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					                                                    Board Agenda
                                            Wednesday, May 21, 2008, at 9:00 a.m.
                                                LCRA Board Room, Austin
                                                    (map on page 3)

                                      Time Certain: 10:30 a.m. - Agenda Item No. 10
Items from the Chair
  1. LCRA Board Policy 206 - Ethics........................................................................................ 5
  2. Proposed 2009 Board Meeting Dates ................................................................................. 9
Items from the General Manager
  Retiree Resolutions
  General Manager’s Update
Items from the Chief Financial Officer
  3. Financial Report................................................................................................................ 11
  4. LCRA FY 2008 Business Plan Third Quarter Update...................................................... 13
Consent Items
 5. Travis County Municipal Utility District No. 11 - Raw Water Diversion and
        Transportation Agreement ........................................................................................... 15
 6. Amend the Irrigation Division Distribution Rate for Raw Water..................................... 19
*7.  Conveyance of Easements in Fayette County................................................................... 20
 8. Directors’ Fees, Expenses................................................................................................. 25
 9. Minutes of Prior Meeting.................................................................................................. 26
Water Topics
 10. Public Hearing for West Travis County Wastewater Impact Fee Land Use
        Assumptions and Capital Improvements Plan ............................................................. 37
 11. Supplemental Interlocal Agreement Regarding Potable Water Supply
        Agreement Obligations from Cedar Park for Leander................................................. 41
 12. City of Dripping Springs - Amend Wholesale Water Service Agreement,
        Adopt Wholesale Rates and Authorize Related Firm Water Contract......................... 43
 13. Repeal of West Lake Hills Wastewater Collection System Impact Fee........................... 46
 14. Adopt Conservation Outdoor Watering Measures for West Travis County
        Regional Water System................................................................................................ 47
Land and Community Resources Topic
 15. Partnerships In Parks Recommendations.......................................................................... 50




LCRA Board Agenda - May 2008                                                                                                               1
Finance and Administration Topics
  16. Contracts and Contract Changes....................................................................................... 52
*17. Renewal of the Revolving Credit Agreement for the Tax-Exempt
        Commercial Paper Line of Credit with JPMorgan Chase Bank .................................. 57
  18. FY 2009 LCRA Capital Improvement Plans .................................................................... 59
  19. FY 2009 LCRA Business Plans........................................................................................ 62

*This agenda item requires the approval of at least 12 members of the Board.
Legal Notice
    Although this is the expected agenda, the Board may discuss or take action on any item listed in
the legal notice, which may include some items not currently on the Board agenda. Legal notices are
available on the Texas Secretary of State Web site 72 hours prior to the meeting at the following
link: http://sos.state.tx.us/open/.


Executive Session
   The Board may go into executive session for deliberation on the matters listed in the legal notice
posted pursuant to Chapter 551 of the Texas Government Code.
   The Board may take final action on any of the executive session matters upon reconvening in
open session pursuant to Chapter 551 of the Texas Government Code. The Board may act in
executive session on competitive electric matters pursuant to §551.086 of the Texas Government
Code.




2                                                                                             LCRA Board Agenda - May 2008
    LCRA General                                                                 Austin
    Office Complex                                                                                                                                                                                35


    Location
                                                                                                                                                                         183




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                                                 Board
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                                                                                                    Garage
                                                                      Board                     (card access
                                                                     Parking                     entry only)


                            Main
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LCRA Board Agenda - May 2008                                                                                                                                                                                              3
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4                                    LCRA Board Agenda - May 2008
FOR ACTION (Discussed at the April Board meeting)

1.     LCRA Board Policy 206 - Ethics
Proposed Motion
   Approve revisions to LCRA Board Policy 206 - Ethics, as attached in Exhibit A.
Board Consideration
  The Board must approve any revisions to Board Policies.
Budget Status and Fiscal Impact
  Approval of this item will have no budgetary or fiscal impact.
Summary
    Staff is recommending the Board’s approval of revisions to LCRA Board Policy 206 - Ethics, as
discussed with the Board in April. Based on comments received at the April meeting, certain
modifications were made to the proposed policy revisions. The proposed revisions add a
requirement that the general manager and Board members submit a financial disclosure form to the
general counsel each year as an internal control. The proposed revisions also address changes to the
Texas Local Government Code, Chapter 176, requiring that directors file a conflicts disclosure
statement in specific instances.
    In addition, staff is recommending revisions to Section 206.204 regarding ethical behavior of
vendors and contractors of LCRA. The proposed revisions reflect that provisions requiring ethical
behavior will be included in all contracts. The changes to Section 206.204 were not included in the
draft presented to the Board in April.
Presenter(s)
   Rebecca A. Klein
   LCRA Board Chair
Exhibit(s)
  A - Revised LCRA Board Policy 206 - Ethics




LCRA Board Agenda - May 2008                                                                       5
EXHIBIT A


                                        LCRA BOARD POLICY

                                              206 - ETHICS

                                    September 20, 2000 May 21, 2008



206.10         PURPOSE

The purpose of this policy is to provide guidance to the LCRA Board of Directors (Directors) and
employees regarding standards of ethical conduct and conflicts of interest.


206.20         POLICY

206.201 Ethical Standards of Conduct. LCRA directors and employees must conduct themselves so
as to bring continuing respect to LCRA, and avoid any questionable conduct that could bring
discredit to LCRA. In accordance with state law, no director or employee should:

    A. Accept or solicit any gift, favor, or service that might reasonably tend to influence him in the
       discharge of his official duties, or that he knows or should know is being offered to him with
       the intent to influence his official conduct;

    B. Accept or solicit employment or engage in any business or professional activity which he
       might reasonably expect would require or induce him to disclose confidential information
       acquired by reason of his official position;

    C. Accept or solicit other employment or compensation which could reasonably be expected to
       impair his independence of judgment in the performance of his official duties;

    D. Make personal investments which could reasonably be expected to create substantial
       conflicts between his private interest and the public interest;

    E. Intentionally or knowingly solicit, accept, or agree to accept any benefit for having exercised
       his official powers or performed his official duties in favor of another; or

    F. Misapply or misuse LCRA property, services, or personnel for personal benefit.

206.202 Conflicts of Interest. Directors and employees will avoid conflicts of interest and conduct
themselves so as to avoid even the appearance of conflicts of interest in the discharge of their official
duties.



6                                                                          LCRA Board Agenda - May 2008
Directors: Before any vote or decision on a business entity or real property in which a director has a
substantial interest, a director will publicly disclose the interest during a meeting of the Board, file a
completed affidavit (available from the general counsel) with the Secretary of the Board, and abstain
from further participation in the matter if:

   A. The action on the matter will have a special economic effect on the business entity that is
      distinguishable from the effect on the public; or

   B. It is reasonably foreseeable that an action on the matter will have a special economic effect
      on the value of the property that is distinguishable from its effect on the public.

