Georgetown staff proposes selling portions of its water service territory to reduce long-term demand by 58%

Caroline Stewart, the city's strategic projects manager, told Mayor and Council that staff is proposing a multi-year effort to transfer large portions of Georgetown's water CCN that lie outside the city's ETJ to neighboring cities or other utilities. The stated objectives are to reduce long-term water demand, lower the city's exposure to development outside its land-use control, and stabilize rates by removing uncertain, high-growth territory from Georgetown's planning responsibility.

Stewart said the city's CCN covers about 400 square miles and extends into Burnet and Bell counties following the 2010 acquisition of the former Chisholm Trail Special Utility District. She said more than 40% of current customers are outside the city limits and that rapid development outside the ETJ has left the city carrying a large capital program: staff reported about $415,000,000 in water capital projects now active, most built to serve areas outside the ETJ.

Under the plan outlined in the workshop, staff would retain service territory inside the city limits and ETJ (about 62,500 customers) plus a small adjoining band where critical infrastructure sits. Staff proposed offering the rest for sale; that territory represents roughly 11,500 current customers. Stewart said modeling shows the transfer would reduce the long-term projected water deficit from about 100,000 acre-feet per year (under the current CCN) to about 41,000 acre-feet per year — a roughly 58% reduction in modeled long-term additional supply need.

Staff explained the steps: (1) give neighboring cities first right of review for areas inside their ETJs; (2) if neighbors decline, issue a request for proposals seeking a utility to acquire the territory; (3) evaluate proposals by multiple criteria that prioritize long-term customer continuity and rate stability (rather than simply the highest cash price); (4) if council approves, hold a city election required by state law for transfers that include customers/infrastructure; and (5) proceed through the Public Utility Commission (PUC) review process. Stewart and staff said the earliest an election could be held is May 2026 and that final transfer close could be in late 2027 or, if there are contested hearings or appeals, as late as 2029.

On valuation, Stewart said staff will look both at depreciated book value and outstanding debt (bond paydown schedules) to ensure the city recoups investments; staff also said the RFP will require bidders to demonstrate a plan for long-term supply, a plan to stabilize near-term rates for existing customers, and operational capability. Staff emphasized they will not cut off existing customers during the transition and that short-term support or temporary service agreements will be part of any transfer plan while the purchaser builds needed facilities.

Stewart also reviewed broader water-supply work: staff has paused or terminated some earlier options (she said a proposed Williamson County supply was not economical/ sustainable and the GateHouse agreement was terminated after due diligence), and staff is actively negotiating term sheets for two long-term groundwater opportunities (one staff labeled as a recharge source with ~35,000 acre-feet permitted for production from Lee/Bastrop counties and another with EPCOR with ~40,000 acre-feet permitted in Robertson County). Staff said it will pursue only the option(s) that best balance cost and risk.

Other actions and projects in the water portfolio Stewart summarized: a proposed Taylor-area pipeline to bring eastern groundwater into the system (staff are acquiring land and issuing procurements); expansion of North Lake Treatment Plant and construction of a South Lake facility; participation in an indirect-potable-reuse opportunity with the Brazos River Authority (staff estimated roughly 5,015 acre-feet per year could be available); aquifer storage and recovery (ASR) following HB 616; and a major AMI meter replacement program (about 25,000 meters) intended to reduce unbilled water and detect high-usage/leaks.

Stewart said staff will bring a draft RFP back to Council for review and that staff will coordinate with neighboring cities before finalizing the transfer area. She emphasized the city will prioritize customer protections in the procurement, and that any purchase would still require council approval, a city election and PUC review before a final transfer could occur.

No formal council vote occurred in the workshop; Councilmembers asked clarifying questions and directed staff to develop an RFP and return with materials for Council review prior to issuing the procurement.