After some entitlement agreements the Huffines Trilogy Development is down to 1,700 lots in the ETJ and city limits with about 60 to 100 lots in the City of Heath, Texas. The part that is in RCH’s CCN is about 1,700 lots and after a number of roadblocks from RCH Water Supply not able to provide water by exceeding Rockwall’s Wholesale Water Supply contract to the economics of infrastructure cost it was time for the developers to review viable options.
If you are new to my blog, welcome and thank you for reading to be informed and how you can be part of the solution for RCH Water Supply Corporation to get their act together to provide a quality water service. Things are starting to get interesting for those on the RCH WS WATCH as you can see developers are now seeking alternatives when RCH WS can’t comply. Simply click yes if asked, “Would you like to receive notifications on latest updates?” Or visit the Politics category in the menu to read all my local Rockwall County political articles.
The Texas Legislature passed Texas Open Meeting Act (TOMA) to ensure that we could keep up with our government. Adopted in 1967, the act essentially gives the public near-complete access to the meetings of a governing body. The law is based on the principle that citizens have the right to be informed about and participate in their own governance, and reviewing courts conduct their analysis of TOMA issues with this principle in mind.
I bring this up for you to understand what you are about to watch and read why it is important about being involved in what is happening locally with our water service provider.
In case you were unable to attend the RCH WS Board Meeting on September 7, 2022 here is the video that I recorded for you to watch at your convenience.
Developers are anxious to get started.
Chris Cuny, associate principal at Teague Nall and Perkins, Inc. (TNP), spoke to the RCH WS board about the Trilogy Development and the recent decisions they have made.
“We spoke about a year ago about RCH WS serving water to the development. Since that time we have received information from Eddy Daniel, engineer consultant (DBI) at your request provided numbers of what we would have to do. Since that time, we have made some revisions with this project that is on Warren Hodges (RCH WS Board Director) old property. Approximately 900 acres, 139 acres is in the City of Heath, approximately 173 acres in the City of McLendon-Chisholm and the rest is in the ETJ.” said Chris Cuny.
Mr. Cuny continued, “Our plan that we worked out with the City of McLendon-Chisholm. After some entitlement agreements we are down to 1,700 lots in the ETJ and city limits. About 60 to 100 lots in the City of Heath. The part that is in RCH’s CCN is about 1,700 lots. The Trilogy development will take about 10 years or longer. We were hoping to have the first lots down by 2024. So we have been working on figuring out what the options are. We have been working with the City of Terrell and a couple of other developers in the [Kaufman County] area.”
Mr. Cuny shared that they are considering a second connection with the Terrell transmission line. There is already a connection there and Terrell is looking at bringing water across Colquitt Road [FIGURE 2]. It’s east of Hwy 205 and it would come from the south of McLendon-Chisholm’s ETJ to extend to the north.
The start of the water decertification process
Mr. Cuny honorably informed the RCH WS board that they are strongly considering to decertify from RCH WS’s CCN [FIGURE 3]. From all the issues that is happening with RCH WS this may be welcomed and the Trilogy developers are hoping this will be an amicable arrangement. Mr. Cuny was very articulate by offering that they are willing to sit down, but made no mention of stating there would be any financial compensation regarding the facilities and investments in that area. Trilogy’s legal counsel advised them of several options, but only spoke of two:
- A sales transfer merger process. The parties would sit down and negotiate what that is. RCH WS will agree to let Trilogy go with a joint application that is sent in with RCH WS’s blessing once the parties come to terms.
- Decertification process. Which will be done through the attorneys.
Agreements are taking off
Currently, there is a three party agreement that has been executed with the City of Terrell, the Tapestry Development (Old Mann Ranch) and the Huffines Trilogy Development. It’s a three party agreement that would share the cost of the line that is based on usage for each of the developments.
On August 23, 2022, Trilogy did discuss with the City of McLendon-Chisholm that if they are interested in taking the CCN after RCH WS is decertified from the Trilogy development portion that they would be happy to transfer to the City at little or no cost. So that the City of McLendon-Chisholm can slowly get in the water business by selling the water from the City of Terrell to the Trilogy development.
Although, there are no official plans from the City of McLendon-Chisholm to expand beyond that. A MOU is not legally binding, but this is what Huffines offered for the City of McLendon-Chisholm so there is time to work out the contracts.
Trilogy land surveyors on the move
Trilogy developer is already in the process of starting to look at right-of-way acquisitions to surveying along the route.
Cuny also mentioned that they didn’t come to this decision easily. It was an economic issue and after talking to Eddy Daniel RCH WS’s the engineer consultant who shared that there was a cost to get water for McLendon-Chisholm with RCH’s CCN. And there was a plan to do it without Trilogy. Eddy Daniel shared his opinion that he was looking at a 16 inch line if Trilogy were with RCH WS. However, Trilogy is looking at a 12 inch line without RCH WS and some of the pumping would be different.
Mr. Cuny commented, “Trilogy would probably be better without RCH WS by going with Terrell’s three-way split and we would be the smallest users. Terrell is eager to bring the line up and expand into their ETJ. Also, Eddy Daniel also informed Trilogy that Rockwall said, “No”.”
