The City Council is divided over whether the San Antonio Water System should allow the company planning to build a water pipeline from Burleson County to sell most of its stake in the project without council approval.

District 8 Councilman Ron Nirenberg is leading a group of council members that says the SAWS board of trustees should not unilaterally amend the Vista Ridge contract. On Wednesday, Nirenberg filed a formal request that the council review the subject, following news that Abengoa Vista Ridge plans to sell 80 percent of its share in the project to an as-yet unknown investor.

District 1 Councilman Roberto Treviño, District 4 Councilman Rey Saldaña, District 5 Councilwoman Shirley Gonzales and District 7 Councilman Cris Medina signed Nirenberg’s council consideration request.

Other council members point out that the issue was already addressed in one paragraph in the resolution that the council unanimously approved in October 2014. It allows the SAWS board to make certain changes to the pipeline contract without further council input.

SAWS’ board governs the decisions of the utility serving 1.6 million people. The City Council appoints board members and approves debt, real estate transactions and water and sewer rates.

Under the current contract with SAWS, Abengoa Vista Ridge was to spend $82 million on engineering and construction of the 142-mile pipeline, which would draw water from 18 wells in Burleson County. The total cost of the pipeline, not counting financing, is expected to be $844 million.

Abengoa Vista Ridge would finance the remaining $762 million by selling tax-free bonds to be issued through the Mission Economic Development Corp. SAWS’ contract requires the utility to buy up to 16.3 billion gallons a year that would begin flowing in 2020.

San Antonio ratepayers would indirectly pay back bondholders, Abengoa Vista Ridge and its as-yet-unknown partner $3.4 billion, including borrowing costs, over 30 years. SAWS will own the pipeline by 2050.

After the contract was signed, Abengoa Vista Ridge’s deeply indebted multinational parent company in Spain began pre-insolvency proceedings in November to stave off full-on bankruptcy. Abengoa stock has plummeted from $29.26 a share Sept. 5, 2014, to 76 cents on Wednesday.

The original contract allows Abengoa Vista Ridge to sell up to 49 percent of its share of the pipeline to another investor.

Abengoa Vista Ridge director Pedro Almagro said at a SAWS board meeting Tuesday that his company is seeking an equity partner to take four-fifths of its share, which works out to $65.6 million. Doing so would require a contract amendment.

Nirenberg said that when council members approved the deal, SAWS and Abengoa officials were telling them that the company was in “solid and improving” financial shape.

“Those circumstances are changing,” he said Wednesday. “So I want on behalf of taxpayers to be able to say we are protecting you.”

Medina said he signed Nirenberg’s request because the issue is worth discussing.

“It is important that we have a plan to secure our city’s water future,” he said, but “we cannot have that at the expense of making sure we have the most financially sound deal.”

Other council members said Nirenberg’s request is unnecessary.

“The mayor’s on the SAWS board and there’s plenty of oversight there,” District 2 Councilman Alan Warrick II said. “If any rate changes need to occur, it still has to come back to council anyway, so I think any additional approval from City Council is cumbersome and unnecessary at this point.”

District 9 Councilman Joe Krier said he is satisfied that the contract protects taxpayers from risk.

District 10 Councilman Mike Gallagher and Mayor Ivy Taylor pointed to a section of the 2014 resolution that gives the SAWS board the authority to make any contract amendments that “do not involve an increase in the amount of water to be delivered” or “the manner in which (SAWS’) payment for delivered water is calculated.”

“I think it was quite clear that we empowered SAWS to make that decision, and I don’t see any reason to change that,” Gallagher said.

Asked if she was satisfied with Abengoa Vista Ridge’s transparency regarding its financial issues, Taylor said, “I think that we probably could have learned some of the stuff maybe a little bit earlier.”

SAWS President and CEO Robert Puente said he and the board first learned of the company’s plan to sell an 80 percent share on Tuesday during Almagro’s presentation. Puente will come before the council next week to provide more details.

“We’ve been very diligent about keeping council members informed on this project,” he said. “I consider this one my personal jobs on this project.”

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