as we have had to protect our ability to provide capacity to our residents. We believe the opportunity to purchase this additional capacity, at 1987 prices is one that should not be passed up and will provide us excellent growth capacity. Attached as Attachment A is a newly prepared graph, based on current population estimates and different projected growth rates. The graph shows that this purchase should provide adequate potable water for a 20 to 30 year period. The graph was prepared with assumptions in population growths of 1.5% to 3% per year. As mentioned earlier, our actual growth rate has been 2.35% for the last seven years. Additionally, based on the assumption that the City of La Porte will be the same percentage of the new capacity that it has of the existing capacity and that the daily per capita consumption continues to average 113.5 gallons, this water purchase should provide the City with enough water to support a population of 64,000. 2