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Lakeway council delays study into annexing Rough Hollow MUDs, asks for Elmwood input
Summary
City council voted unanimously to postpone a $50,000 engineering study about annexing water/wastewater Municipal Utility Districts in the Rough Hollow area until the June meeting and asked staff to consult LMUD before proceeding.
Lakeway City Council on Monday postponed action on a proposed $50,000 engineering work order to study annexing three Rough Hollow Municipal Utility Districts (MUDs), moving the item to the June 16 regular meeting.
The study would have asked an engineering firm to evaluate the MUDs’ infrastructure, outstanding debt and whether the city should take responsibility for water and wastewater systems as required under the Rough Hollow development agreement. Council voted unanimously to delay so staff could coordinate with the local utility LMUD (Lakeway MUD) and present additional information.
City staff told the council the development agreement requires the city to accept infrastructure from certain MUDs at a defined threshold, but the city is not required to annex them if it does not want to. The proposed consultant scope would identify the condition of water and wastewater facilities, likely replacement needs and the MUDs’ debt obligations so the city can assess long-term fiscal and operational impacts.
Multiple council members and staff said they lack in-house technical expertise to evaluate water/wastewater systems, and that the study was intended as a preparatory step so Lakeway would be ready if and when the MUDs request annexation. Council members also raised concern that LMUD or West Travis County PUA might independently pursue operational changes that could occur without Lakeway’s intervention.
Councilmember questions focused on scale of the debt (staff and commenters cited figures that ranged from about $20 million per MUD to about $100 million combined) and on whether LMUD would perform its own due diligence. City staff and the city attorney said LMUD would likely do similar studies if it sought to take over service contracts, but the information would also help Lakeway decide whether to consent to any future annexation requests.
Action and next steps: Council directed staff to consult with LMUD and return the full study request, scope and a recommendation at the June 16 regular council meeting. The council formally postponed the item to June 16 by unanimous vote.
Why it matters: If Lakeway ultimately annexes the MUDs and takes on their utilities, the city would assume long-term maintenance responsibilities and any outstanding debt tied to those systems. The issue affects Rough Hollow residents directly and has longer-term fiscal implications for city budgets and operations.
What’s next: Staff will coordinate with LMUD and return to council with a refined scope and any cost or scope changes prior to authorizing a consultant contract. The council’s request to consult LMUD was intended both to avoid duplicated studies and to give the council information that will make a future decision more informed.
