City Council authorizes due‑diligence and option to buy Evangeline groundwater rights, with closing conditions

Corpus Christi’s City Council voted to authorize staff to pursue and close on a purchase of groundwater rights from Evangeline Laguna LP, approving an ordinance that begins a contract option and due‑diligence period. The item cleared the council after several hours of technical briefings and public comment.

The city will pay a negotiated purchase price of $169,491,700 for Evangeline’s groundwater rights, subject to conditions staff described as mandatory before closing. As part of the option the city will deliver a nonrefundable $1,000,000 earnest payment and will escrow $3,250,000 at the end of a 120‑day due‑diligence window; those amounts would be credited to the purchase price at close if the sale proceeds. City staff said the price was the final negotiated offer after prior negotiations and an appraisal and that the contract contains adjustment clauses that reduce price if the final permitted production or acreage is smaller than projected.

City staff said the Evangeline rights encompass a large tract in San Patricio County and were described in staff materials as conveying production capacity of roughly 24 million gallons per day (MGD) in total, subject to the transfer of permits and non‑appealable drilling and transport permits from the seller. The ordinance requires a number of closing conditions, including completion of non‑appealable permits from the San Patricio Groundwater Conservation District, execution of surface‑use agreements so infrastructure can be built, and assignment of a production permit issued in 2019 (renewed in 2025). The ordinance specifically conditions the city’s obligation to close on receiving those permits and meeting the seller’s timeline for surface‑use agreements.

City Manager Peter Zanoni and Nick Winkelman of Corpus Christi Water said staff and consultants will use the option period to verify well locations, verify production estimates, confirm electrical and pipeline access, complete title and survey work, and finalize engineering opinions of probable construction cost. CCW officials said they will not pay the full purchase price until the stated closing conditions are satisfied.

The council and members of the public pressed staff on the purchase price relative to an appraisal, on whether and how the city will protect nearby groundwater users from impacts, and on the financial effect to customers. Staff said negotiations reduced the seller’s initial asking price (publicly stated as higher in early negotiations) and described the $169 million as the seller’s final best offer; staff also said the contract has clauses to lower the price if production capacity is reduced. City staff estimated bond financing for the purchase could raise costs for ratepayers; preliminary modeling presented during the meeting suggested an illustrative long‑term debt service impact in the range of a few tenths of a cent per thousand gallons depending on final funding structure and term.

On technical concerns, the council heard a lengthy hydrogeology briefing from Entera (Steve Young) and Corpus Christi Water (Nick Winkelman) that outlined aquifer stratigraphy, transmissivity tests, model runs, and monitoring plans. Entera recommended cautious operation and monitoring (including baseline sampling and monitoring wells) and suggested a well‑assistance program to help neighbors who experience drawdown impacts. Council members asked for clear operational limits, monitoring and neighbor protections; staff committed to baseline monitoring and to designing a city‑approved well‑assistance program and to continuing to provide information to neighbors.

The council approved the ordinance on the condition that Evangeline provide the permits required by the San Patricio Groundwater Conservation District and the other closing requirements outlined in the staff report. The council also adopted a related reimbursement resolution authorizing the city’s intent to reimburse itself from future bond proceeds for up to $169,500,000 of prior qualifying expenditures related to the project.

If the seller does not meet the closing conditions within the contract timelines, staff told the council they would return with recommended changes or next steps. That procedural guardrail was a central factor in the council’s vote.

The purchase vote and the earlier hydrogeology presentation mark a significant step in the city’s multi‑track strategy to add drought‑resilient water supplies alongside other projects already underway. The city said the Evangeline purchase is one element of a broader portfolio that includes local well fields and other regional projects; next procedural steps are legal review, completion of negotiated surface‑use agreements, and the scheduled due‑diligence work over the option period.