RCH WS Board of Directors, Steve Hatfield and Warren Hodges said that they would like to see that letter that was proposed to begin negotiations. Mr. Cuny agreed to send that letter within the next day or two.
RockTalk Podcast | Episode 4
Paul Day, Jason and Adrienne Balkum discuss about the RCH water management issues from the secret meetings to highlighting why Trilogy developers are seeking to decertify from RCH‘s CCN. If you are listening from Spotify please take our poll to answer, “Should the RCH WS Board continue their service contract with H20 Services, Robin Baley?”
What kind of questions will the Transferor (RCH WS) have to provide to the Public Utility Commission (PUC)?
An amicable transferor would have to answer question 4, 5 and sign the oath.
4. If the transferor is a Water Supply or Sewer Service Corporation, provide a copy of the current tariff.
5. *Attach a list of all customers affected by the proposed transaction that have deposits held, and include a customer indicator (name or account number), date of each deposit, amount of each deposit, and any unpaid interest on each deposit.
In order for the Commission to find the application sufficient for filing, the Applicant should provide answers to all of the questions, attach any agreements, contracts, references, mapping and affidavits. Each application will be assigned a docket number and an administrative law judge (ALJ). All parties involved will receive notice of a HEARING ON THE MERITS. So between 30 days to 120 days from a proper notice given the Commission Staff will give a recommendation for the transaction to proceed as proposed or recommend that the STM be referred to State Office of Administrative Hearings (SOAH) for further investigation. The Applicants will be required to file an update in the docket to the ALJ every 30 days following the approval of the transaction. The transaction must be completed within six (6) months from the ALJ’s order (Note: The Applicants may request an extension to the 6 month provision for good cause).
After all required documents from the Applicants are delivered, the application will be granted a procedural schedule for final processing. The Applicants are requested to consent in writing to the proposed maps and certificates, or tariff if applicable. The final order by the ALJ will issue or amend the applicable CCNs.
Based on the “applicant questions” do you believe that RCH WS would be considered a qualified water provider?
Here is a list of some of the applicant questions:
1. If the transferee is someone other than a municipality, is the transferee current on the Regulatory Assessment Fees (RAF) with the Texas Commission on Environmental Quality (TCEQ)?
2. If the transferee is an IOU, is the transferee current on the Annual Report filings with the Commission?
3. The legal status of the transferee is (as recorded with the Texas Secretary of State and Articles of Incorporation and By-Laws established).
4. If the transferee’s legal status is anything other than an individual, provide the following information regarding the officers, members, or partners of the legal entity applying for the transfer.
5. The transferee Applicant must provide accounting information typically included within a balance sheet, income statement, and statement of cash flows. If the Applicant is an existing retail public utility, this must include historical financial information and projected financial information. However, projected financial information is only required if the Applicant proposes new service connections and new investment in plant, or if requested by Staff. If the Applicant is a new market entrant and does not have its own historical balance sheet, income statement, and statement of cash flows information, then the Applicant should establish a five-year projection taking the historical information of the transferor Applicant into consideration when establishing the projections.
6. Projected Financial Information may be shown like a detailed budget or capital improvement plan, which indicates sources and uses of funds required, including improvements to the system being transferred; or a recent budget and capital improvements plan that includes information needed for analysis of the operations test (16 Tex. Admin. Code § 24.11(e)(3)) for the system being transferred and any operations combined with the system.
7. Are any improvements or construction required to meet the minimum requirements of the TCEQ or Commission and to ensure continuous and adequate service to the requested area to be transferred plus any area currently certificated to the transferee Applicant? Attach supporting documentation and any necessary TCEQ approvals, if applicable. If yes, describe the source and availability of funds and provide an estimated timeline for the construction of any planned or required improvements.
8. Describe, in detail, the anticipated impact or changes in the quality of retail public utility service in the requested area as a result of the proposed transaction. Describe the transferee’s experience and qualifications in providing continuous and adequate service. This should include, but is not limited to: other CCN numbers, water and wastewater systems details, and any corresponding compliance history for all operations.
9. Has the transferee been under an enforcement action by the Commission, TCEQ, Texas Department of Health (TDH), the Office of the Attorney General (OAG), or the Environmental Protection Agency (EPA) in the past five (5) years for noncompliance with rules, orders, or state statutes? Attach copies of any correspondence with the applicable regulatory agency(ies)?
10. How will the proposed transaction serve the public interest?
11. List all neighboring water or sewer utilities, cities, districts (including ground water conservation districts), counties, or other political subdivisions (including river authorities) providing the same service within two (2) miles from the outer boundary of the requested area affected by the proposed transaction.
12. Does the PWS or sewer treatment plant have adequate capacity to meet the current and projected demands in the requested area?
13. List the name, class, and TCEQ license number of the operator that will be responsible for the operations of the water or sewer utility service.
14. What effect will the proposed transaction have on an average bill to be charged to the affected customers? Take into consideration the average consumption of the requested area, as well as any other factors that would increase or decrease a customer’s monthly bill.
Are you curious as I am what will RCH WS provide to the PUC Commission if they come to amicable terms with the Trilogy developers?
As always I would love to hear some feedback please reach out to me and/or comment below.