Two firms, the New York-based investment firm Blackstone Group and Missouri-based Garney Construction, are in talks with executives of Abengoa Vista Ridge to take over 80% of the 142-mile Vista Ridge water pipeline project contract, according to SAWS President and CEO Robert Puente.
Abengoa Sociedad Anónima, and its subsidiary Abengoa Vista Ridge, have until March 28 to reach a deal with creditors after the Spanish renewable energy and engineering conglomerate filed for protection in November last year.
If a new firm is selected to become Abengoa Vista Ridge’s majority owner, nothing about San Antonio Water System‘s contract in terms of risk or project scope will change, Puente said Tuesday morning after the SAWS board’s meeting. The new partner would essentially have to take on the project as-is and SAWS will have the opportunity and authority to review the firm before proceeding.
Pedro Almagro, director of Abengoa Vista Ridge, informed the board that the company has narrowed down the number of interested firms from five to two, which are going over the contract and formulating proposals.
Progress is being made in Spain, too, Almagro said, and the company hopes to “have a solution in the next two weeks.”
The Rivard Report reached out to Blackstone and Garney representatives on Tuesday to confirm the firms’ interest in the Vista Ridge project, but no response was received by deadline.
“It’s very fluid,” Puente said. “Things are happening yesterday and today that we’re trying to finalize.”
Garney, a construction contracting firm with offices across the U.S., is a contractor on previous and ongoing projects with SAWS, such as the Twin Oaks Aquifer Storage and Recovery facility.
If an investment partner isn’t found, SAWS has a few different options. It could abandon the pipeline plan that would bring 16 billion gallons of water from Burleson County’s Carrizo Aquifer to San Antonio every year for 30-60 years altogether and instead invest in expanding other sources of water like its desalination facility. It could also change the contract to appease potential partners, or take on the $3.4 billion project itself.
Before any substantial changes are made to the contract, Councilman Ron Nirenberg (D8) wants SAWS to come before City Council for approval and he has filled a council consideration request (CCR) to that would increase the amount of oversight Council has over the Vista Ridge contract.
“The City Council already decided that in October 2014,” when the contract was approved, Puente said. “The direction I have is from the City Council and they said … that those kind of changes do not have to go back to Council (for approval).”
Under the agreement approved in October, the price and the amount of water from Vista Ridge are contractual items that, if changed, would need Council approval, he said. Puente gives regular briefings and updates to City Council, and during one such briefing on Feb. 18, he assured members that the project is being closely monitored and is still viable.
But Nirenberg is concerned that if the project risk shifts away from Abengoa Vista Ridge – or whatever partner owns it – and onto SAWS, then ratepayers would be liable if the project never materialized.
“Basically I want (SAWS) to get a clear indication from Council (either by vote or briefing) whether or not changes they propose or modifications to the contract, that we consented to, should be made,” Nirenberg said on Saturday after his State of the District address. “I am very uneasy about some of the things I’ve been hearing about risk tolerance.”
The idea that SAWS could take over the project would be “unacceptable,” he said. “The risk is who’s left holding the bag if Vista Ridge fails. For me, and according to SAWS, it was not ever going to be the taxpayer. We’re not okay holding any of the bag. Not half the bag, not a quarter of the bag.”
Click here to download the CRR which was signed by Council members Roberto Treviño (D1), Rey Saldaña (D4), Shirley Gonzales (D5) and Cris Medina (D7) and submitted to the City Clerk’s office on Feb. 10.
“Until I’m told differently by the board or City Council itself, we will proceed on with trying to resolve the latest issue of the finances of the Vista Ridge project,” Puente said.
*Top image: Pedro Almagro, director of Abengoa Vista Ridge, tells the SAWS board that the company is seeking investors during its meeting in January. File photo by Scott Ball.
Related Stories:
At Least Three Investment Firms Interested in Vista Ridge Pipeline
Troubled Abengoa Files for Protection from Creditors
Council Approves New Water Rates, Structure
Tax the hell out of every useless, water-sponging lawn and everything will be okay.
The longer this slow-motion trainwreck goes on, the sketchier it gets. Council Nirenberg is seemingly the only voice of reason here, and I’m very glad he isn’t giving an inch.
This whole thing is really starting to stink–enough that I’m beginning to wonder what the deposit activity looks like in the bank accounts Mr. Puente controls.
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