Directors must also file a conflicts disclosure statement whenever a director becomes aware that a
vendor or contractor of LCRA, or a potential vendor or contractor, has an employment or business
relationship with a director or a family member of the director (the director’s spouse, parent, child,
father-in-law, mother-in-law, sons-in-law, and daughters-in-law). The disclosure statement must
also be filed in the following circumstances:

   A. When a director or a family member of a director receives taxable income from a vendor or
      contractor or a potential vendor or contractor, other than investment income, that exceeds
      $2,500 during the 12-month period preceding the date a contract is signed or first considered
      by LCRA, or

   B. When a vendor has given to a director or a family member of a director one or more gifts that
      have an aggregate value of more than $250 in the 12-month period preceding the date a
      contract is signed or first considered.

A director must sign the disclosure statement (available from the general counsel) before a notary,
under oath, acknowledging that it applies to the director’s family members, then file it with the
LCRA records custodian by the seventh business day after the director becomes aware of facts
requiring the form to be filed.

    Employees: A conflict of interest exists when an employee’s personal interests (whether due to
considerations of economic benefit, family relationships, personal friendships, or otherwise) may
affect his or her judgment in performing the employee’s LCRA duties. In the event that an
employee has an apparent or actual conflict of interest involving a business entity seeking to do or
doing business with the LCRA, the employee must 1) notify an immediate supervisor in writing, and
2) avoid any participation in recommendations or approvals of any business transaction with the
business entity.

206.203 Annual Financial and Disclosure Statements. The general manager and each member of
the Board of Directors will file an annual financial statement with the Texas Ethics Commission in
accordance with Texas Government Code, Chapter 572. In addition, the general manager and each
Board member shall submit to the general counsel a disclosure statement by June 30 of each year.
The annual disclosure statement shall be in a form prescribed by the general counsel that
incorporates business and financial information included in the Texas Ethics Commission annual
financial statement and provides a reaffirmation of adherence to this policy.

LCRA Board Agenda - May 2008                                                                             7
206.204 Vendors and Contractors. Vendors and Contractors of LCRA, their subcontractors, and
their employees, are expected to behave in a lawful and ethical manner in their business dealings
with LCRA. Contract provisions requiring ethical behavior will be included in all procurement
contracts. are expected to comply with this policy in conducting business with LCRA. LCRA staff
will provide a copy of this policy to all such vendors and contractors.

206.205 General Manager Authority. The general manager is authorized to develop and enforce
codes of ethical conduct applicable to employees, which codes may be more restrictive than this
policy or state law.

206.206 Constitutional Limits on Donations. LCRA will not give away public funds, property, or
services in violation of Article III, Section 52, of the Texas Constitution.


206.30        AUTHORITY

Texas Local Government Code, Chapters 171 and 176.
Texas Government Code, Chapter 572.
Texas Penal Code, Chapters 36 and 39.
LCRA Bylaws, Sec. 2.01.
30 Tex. Admin. Code, Chapter 292.

EFFECTIVE: August 1987, Amended October 18, 1990, March 19, 1992, September 22, 1994, and
September 20, 2000, and May 21, 2008.




8                                                                      LCRA Board Agenda - May 2008
FOR DISCUSSION

2.     Proposed 2009 Board Meeting Dates
Board Consideration
   The bylaws provide that the regular meeting of the Board takes place on the last Wednesday
before the 25th day of each month, unless otherwise authorized by the Chair or the Board.
Summary
    Options for the 2009 Board meeting dates are reflected in Exhibit A. The Board will discuss
options this month and will be asked to take action on the 2009 Board meeting schedule in June.
Presenter(s)
   Rebecca A. Klein
   LCRA Board Chair
Exhibit(s)
  A - 2009 Tentative LCRA Board Meeting Schedule




LCRA Board Agenda - May 2008                                                                      9
EXHIBIT A

                       2009 TENTATIVE LCRA BOARD MEETING SCHEDULE




                            Option 1                 Option 2 3                Option 3 4


                        Committee       Board     Committee       Board     Committee       Board
            Month
                         Meetings      Meeting     Meetings      Meeting     Meetings      Meeting


            January        20                21      20                21      20                21

           February        17                18      17                18      17                18

            March 1        24                25      24                25      24                25

             April         21                22      21                22      21                22

             May 2          -            6&7          -            6&7          -            6&7

             May           19                20      19                20      19                20

             June          16                17       9                10      16                17

             July               No Meeting                No Meeting                No Meeting

            August         18                19      25                26      25                26

           September       15                16      15                16      15                16

            October        20                21      20                21      20                21

           November        17                18      17                18      17                18

           December        15                16      15                16      15                16

1
  March meetings will be held one week later, as Spring Break for many of the area school districts
is March 16 - 20.
2
    These dates are for the annual FY 2010 Business Plan Work Sessions.
3
  Option 2 provides for a longer summer break for the Board by having the June meeting one week
earlier and the August meeting one week later.
4
  Option 3 extends the August meeting one week later, but keeps the June meeting in line with the
scheduled summer release of many area schools.

10                                                                            LCRA Board Agenda - May 2008
FOR DISCUSSION

3.     Financial Report
Board Consideration
  This report is presented monthly to the Board for discussion.
Summary
  The consolidated financial report for LCRA covers the month and fiscal year to date.
Presenter(s)
   Brady Edwards
   Interim Chief Financial Officer and Treasurer




LCRA Board Agenda - May 2008                                                             11
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12                                   LCRA Board Agenda - May 2008
FOR DISCUSSION

4. LCRA FY 2008 Business Plan Third Quarter
Update
Board Consideration
  This update is presented quarterly to the Board for discussion.
Summary
   The update includes LCRA’s financial and operational performance for the third quarter of
FY 2008.
Presenter(s)
   Jim Travis
   Controller




LCRA Board Agenda - May 2008                                                                   13
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14                                   LCRA Board Agenda - May 2008
FOR CONSENT (Discussed at the April Board meeting)

5. Travis County Municipal Utility District No. 11 -
Raw Water Diversion and Transportation Agreement
Proposed Motion
    Approve the following items related to the provision of raw water diversion and transportation
services to Travis County Municipal Utility District (MUD) No. 11.
    1. Authorize the general manager or his designee to negotiate and execute a raw water diversion
       and transportation agreement, as described below, with MUD No. 11.
    2. Adopt an annual capital charge for MUD No. 11.
Board Consideration
    The proposed raw water diversion and transportation agreement would incorporate new rates
based on the amount of the service commitment requested. Authority for setting wholesale water
service rates is vested in the LCRA Board pursuant to Texas Special District Local Laws Code
Section 8503.011 and LCRA Board Policy 508 - Water Pricing.
Budget Status and Fiscal Impact
    The administrative costs associated with the negotiation of these agreements are included in the
FY 2008 Business Plan and the revenue generated from the additional service has been incorporated
into the long range strategic planning for the West Travis County Region.
Summary
    LCRA owns and operates a regional raw water intake and transportation system that provides
service to Lakeway Municipal Utility District (Lakeway No. 1) and to Hurst Creek Municipal Utility
District. For the past year, MUD No. 11 has received interim services for the Rough Hollow
development through Lakeway No. 1. Staff is recommending a new contract for this area between
LCRA and MUD No. 11.
    Background. The LCRA facilities divert raw water from Lake Travis and transport it to the
customers at specified delivery points. The customers pay LCRA capital charges according to the
amount of capacity they have reserved in the intake structure and transportation charges depending
on how many gallons of water are transported to them each month. The capital charges are designed
to cover the capital cost associated with the construction of the facilities. The transportation charges
are designed to cover the annual expense of operating the intake and pumping the water to the


