By Moses Leos III

At a cost of $3 million, Kyle will soon claim sole ownership of its wastewater treatment plant after years of fighting with current co-permittee Aqua Operations. 

As Kyle officials work on financing the acquisition, city leaders believe the move will help the city manage its rapid growth.  

“We’ve been fighting this battle for a long time. I consider that it’s going to be freedom for the city,” council member Diane Hervol said on June 16. “The shackles will be taken off. This will be key for development in the city.” 

Under Kyle’s purchase agreement with Aqua, approved by a 7-0 city council vote on June 16, the city would obtain complete ownership of the plant. That includes all permits and assets that are a part of the plant. Aqua would be required to close any outstanding accounts they have with vendors.

In turn, the city would pay Aqua a $3 million lump sum cash settlement. In addition, Kyle would be required to fund two inspections on the plant prior to closing the agreement. Both parties must close no later than October 1. 

City Manager Scott Sellers said the city would create a division withing the wastewater department, with three to four new jobs to be created. 

The agreement ends Kyle’s four-year fight over gaining plant ownership rights. Since the plant was built in 1999, both Kyle and Aqua, then AquaSource, have been co-permittees of the plant. 

But several incidents, including two wastewater spills into Plum Creek, have pushed both parties into litigation. The two entities are in an ongoing billing dispute that will not be dissolved by the contract. 

While the original contract allowed Kyle to purchase the plant in the future, questions on whether the facility could meet Kyle’s growth led city officials to make a play for it’s acquisition. 

But as the plant didn’t meet contractually obligated growth milestones, Sellers said few anticipated Kyle’s rapid growth when the facility was first built. 

“I don’t think anyone assumed in the year 2000 that the population (in Kyle) would be 30,000 or greater,” he said. 

With the transition of power, Kyle would “control its own destiny” according to Sellers. It would allow the city to time its wastewater treatment model with the acquisition. The model, commissioned to Burgess and Niple, would provide an in-depth analysis of the city’s wastewater needs. That could include an upgrade or expansion to accommodate for growth. 

Sellers said many developers looking at Kyle have “asked and will continue to ask” what the city’s capacity to treat water and wastewater is. 

“By being sole permit holders of the plant, we’d be able to address growth in a much more proactive manner.” 

But the biggest question becomes what method Kyle will employ to finance the plant. 

Kyle Chief of Staff Jerry Hendrix said the city has been proactive in budgeting for the acquisition since 2011. The city, however, didn’t budget the item in the fiscal year 2016 budget. 

Sellers said the city will use the time prior to the October closing date to work the project into the budget. 

Several options are on the table with all options going thorugh the city’s utility fund. 

One option calls for the use of enterprise funds. That would require the city to reprioritize CIP projects that fall under the FY 16 budget. Sellers said the acquisition would be priority if the city goes that route. 

The city could issue debt through CO Bonds, paying for the debt service through utility fees.

However, Sellers said it’s too early to tell if the city’s wastewater rates would go up. He said the city has also employed the philosophy of “growth paying its own way.” 

That could mean developers paying impact fees to help offset the cost. 

“We could capitalize on larger developments as they come into the city…which would offset the need for a utility rate increase,” Sellers said.