Austin Alliance Moves to Halt MWH's Billion-Dollar Plant Project

By ED OCHS

Like the Whac-A-Mole arcade game, it’s almost impossible to keep megacontractor MWH Americas Inc. from popping up in towns and cities across America and repeating the same pattern of abusive business practices that have placed them under the microscope in Cape Coral, Fla., New Orleans, Los Osos and Morro Bay, California, and elsewhere. In Texas, environmentally and fiscally-conscious Austinites banding together seem to have gained the upper hand on the profiteers. But can they hold on?

By ED OCHS

MWH is up to its old tricks again, building something that isn’t necessary for a billion dollars that ratepayers don’t have.

Having laid waste to homeowners in Cape Coral, Florida, flim-flammed the city of New Orleans, and threatening to do both in Los Osos and sister city Morro Bay on California’s Central Coast, MWH has targeted Austin, Texas, where the city has contracted the Broomfield, Colo.-based global infrastructure firm to build a $500 million-plus water treatment plant that has boondoggle written all over it.

Water Treatment Plant No. 4 was first approved in 1984 and postponed until 2002 when, according to Save Our Springs Alliance’s web site SaveWaterSaveMoney.org, “peak day (water) demand increases in the ’90s suggested an upcoming need for increased treatment capacity. However, our record peak occurred in August 2001, and has been flat to declining ever since.” The city’s calculations indicate additional capacity will not be needed until 2025.

The $500 million plant has been under construction since 2009, and was supposed to start operation in 2014. To date, $115 million had already been spent on project development and construction costs, with between $300-$400 million in planned future expenditures now facing a hold.

The Austin project not only follows the pattern of MWH’s dubious bidding and billing activities in Cape Coral, Florida, it is headed by the same Cape Coral project manager, Larry Laws. MWH’s practices in the halted Cape Coral project are presently under review by the city of Cape Coral and independent auditor Kessler International. The Austin project was designed by Carollo Engineers, the same large consultant firm that misrepresented and omitted critical information essential to San Luis Obispo County’s dangerously-flawed, runaway $200 million Los Osos gravity-collection sewer project — servicing a small community of only 16,000 residents. Carollo has also been involved in Morro Bay, and is a key cog in MWH’s inbred contractor network.

According to Save Our Springs Alliance fact-checkers, “Austin’s WTP4 will cost taxpayers over $1 billion including interest… City cost estimates put WTP4 at $1.2 billion, counting interest and debt financing charges…

“Significant hidden cost overruns are already running the price tag beyond this estimate. Specifically, the City’s official $508 million (without interest) cost estimate excludes over $60 million spent on the project before 2008. To hide the fact that the plant is already over budget, the City also lopped off a $30 million transmission main that has always been a critical component of the plant. This tunnel will need to be built within a few years – but it disappeared from the budget without explanation as the costs for other components busted the $508 million budget.”  

A coalition of Austin groups opposed to the MWH project wants the city council to hire New York-based Kessler, author of the Kessler forensic audit of MWH practices in Cape Coral, to perform a similar audit for the Austin project. Austin’s city auditor’s office is also reviewing the Cape Coral situation.

In a preliminary move towards a change in direction, the Austin City Council voted 5-2 on July 29 to gather information “to evaluate the costs and savings of postponing further construction on WTP4 for five years and for 10 years,” according to Save Our Springs Alliance, which supports “postponing spending hundreds of millions of dollars for WTP4 in favor of keeping Austin water rates affordable now while we study our options for meeting our future water needs.”  

The alliance recently won a crucial Austin city council race, tipping council balance of power in favor of shelving the project, but entrenched, deep-pocket MWH supporters are turning up the heat to keep the project rolling.

“We’ve built about 15% of the project, with about $350 million yet to be spent,” Bill Bunch of Save Our Springs Alliance (http://www.SaveOurSprings.org) told The Rock. “We have plenty of treatment capacity to absorb all the growth we are likely to see through at least 2025, so we really have no need of any kind for the plant.”

According to Save Our Springs, “Even with grossly inflated costs of stopping construction and preserving the work that has been done, Austin ratepayers stand to save over $300 million by stopping construction at this time while preserving the value of the work done to date… Piling on debt during a recession is not very smart – unless you are a contractor on the project or city bond agent working on commission.

“The Water Utility misled bond buyers last year and the year before on how much water they would sell, and now the chickens are coming home to roost. The Water Utility’s only answer to our bond problems: jack up water rates twice as much as what they said we would need, while still rushing forward building a plant that diminished water sales now tell us we do not need.

“…Borrowing less money would improve our bond rating, not lower it. We can’t sell the water we have the capacity to treat now; completing the plant won’t add a single dollar to our revenues while expanding our debt dramatically and increasing operating costs. Fiscal prudence requires responding to changed conditions – yet our Water Utility continues ignoring the simple fact that their own water projections now show we won’t need additional treatment capacity until 2025 or later.”

“The real decision point lies before us,” according to Save Our Springs. “But for the first time in a long time, we have City leadership and a potential council majority recognizing that building WTP4 is a dead end rather than a road to securing a safe, reliable and affordable water supply for Austin’s future.”

Opined Austin City Councilman William Spelman in an Aug. 10 Austin-American Statesman commentary (http://www.statesman.com/opinion) entitled “Decide water plant on its merits”:

“Over the last 50 years, more Austinites moved into apartments, condos and houses with small yards. Since the utility decided to build WTP4, demand has dropped further in response to rate hikes (the utility projects a 66% increase over five years), a sputtering economy and one of the worst droughts in state history,” wrote Spelman.

“Sooner or later, we’ll need WTP4. We’re building it now so it can come on line in 2014 — five years or more before we need it. That might sound prudent to some, but we’re giving up a lot to build that plant now,” he penned. “But with demand down and revenues uncertain, we don’t have the money to build WTP4, fix leaky pipes and old plants, and build out the reclamation system. Any of those approaches could have met our water needs for the future, but WTP4 costs a lot more.”

“It’s time to call a time out, get the facts and evaluate our options for providing a safe and affordable water supply for our growing city,” wrote Bunch, executive director of the Save Our Springs Alliance, in an August 14 Statesman opinion piece (http://www.statesman.com/opinion).

“Rushing ahead with a project that is only 15% complete, that won’t be needed for 15 years or more, and that continues to be justified with misleading information and unfounded scare tactics benefits no one but the contractors,” he wrote.

“Postponing the treatment plant would allow our community to develop a real plan for meeting our future water needs, one that would likely unite rather than divide our city. Or we can continue throwing good money after bad and praying that it does not get worse.”

Save Our Springs Alliance (http://www.sosalliance.org) supports “postponing spending hundreds of millions of dollars for WTP4 in favor of keeping Austin water rates affordable now while we study our options for meeting our future water needs,” according to its web site. Alliance groups include Austin Sierra Club, Environment Texas and Clean Water Action, as well as Austin Neighborhoods Council, PODER, National Wildlife Federation, Hill Country Alliance and others.

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