LCRA Board Agenda - May 2008                                                                          15
customers. Transportation charges are developed each year to capture the cost of service and are
currently 24 cents per 1,000 gallons.
    Proposed Agreement. MUD No. 11 has requested 0.612 million gallons per day of capacity in
the intake from LCRA. Service to this area was anticipated at the time the intake was constructed.
At this time the intake has sufficient capacity to allow this commitment to
MUD No. 11. The capacity allocation is captured in Exhibit A.
    Lakeway No. 1 provides water treatment services to MUD No. 11 for its municipal supply.
Under the proposed agreement, transportation charges associated with MUD No. 11’s municipal
supply will be charged to Lakeway No. 1. MUD No. 11 will also take raw water for recreational
purposes to irrigate common areas in the development. Under the proposed agreement,
transportation charges associated with MUD No. 11’s recreational supply will be charged directly.
    Proposed Rate. Staff recommends that the Board establish the capital charge for the agreement
as follows:
    • Annual Capital Charge:            $52,992
Exhibit(s)
  A - Lakeway Raw Water Barge Capacity
  B - General Location Map




16                                                                     LCRA Board Agenda - May 2008
EXHIBIT A


                               Lakeway Raw Water Barge Capacity


                           Lakeway Raw Water Barge Capacity Reserved
                                Millions of Gallons per Day (mdg)
                   Lakeway MUD No. 1                              4.00   mgd
                   Hurst Creek                                    2.20   mgd
                   MUD No. 11, Proposed                           0.61   mgd
                   Reserved Capacity                              6.81   mgd



                             Lakeway Raw Water Barge Capacity
                              Millions of Gallons per Day (mgd)
                   Ultimate (with additional pumps)               9.20   mgd
                   Installed                                      6.81   mgd
                   Available Future Capacity                      2.39   mgd




LCRA Board Agenda - May 2008                                                   17
EXHIBIT B




18          LCRA Board Agenda - May 2008
FOR CONSENT (Discussed at the April Board meeting)

6. Amend the Irrigation Division Distribution Rate for
Raw Water
Proposed Motion
   Amend the irrigation distribution rate for industrial customers to increase the rate to 12 cents per
1,000 gallons from the current rate of 9 cents per 1,000 gallons used. This increase will be effective
June 1, 2008.
Board Consideration
    Under LCRA Board Policy 508 - Water Pricing, all rates and rate changes are to be presented to
the Board for approval. At this time, Board authorization is needed to increase the distribution rate
for industrial customers diverting water from the Gulf Coast Irrigation Division canals.
Budget Status and Fiscal Impact
    The change in rate, which will increase revenues by approximately $80,000 per year, was not
included in the FY 2008 Business Plan.
Summary
     LCRA currently has three customers that divert raw (untreated) water from the Gulf Coast
irrigation canals: Texas Brine Corporation (Underground Services Markham, LP), Celanese
Corporation (Oxea) and the Bay City Country Club. Because these companies take water from the
irrigation canals and not directly from the river, they pay a share of the costs of operating and
maintaining the canal system. Currently, the customers pay 9 cents per 1,000 gallons used for water
distribution costs.
     The distribution rate currently paid has been in place since 2004. Since that time, the operating
costs of the Gulf Coast Irrigation Division have increased, as well as the relative use of the canals by
Brine and Celanese as compared to the agricultural customers. As a result, an increase in rates to
12 cents per 1,000 gallons used is recommended, effective June 1, 2008, to recover all costs of
providing this service. The distribution rate is paid in addition to the stored water rate currently set
at $126.00 per acre-foot.
     These rate changes have been communicated to the affected customers.




LCRA Board Agenda - May 2008                                                                          19
FOR CONSENT

7.     Conveyance of Easements in Fayette County
Proposed Motion
   Authorize the general manager or his designee to convey a 35-foot wide access easement
containing approximately 3.636 acres, a 1.139 acre switchyard easement, and three transmission line
easements that total 1.08 acres to the LCRA Transmission Services Corporation (LCRA TSC).
These easements cross a portion of the Winchester Power Park (WPP) in Fayette County.
Board Consideration
    Section 8503.020(b) of the Texas Special Local Laws Code requires the approval of 12 members
of the LCRA Board of Directors prior to conveyance of any interest in real property.
Budget Status and Fiscal Impact
   The administrative costs associated with the conveyance of this access easement, switchyard
easement and transmission line easements are contained within the FY 2008 Business Plan.
Summary
    This agenda item would authorize the conveyance of an access easement, a switchyard easement,
and three transmission line easements to LCRA TSC, which would operate the switchyard through
which electricity generated by the WPP would enter the electric grid.
    In the Electric Reliability Council of Texas Standard Generation Interconnection Agreement
between LCRA TSC and LCRA dated March 5, 2008, it was agreed that the above-referenced
easements would be granted to LCRA TSC at no cost. It is a common practice in the electric
industry for a generator (LCRA) to grant easements at no cost to a transmission service provider
(LCRA TSC).
    A due diligence environmental site assessment by LCRA staff revealed no apparent adverse
environmental conditions associated with the property.
Exhibit(s)
  A - Vicinity Map, LCRA Parcel Winchester Power Park, Fayette County
  B - Site Map 1, LCRA Parcel Winchester Power Park, Fayette County
  C - Site Map 2, LCRA Parcel Winchester Power Park, Fayette County
  D - Site Map 3, LCRA Parcel Winchester Power Park, Fayette County



20                                                                     LCRA Board Agenda - May 2008
EXHIBIT A




                                 21

                                                                                                 N

                                                                  Giddings

                                                                                     290                       WASHINGTON
                                                                                                                COUNTY


                                                                               LEE

                                 2239                                        COUNTY



        BASTROP
        COUNTY       2104                               448


                                                                                    Vicinity Map
                                                                                       Winchester Power Park
                                                                        77                Fayette County


                                                     Area of Interest
        Smithville
                                 153
                                        Winchester
                                                                                                                   237



                                                      FAYETTE
   95
                                                      COUNTY
                                                                                                                 Lake
                            71                                                                       159       Fayette
                                                                                                                FPP



                                                                        La Grange




                                                                        0                    5                     10 miles




LCRA Board Agenda - May 2008                                                                                                  21
EXHIBIT B




                                                 FM
                                                      44
                                                              8




                                                                                                                                N
                                                              Scottie Hart
                                                                4 Acres
                                                                175/637



