The Killeen City Council is slated to vote Tuesday on an agreement with Bell County Water Control and Improvement District No. 1 for the financing, design and construction of a water treatment plant on Stillhouse Hollow Lake.
The proposal will give the city an additional 10 million gallons of treated water per day and is expected to meet the city’s growing water needs for another two decades. It adds to the current 32 million gallons per day from Belton Lake.
The Texas Commission on Environmental Quality requires a city to begin planning for future water usage once it reaches 85 percent of its peak treatment capacity, a mark Killeen nearly hit in 2011.
City Manager Glenn Morrison said the city studied options with WCID-1, Kempner Water Supply and Central Texas Water Supply Corporation.
Killeen has a contract with WCID-1 for treated water from Belton Lake at a rate of 62 cents per thousand gallons, Morrison said. It will charge the same rate for water from the Stillhouse plant.
Morrison said Kempner Water Supply rates were 75 cents per thousand gallons and Central Texas Water Supply rates were 69 cents per thousand gallons.
Morrison said one of the most important factors in moving forward with a provider is the issuance of debt services. WCID-1 agreed to issue the debt at its current rate of 62 cents per thousand gallons, whereas Central Texas and Kempner rates were nearly four times that amount at $2.62 and $2.66 per thousand gallons.
“(That’s) a very big difference,” Morrison said. “The reason we ask the question about issuing debt is to keep us in line with our water and sewer master plan.”
Another deciding factor was interim water, he said.
All three companies were able to provide 2 million gallons of water while the plant is constructed, but Kempner and Central Texas were both on a take-or-pay basis while WCID-1 allows the city to only pay for what it uses.
The Stillhouse plant will serve neighboring cities as well as Killeen. The city is expected to fund nearly $30 million for the plant’s construction.
Martie Simpson, city finance director, said in November the total debt service is a little more than $87 million, which includes existing debt and debt that will come into play once the city enters negotiations on the new treatment plant.
Because of the city’s “extremely healthy” water and sewer fund, Simpson said financial advisers determined it would be in the city’s best interest to put in an initial cash outlay of $5 million for the water plant’s construction.
She said because of the water and sewer fund’s balance, it isn’t necessary to issue capitalized interest — interest incurred during construction — for the project.