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Council hears reuse-plant and water-fund pressure as staff seek customers for effluent
Summary
City Manager Sylvia told council the reuse plant and elevated storage tank remain significant capital needs (estimates cited: ~$20M for storage/transmission, ~$60M for reuse plant). Staff are negotiating contracts and seeking customers for effluent but said revenue timing is uncertain and enterprise transfers currently subsidize the general fund.
City Manager Sylvia briefed council on water and wastewater finances and the ongoing reuse-plant negotiations. She said staff are in final contract iterations with reuse partners and are continuing talks with potential customers for effluent sales.
"Part of that is a conversation that we've been having with the Musk companies," Sylvia said, noting earlier commitments to deliver up to 1 million gallons per day that have not materialized and that current flows are far below that commitment. She described the need to consider pretreatment, potential construction of a second (pretreatment) system, and the operational trade-offs involved.
Sylvia also cited large capital exposures: an elevated storage tank in the Valverde area at roughly $10 million and pumps/transmission estimated at another $10 million, plus the reuse plant's approximate $60 million cost. Staff said the water/wastewater fund currently contributes an $890,000 debt payment and that identifying new wholesale customers or renegotiating agreements will be central to minimizing transfers to the general fund.
Council asked for revenue scenarios tied to different wholesale volumes and for the status of outstanding contracts; staff agreed to return with updated numbers and the reuse-plant contract redline for legal review.