               Ronnie W. and
              Darline A. Kaiser
                1.263 Acres
                 1407/793                                                                                              Site Map 1
                                                                                                                          Winchester Power Park
                                                                                                                            Access Easement
                                                      Area of Interest                                                       Fayette County


               Ronnie W. and
                                                       3.636 Acres
              Darline A. Kaiser
                29.65 Acres
                 1322/734
                                                                           Gas P Morgan
                                                                                 ipeline
                                                                               r
                                                                          Kinde
                                                        Pipelinhillips




                                                                                              LCRA
                                                               e
                                                           oP




                                                                                           103.51 Acres
                                                      Conoc




                                                                                            1407/802

                                      Estate of                                                                 LCRA
                                  Thelma O. Pietsch                                                       100' Transmission
                                    249.36 Acres                   T-18                                       Easement
                                                                        6
                                      1385/572                                                                 270/197
                                                                                                               335/311

                                                 Phillips Petroleum Co.
                                                 50' Pipeline Easement
                                                         549/934
       NOTE:                                                             Proposed 1.139 Acre Tract
      All acreages                                                        Piney Creek Switchyard
     approximate.                                                             See Site Map 2


                                                                                                            0                 500             1,000 ft.




22                                                                                                                      LCRA Board Agenda - May 2008
EXHIBIT C




                                               Betty Koenning Richter                  Linda Koenning Hart
                 N                                   41.64 Acres                           31.64 Acres
                                                       680/59                                 680/59




    Site Map 2
        Winchester Power Park
        Switchyard Easement
           Fayette County


                                                                        Area of Interest
                                        86




                                                                          1.139 Acre
                                    T-1




              LCRA
        100' Transmission                                                                   Proposed
            Easement
             270/197                                                                      Generation
             335/311
                                                                                              Plant
                                             Proposed 3.636
                                             Access Easement
                                              See Site Map 1


                                          Phillips Petroleum Co.
                                          50' Pipeline Easement
                                                  549/934
                                                                           LCRA
                                                                        103.51 Acres
                                                                         1407/802




                                                                                     Estate of
                                                                                 Thelma O. Pietsch             NOTE:
                                                                                   249.36 Acres               All acreages
                                                                                     1385/572                approximate.
    0                200        400 ft.




LCRA Board Agenda - May 2008                                                                                                 23
EXHIBIT D




                                                                                Betty Koenning Richter         Linda Koenning Hart
                                                                                      41.64 Acres                  31.64 Acres
                   N                                                                    680/59                        680/59




      Site Map 3
          Winchester Power Park
          Transmision Easements
              Fayette County




                LCRA
          100' Transmission
              Easement
               270/197
               335/311


            Tract 3
          0.327 Acre
                                                                                                                    Tract 1
                                                                         Proposed                                 0.377 Acre
                                                                         1.139 Acre
                                                                      Switchyard Tract
                                                                       See Site Map 2
                       6 8
                     T-1




                                    549 e Ease m Co.




                                                                                                           Tract 2
                                                  t
                                        /934 men




                                                                                                         0.376 Acre
                                     elin troleu
                             50' llips Pe
                                 Pip
                              Phi




                                                              LCRA                                                      Proposed
                                                           103.51 Acres
                                                            1407/802                                                   Generation
                                                                                                                           Plant
       NOTE:
      All acreages
     approximate.
      0                100                       200 ft.




24                                                                                                       LCRA Board Agenda - May 2008
FOR CONSENT

8.     Directors’ Fees, Expenses
Proposed Motion
   Approve directors’ fees and expense reports.
Board Consideration
   LCRA Board Policy 105 - Directors’ Fees and Expense Reimbursement Policy and the LCRA
Bylaws require Board approval for directors’ fees and expenses.
Budget Status and Fiscal Impact
  Directors’ fees and expenses are provided for in the budget in the Business Plan.
Summary
   LCRA Board Policy 105 establishes guidelines for the payment of fees and reimbursement of the
expenses that directors incur as they carry out their responsibilities as LCRA Board members.




LCRA Board Agenda - May 2008                                                                  25
FOR CONSENT

9.     Minutes of Prior Meeting
Proposed Motion
   Approve the minutes of the April 16, 2008, meeting.
Board Consideration
    Section 2.04 of the LCRA Bylaws provides that the Secretary shall keep minutes of all meetings
of the Board.
Budget Status and Fiscal Impact
  None.
Summary
  Each meeting the Board approves the minutes of previous meetings.
Exhibit(s)
  A - Minutes of April 16, 2008, meeting.




26                                                                     LCRA Board Agenda - May 2008
EXHIBIT A

Minutes Digest
April 16, 2008

08-47         Authorization for the general manager or his designee to negotiate and execute
              amendments to the wastewater collection and transportation services agreement
              between the City of West Lake Hills and LCRA.

08-48         Approval of revisions to LCRA Board Policy 305 - Independent Public Auditors.

08-49         Approval of a resolution honoring Cruz Reyna, LCRA retiree.

08-50         Approval of a resolution honoring David Krenek, LCRA retiree.

08-51         Approval of a resolution honoring James Parker, LCRA retiree.

08-52         Approval of a resolution honoring Terry Runkle, LCRA retiree.

08-53         Declaration of a 0.185-acre tract of land in the Sandy Harbor Section Two
              Subdivision in Llano County and the water treatment plant situated thereon as
              “nonessential,” and authorization for the general manager or his designee to convey
              the water treatment plant and land to the Sandy Harbor Volunteer Fire Dept., Inc.

08-54         Declaration of an approximate 0.03-acre tract of land, being a portion of the LCRA
              Parcel Lake LBJ West-06 in Llano County, “nonessential,” and authorization for the
              general manager or his designee to convey the land to the adjacent property owner.

08-55         Authorization for the general manager or his designee to convey a 30-foot-wide
              (0.07-acre) permanent natural gas pipeline easement to Tres Palacios Gas Storage
              LLC across a portion of Tract 14 of the Moore-Cortes Section of the El Maton Canal
              in Matagorda County.

08-56         Approval of the FY 2008 third quarter report of legal fees and expenses for outside
              counsel.

08-57         Approval of directors’ fees and expenses reimbursement.

08-58         Approval of directors’ attendance at seminars or conferences.

08-59         Approval of the minutes of the March 26, 2008, meeting.

08-60         Reaffirmation and amendment of the Board Resolution dated August 22, 2007,
              regarding the Report of the Water Utility Audit Subcommittee of the LCRA Board of
              Directors.


LCRA Board Agenda - May 2008                                                                        27
08-61        Adoption and approval of the Twenty-Seventh Supplemental Resolution to the Master
             Resolution authorizing the issuance of tax-exempt Refunding Revenue Bonds, Series
             2008, in the maximum principal amount of $317.5 million.

08-62        Adoption and approval of a Twelfth Supplemental Resolution to the Controlling
             Resolution establishing the LCRA Transmission Contract Revenue Financing
             Program authorizing the issuance of tax-exempt debt in an amount not to exceed
             $200 million for the purposes of refunding the Transmission Contract Revenue
             Commercial Paper Notes (LCRA Transmission Services Corporation Project), Tax-
             Exempt Series and Tax-Exempt Series B. Adoption and approval of the
             Transmission Contract Revenue Debt Installment Payment Agreement Supplement
             Related to the Transmission Contract Refunding Revenue Bonds (LCRA
             Transmission Services Corporation Project), Series 2008, between LCRA and LCRA
             Transmission Services Corporation (LCRA TSC) supplementing the restated
             Transmission Contract Revenue Debt Installment Payment Agreement, dated as of
             March 1, 2003, between LCRA and LCRA TSC.

08-63        Authorization for the general manager or his designee to negotiate and execute the
             following contracts and contract changes: Contract No. 2315 (Techline Inc.),
             Contract No. 2313 (McCoy Tree Surgery Company Inc.) and Increase in Estimate
             No. 1 to Contract No. 1712 (Woolery Custom Fence Company Inc.).

No Action:   The Board voted to table Agenda Item 10 - Amendment of the LCRA Water Utilities
             Drought Contingency Plan to include adoption of a mandatory watering schedule for
             LCRA West Travis County Regional Water System.




28                                                                    LCRA Board Agenda - May 2008
                        MINUTES OF THE REGULAR MEETING OF THE
                             BOARD OF DIRECTORS OF THE
                          LOWER COLORADO RIVER AUTHORITY
                                      Austin, Texas
                                      April 16, 2008

    Pursuant to notice posted in accordance with the Texas Open Meetings Act, the Board of
Directors (Board) of the Lower Colorado River Authority (LCRA) convened in a regular meeting at
9:31 a.m. on Wednesday, April 16, 2008, at the principal office of LCRA, 3700 Lake Austin
Boulevard, Hancock Building, Board Room, Austin, Travis County, Texas. The meeting was open
to the public, and the following directors were present, constituting a quorum:

             Klein
             Raun
             Adair
             Balas
             Carlton
             Carter
             Dickerson
             Garrett
             McCasland
             Spears
             Timmerman
             Wallace

   Absent: Nettleship
           Steiner
           Wilke

    Chair Klein convened the meeting at 9:31 a.m. and led pledges of allegiance to the United States
and Texas flags. Director Garrett provided an invocation. Chair Klein introduced special guests in
attendance, including Mayor Frain of Sunrise Beach and the following representatives of the City of
West Lake Hills: Mayor Mark Urdahl, City Administrator Robert Wood, Wastewater Commission
Chairman Dave Claunch, City Attorney Alan Bojorquez and Council Member Cindy Probst.

    Chair Klein introduced the first item, a presentation by the City of West Lake Hills relating to the
proposed amendment of the wastewater collection and transportation services agreement between
the City and LCRA. Mayor Urdahl began the presentation on behalf of the City, which included a
PowerPoint presentation. He provided background information on the wastewater project and
system. Chairman Claunch discussed the need for the second phase of the wastewater system,
focusing on environmental, community and financial concerns. Mayor Urdahl closed the
presentation with a proposal that he said would involve the concept of the City and LCRA working
as partners to share the load going forward.

   The City would:
   • Scale back the project from $7.7 million to $5.2 million.
   • Contribute $750,000 to the Phase 2 project.
LCRA Board Agenda - May 2008                                                                         29
     LCRA would:
     • Fix a capital payment schedule for the project that reflects revenue funding of $750,000.
     • Allow coverage to inure to the benefit of the system.

    The City's proposed changes to the wastewater services agreement between LCRA and the City
include:
    • Defining a fixed capital payment schedule.
    • Clarifying that coverage is 25 percent.
    • Specifying that coverage inures to the benefit of the West Lake Hills system.
    • Clarifying ownership of impact fees and transferring the process from the LCRA to the City.
    • Incorporating current easement acquisition and recording responsibilities into the agreement.

   Mayor Urdahl complimented LCRA staff member Connie Real, saying that Real has done a
remarkable job with closing of the easement acquisitions.

    Chair Klein next asked for questions from Board members. Mayor Urdahl and Chairman
Claunch responded to various questions from Board members. After extensive discussion, Chair
Klein declared the meeting to be in executive session at 10:32 a.m., pursuant to Section 551.071 of
the Texas Government Code (Open Meetings Act). Executive session ended, and Chair Klein
declared the meeting to be in public session at 11:30 a.m.

    Chair Klein expressed her appreciation to Mayor Urdahl and Chairman Claunch for their interest
in and spirit of approaching the City's proposal in terms of sharing and partnering. Klein noted that
in executive session the Board reviewed the City's proposal and discussed with legal counsel the
impact of the provisions of the proposal as it would apply to the existing wastewater services
agreement between the City and LCRA. Klein then asked LCRA staff for its recommendation.

    Suzanne Zarling, executive manager of Water Services, presented the LCRA staff
recommendation relating to the amendment of the wastewater services agreement between LCRA
and the City:
    •   The City proposed to reduce the project scope from $7.7 million to $5.6 million or less by
eliminating specific portions of the project. LCRA staff recommended this change provided the
reduced scope is a viable project.
    •    The City proposed that the Board fix a capital schedule for the project that would require the
City and LCRA to each revenue fund approximately $750,000 or to establish a financing mechanism
within LCRA to reduce the cost of the project by $750,000. Staff recommended that the Board
establish a capital schedule only after debt is issued to match actual debt cost, that LCRA not make
an equity contribution, that LCRA continue to charge the City the cost of operation and
maintenance, and that these costs not be fixed as a part of the contract.
    •    The City proposed that it will own, collect and manage impact fees for the project. LCRA
staff recommended that the City take full responsibility for impact fees for the wastewater project,
which would include the City adopting its own impact fee schedule and LCRA repealing its impact
fee for the wastewater system.
    •    The City proposed that the Board consider allowing all 25 points of debt service coverage
collected be used to benefit the wastewater system, to offset costs to the system in future years.

30                                                                        LCRA Board Agenda - May 2008
LCRA staff recommended this change provided that the coverage that inures is net of development
funding, operating reserves and defeasance costs.
   •    LCRA staff recommended that the City bear the cost of any scope increase in the project.
    •    The City proposed that LCRA continue the current practice of finalizing and recording
easement documents as part of project costs, with the City continuing to acquire easements. LCRA
staff recommended that this practice continue.
    •   LCRA staff recommended that LCRA and the City evaluate the opportunity for the City to
pledge other sources of funds to pay LCRA in addition to the pledge of revenues from wastewater
customer rates.
    08- 47      Director Spears expressed his appreciation to Mayor Urdahl and Chairman Claunch
for their extensive work on the wastewater project and for working with LCRA in the spirit of
cooperation and partnering. He commented on the Board's need to consider its fiduciary
responsibility as well as LCRA's statutory mission in serving all of LCRA's customers. Director
Spears made a motion that the Board authorize the general manager or his designee to negotiate and
execute amendments to the wastewater collection and transportation services agreement between the
City of West Lake Hills and LCRA consistent with the LCRA staff position as presented by Suzanne
Zarling. Director Wallace seconded the motion, and the Board approved the motion by a vote of
11 to 0. Director McCasland abstained from voting on this motion.

   Chair Klein recognized Cristen Wohlgemuth of the Governor's office, who was present to
observe the meeting.

    08-48      Chair Klein presented for consideration a recommendation, described in Agenda
Item 1 [attached hereto as Exhibit A], that the Board approve revisions to LCRA Board Policy 305 -
Independent Public Auditors. Upon motion by Director McCasland, seconded by Director
Dickerson, the recommendation was unanimously approved by a vote of 12 to 0.

   General Manager Thomas Mason next presented for consideration resolutions honoring four
former employees who recently retired from LCRA. Upon motion by Director Raun, seconded by
Director McCasland, the Board unanimously approved the following resolutions:

   08-49      Resolution honoring Cruz Reyna [attached hereto as Exhibit B].

   08-50      Resolution honoring David Krenek [attached hereto as Exhibit C].

   08-51      Resolution honoring James Parker [attached hereto as Exhibit D].

   08-52      Resolution honoring Terry Runkle [attached hereto as Exhibit E].

   General Manager Thomas Mason gave his monthly update on recent issues and events related to
LCRA, including Earth Day events scheduled at LCRA facilities during the week of April 22, his
appearance before the Senate Committee on Natural Resources on April 8, his recent speech at the
Bay City Chamber of Commerce and Agriculture meeting, and his recent informal visits with


LCRA Board Agenda - May 2008                                                                       31
wholesale electric customers at an event hosted by San Bernard Electric Cooperative. Director Raun
gave a report on the Board's ad hoc Strategic Initiatives Committee.

   Interim Chief Financial Officer Brady Edwards presented the monthly financial report for March
2008.

   Director Spears made a motion, seconded by Director Timmerman, that the Board approve
Consent items 3, 4, 5, 6, 7, 8 and 9, included on the April 16 Board agenda. The Board unanimously
approved the Consent Agenda by a vote of 12 to 0, as follows:

    08-53      Declaration, by a vote of 12 to 0, of a 0.185-acre tract of land in the Sandy Harbor
Section Two Subdivision in Llano County and the water treatment plant situated thereon as
“nonessential” (being no longer necessary, convenient or of beneficial use to the business of LCRA),
and authorization for the general manager or his designee to convey the water treatment plant and
land to the Sandy Harbor Volunteer Fire Dept., Inc., as recommended by staff in Agenda Item 3
[attached hereto as Exhibit F].

    08-54      Declaration, by a vote of 12 to 0, of an approximate 0.03-acre tract of land, being a
portion of the LCRA Parcel Lake LBJ West-06 in Llano County, “nonessential” (being no longer
necessary, convenient or of beneficial use to the business of LCRA), and authorization for the
general manager or his designee to convey the land to the adjacent property owner, as recommended
by staff in Agenda Item 4 [attached hereto as Exhibit G].

    08-55      Authorization for the general manager or his designee to convey a 30-foot-wide
(0.07-acre) permanent natural gas pipeline easement to Tres Palacios Gas Storage LLC across a
portion of Tract 14 of the Moore-Cortes Section of the El Maton Canal in Matagorda County, as
recommended by staff in Agenda Item 5 [attached hereto as Exhibit H].

   08-56       Approval of the FY 2008 third quarter report of legal fees and expenses for outside
counsel, as recommended by staff in Agenda Item 6 [attached hereto as Exhibit I].

   08-57      Approval of directors’ fees and expenses and reimbursement of directors for such fees
and expenses, as recommended in Agenda Item 7 [attached hereto as Exhibit J].

   08-58     Approval of directors’ attendance at seminars or conferences, as recommended in
Agenda Item 8 [attached hereto as Exhibit K].

     08-59    Approval of the minutes of the March 26, 2008, meeting [Agenda Item 9].

    Suzanne Zarling presented for discussion the proposed commitment of firm water and wholesale
treated water service to Hays County Water Control and Improvement District (WCID) No. 2
(Agenda Item 12). Sarah Baker, attorney representing Save Our Springs Alliance, addressed the
Board in opposition to this item. Steve Sherrill of Makar Properties, developer of the Belterra
subdivision in northern Hays County, and Matthew Kutac of Barrett and Smith, attorney
representing Hays County WCID No. 1 and No. 2, addressed the Board in support of this item.


32                                                                      LCRA Board Agenda - May 2008
    Suzanne Zarling presented for consideration a staff recommendation, described in Agenda Item
10, that the Board amend the LCRA Water Utilities Drought Contingency Plan to include adoption
of a mandatory watering schedule for LCRA West Travis County Regional Water System for both
retail and wholesale customers effective May 1 through September 30 each year and further adopt
penalties for noncompliance for wholesale treated water customers. Zarling responded to questions
from the Board about issues including the enforcement process and imposing and collecting
penalties. Several directors expressed concerns about implementing a mandatory watering schedule
with associated penalties for noncompliance at this time. After a lengthy discussion, Director
Wallace made a motion, seconded by Director Dickerson, to table consideration of Agenda Item 10.
The Board unanimously approved the motion by a vote of 12 to 0.

   Chair Klein recessed the meeting at 12:51 p.m. for a lunch break, and she reconvened the
meeting at 1:45 p.m.

    Suzanne Zarling introduced Kyle Jensen, manager of River Operations, who presented for
discussion the proposed amendment of the Irrigation Division distribution rate for raw water
(Agenda Item 11).

    Suzanne Zarling next presented for discussion Agenda Item 13, the proposed raw water diversion
and transportation agreement with Travis County Municipal Utility District No. 11, and Agenda
Item 14, the proposed amended wholesale water service agreement with the City of Dripping
Springs, adoption of wholesale rates and authorization of related firm water contract.

   Staff noted its plan to present discussion items 11-14 for consideration and action at the May
Board meeting.

    08-60      Upon motion by Director McCasland, seconded by Director Raun, the Board, by a
unanimous vote of 12 to 0, reaffirmed the resolution dated August 22, 2007, regarding the Report of
the Water Utility Audit Subcommittee, amended to read in its entirety as follows:
   1. The Board recognizes the important public service provided by LCRA’s water and
wastewater utility. Reliable water and wastewater utility services are a critical part of the foundation
needed for economic vitality in the area. LCRA shall continue to work with local officials and
community representatives to ensure adequate water and wastewater service is available in the
Lower Colorado River basin.
    2. LCRA will own and operate a financially self-sustaining water and wastewater utility.
LCRA will work collaboratively with other public entities in providing this service in as cost
effective and affordable manner as is reasonable, ensuring that assets are protected and regulatory
requirements met.
   3. When available, development funding and other available funds may be used to support the
public service mission of the water utility.
    4. Rates for LCRA’s water and wastewater systems should be sufficient to cover the cost of
service, including reserves and debt service coverage.
    5. LCRA should actively engage in an effort to divest itself of those water or wastewater utility
systems or portions thereof where another public or non-profit entity is reasonably positioned to

LCRA Board Agenda - May 2008                                                                          33
acquire such utility facilities and to provide utility services in an efficient and cost-effective manner.
Where no such entity or entities exist, LCRA should be prepared to assist in the process of creating
such a public or non-profit entity if the customers to be served by the new entity seek such
assistance. Divestiture of systems to a private entity should only be considered if there are
advantages for both departing and remaining customers and if public funds invested in the system
are appropriately compensated by the private entity. Any divestiture contemplated by this paragraph
will be accomplished in coordination with the affected customers pursuant to a public process
developed by LCRA staff.
     The general manager is hereby instructed to investigate opportunities for LCRA to divest itself of
all, or a significant portion of, water and wastewater utility assets in Williamson County, but only
upon the negotiation of a sale price for any such transferred assets in an amount that reflects the true
value of such system, which price is approved by the Board of Directors; and
    The general manager is hereby instructed to develop and present to the Board for consideration a
water conservation program for LCRA' s West Travis County Region water utilities designed to
reduce the "peak day "consumption and the "average consumption per capita per day" within such
region.
    6. LCRA shall aggressively seek opportunities to build equity in the water utility and reduce
the level of debt and the associated impact on rate payers.
    7. The water utility shall maintain industry-wide benchmarks and periodically report
performance against these benchmarks. The benchmarks shall address operational efficiency, asset
management, and cost of service.
    8. LCRA should continue to provide retail and wholesale service to customers, based on their
specific needs. In the West Travis Country water and wastewater system, LCRA will pursue a retail
service provider model.
   9. The following specific actions will be employed to improve the financial performance of the
water and wastewater utility:
        a.     Diligent cost management, both O&M and capital projects.
        b.     Managed capital program that reflects customer affordability and fully recovers costs
               from developers.
        c.     Equity infusion.
        d.     Fully allocate costs to retail and wholesale systems.
        e.     Rate increases.
        f.     Participate with customers in new projects to the extent there is a clear and needed
               role for LCRA so long as LCRA can recover costs and fees in a reasonable period of
               time.
   Prior to this action, Board members and staff discussed LCRA's water and wastewater utility
operations, including long-term strategies and related policy issues at the March 25 and April 15
Water Operations Committee meetings.

    Brady Edwards presented for the Board's consideration Agenda items 15 and 16. Edwards asked
the Board to approve a revised motion for Agenda Item 15 reflecting "Refunding Revenue Bonds"

34                                                                          LCRA Board Agenda - May 2008
instead of "Refunding and Improvement Revenue Bonds." Upon motion by Director Dickerson,
seconded by Director Timmerman, the Board unanimously adopted and approved the following
items by a vote of 12 to 0:

    08-61       The Twenty-Seventh Supplemental Resolution to the Master Resolution authorizing
the issuance of tax-exempt Refunding Revenue Bonds, Series 2008, in the maximum principal
amount of $317.5 million, as recommended by staff in Agenda Item 15 [attached hereto as
Exhibit L] as revised. This motion also:
    1. Approves all related documents, including the Preliminary Official Statement, in substantially
       final form; and
    2. Delegates authority to the general manager or the interim chief financial officer to:
       a. Make final changes to the documents necessary to facilitate proper issuance of the Series
          2008 Bonds;
       b. Establish the terms of the Series 2008 Bonds as provided in the resolution (including the
          principal amounts and maturity schedules, interest rates and redemption provisions); and
       c. Set the terms of the sale of the Series 2008 Bonds to an underwriting team led by Morgan
          Stanley & Co., Incorporated, and to execute a bond purchase agreement.

    08-62        A Twelfth Supplemental Resolution to the Controlling Resolution establishing the
LCRA Transmission Contract Revenue Financing Program authorizing the issuance of tax-exempt
debt in an amount not to exceed $200 million (the LCRA TSC 2008 Bonds) for the purposes of
refunding the Transmission Contract Revenue Commercial Paper Notes (LCRA Transmission
Services Corporation Project), Tax-Exempt Series and Tax-Exempt Series B; and the Transmission
Contract Revenue Debt Installment Payment Agreement Supplement Related to the Transmission
Contract Refunding Revenue Bonds (LCRA Transmission Services Corporation Project), Series
2008, between LCRA and LCRA Transmission Services Corporation (LCRA TSC) supplementing
the restated Transmission Contract Revenue Debt Installment Payment Agreement, dated as of
March 1, 2003, between LCRA and LCRA TSC, as recommended by staff in Agenda Item 16
[attached hereto as Exhibit M]. This motion also:
    1. Approves related documents including the Preliminary Official Statement in substantially
       final form.
    2. Delegates authority to the general manager or interim chief financial officer:
       a. to approve any final changes to said documents necessary to facilitate proper issuance of
           such LCRA TSC 2008 Bonds;
       b. to establish the terms of the LCRA TSC 2008 Bonds as provided in the resolutions
           (including the principal amounts and maturity schedules, interest rates and redemption
           provisions); and
       c. to approve the terms of the sale of the LCRA TSC 2008 Bonds to an underwriting team led
           by Morgan Stanley & Co., Incorporated, and to execute a bond purchase agreement.

    08-63      Christopher Kennedy, executive manager of Corporate Services, reviewed the new
template and format for procurement items. Andy Betz, manager of Purchasing, presented for
consideration a staff recommendation, described in Agenda Item 17 [attached hereto as Exhibit N],
that the Board authorize the general manager or his designee to negotiate and execute the following

LCRA Board Agenda - May 2008                                                                       35
contracts and contract changes: Contract No. 2315 (Techline Inc.), Contract No. 2313 (McCoy Tree
Surgery Company Inc.) and Increase in Estimate No. 1 to Contract No. 1712 (Woolery Custom
Fence Company Inc.). Upon motion by Director Dickerson, seconded by Director Balas, the
recommendation was unanimously approved by a vote of 12 to 0.

    Brady Edwards gave an overview of the FY 2009 Capital Improvement Plan, including process
and controls, management guidelines and the capital planning process. Edwards noted staff's plan to
present Board Policy 304 (Financial Planning Policy) to the Board for discussion in May and action
in June. Marcus Pridgeon, assistant general manager and chief operating officer, presented an
overview of the FY 2009 capital plans for Wholesale Power Services and Water Services. Rick
Bluntzer, assistant general manager and chief administrative officer, presented an overview of the
FY 2009 capital plans for Community Services and Corporate Services.

    General Counsel John Rubottom discussed with the Board proposed revisions to LCRA Board
Policy 206, Ethics - Agenda Item 19.

    Chair Klein declared the meeting to be in executive session at 3:29 p.m., pursuant to sections
551.071, 551.072 and 551.086 of the Texas Government Code (Open Meetings Act). Executive
session ended, and Chair Klein declared the meeting to be in public session at 5:10 p.m.

   There being no further business to come before the Board, the meeting was adjourned at
approximately 5:11 p.m.

                                                     _____________________________________
                                                     Linda C. Raun, Secretary
                                                     LCRA Board of Directors




36                                                                       LCRA Board Agenda - May 2008
                                                                       Time Certain - 10:30




FOR DISCUSSION / POSSIBLE ACTION

10. Public Hearing for West Travis County Wastewater
Impact Fee Land Use Assumptions and Capital
Improvements Plan
Proposed Motion
   Adopt land-use assumptions and a capital improvements plan for the West Travis County
Wastewater Impact Fee Study, as provided to the Board under separate cover, following a public
hearing on the assumptions and plan. Also authorize staff to publish a notice of public hearing to
consider adoption of an impact fee.
Board Consideration
   Chapter 395 of the Local Government Code requires the governing body of a utility to hold
public hearings on land-use assumptions, capital improvement plans and determination of the
maximum allowable impact fee prior to adoption and assessment of an impact fee.
Budget Status and Fiscal Impact
   The administrative costs for this process are included in the FY 2008 Business Plan and the
proposed FY 2009 Business Plan.
Summary
     In October 2007, consistent with requests from the West Travis County customers, the Board
initiated an Impact Fee Study for the West Travis County Wastewater System. As required by law,
the Board appointed an advisory committee and authorized staff to prepare land-use assumptions and
a capital improvements plan and to publish notice of a public hearing to approve the land-use
assumptions and the plan.
     Background. Impact fees may be imposed only on new service connections to pay eligible costs
related to facility expansion, including construction or acquisition, and most costs of preparing the
impact fee study. To adopt an impact fee state law requires political subdivisions such as LCRA to
complete an impact fee study that has two steps. The first step is to develop land use (growth)
assumptions for the service area and a capital plan that describes the projects needed to serve that
growth. Once these are developed by a licensed engineer, the LCRA Board is required to hold a
public hearing and take action on the land use assumptions and capital plan. This agenda item and
public meeting meet this requirement. If the Board approves the land use assumptions and capital
plan, the second step is for staff to use this information to develop a proposed impact fee, with input
LCRA Board Agenda - May 2008                                                                         37
from the advisory committee. Once the fee is developed, the Board will be required to hold another
public hearing before voting on the impact fee. The impact fee study has a 10-year planning horizon
and must be updated at least every five years.
    The impact fee allowed by law is limited to an amount calculated by dividing the costs of the
capital improvements needed to serve the new connections by the total number of projected new
service units within the service area and planning horizon.
    Discussion. The staff has used a licensed engineer and has collaborated with the advisory
committee appointed by the Board to prepare the land-use assumptions and the capital improvements
plan. The land-use assumptions and capital plan have been sent to the Board under separate cover.
The Impact Fee Advisory Committee, made up of the members listed on Exhibit A, supports these
recommendations. Written comments from the impact fee advisory committee have also been sent
to the Board under separate cover.
Presenter(s)
   Suzanne Zarling
   Executive Manager, Water Services
Exhibit(s)
  A - West Travis County Wastewater Impact Fee Advisory Committee Members
  B - General Location Map




38                                                                     LCRA Board Agenda - May 2008
EXHIBIT A



                     West Travis County Advisory Wastewater Impact Fee
                               Advisory Committee Members
  Felix Benevides              Engineer               City of Bee Cave
  Kirk Coburn                  Lake Pointe Resident   Lake Pointe Homeowners Association
  John Cook                    Realtor                Lake Pointe Resident
  Jack Creveling               Developer              Spanish Oaks
  Bob Dorsett                  Falconhead Resident    Falconhead Homeowners Association
  Fred Goff                    Lake Pointe Resident   Lake Pointe Homeowners Association
  Don Walden                   Developer              Spillman Ranch and Falconhead West




LCRA Board Agenda - May 2008                                                               39
EXHIBIT B




40          LCRA Board Agenda - May 2008
FOR DISCUSSION

11. Supplemental Interlocal Agreement Regarding
Potable Water Supply Agreement Obligations from
Cedar Park for Leander
Board Consideration
   This agenda item seeks Board approval for an agreement to temporarily suspend a wholesale
potable water commitment from the City of Cedar Park to serve the City of Leander. This action
may affect potable water service by LCRA to Leander. The Board previously approved a similar
suspension of the Cedar Park wholesale water commitment but for a shorter period of time.
Budget Status and Fiscal Impact
    This agenda item is not expected to have any fiscal impact. The costs to Leander for purchasing
water from LCRA’s Sandy Creek Water Treatment Plant are not significantly different from the cost
of purchasing water from Cedar Park.
Summary
    In July 1998, the City of Cedar Park and LCRA entered into an interlocal agreement for water
supply. In the agreement, Cedar Park agreed to treat raw water supplied by LCRA and deliver it to
the City of Leander, an LCRA customer. Since the agreement was signed, LCRA constructed the
Sandy Creek Water Treatment Plant to serve Leander; the water from Cedar Park is only
supplemental to water available from LCRA’s Sandy Creek Plant.
    In January 2006, because Leander did not need the Cedar Park water, LCRA and Cedar Park
entered a new agreement allowing Cedar Park to suspend potable water deliveries to Leander during
the summer months of 2008 and 2009. Under this agreement, Cedar Park has the option to notify
LCRA during summer months that it does not have sufficient water treatment capacity to serve
Leander. Following such notice, Cedar Park’s supply obligations are suspended, as are LCRA’s
obligations to pay Cedar Park for water supply during the suspension.




LCRA Board Agenda - May 2008                                                                     41
   Cedar Park and Leander now have requested and approved an agreement, similar to the 2006
agreement, to allow Cedar Park to suspend potable water deliveries to Leander during the summer
months of 2010 and 2011. LCRA staff projects that it will be able to meet Leander’s water supply
needs during summers 2010 and 2011 with current capacity available from the Sandy Creek Plant.
LCRA Board action will be needed to suspend deliveries from Cedar Park to Leander for 2010 and
2011.
Presenter(s)
   Suzanne Zarling
   Executive Manager, Water Services




42                                                                    LCRA Board Agenda - May 2008
FOR ACTION (Discussed at the April Board meeting)

12. City of Dripping Springs - Amend Wholesale Water
Service Agreement, Adopt Wholesale Rates and
Authorize Related Firm Water Contract
Proposed Motion
    Approve the following items related to the provision of wholesale raw and potable water to the
City of Dripping Springs (the City).
    1. Authorize the general manager or his designee to negotiate and execute amendments, as
        described below, to the existing wholesale potable water contract with the City.
    2. Adopt wholesale rates for wholesale potable water service to the City.
    3. Authorize staff to negotiate and execute a standard water contract for municipal use of
        LCRA’s firm water supply for a term of 40 years with the City at a maximum allowable
        quantity (MAQ) of 506 acre-feet.
Board Consideration
    The proposed, amended wholesale water service agreement would incorporate new rates based
on the water service commitment requested. Authority for setting wholesale water service rates is
vested in the LCRA Board pursuant to Texas Special District Local Laws Code Section 8503.011
and LCRA Board Policy 508 - Water Pricing. In addition, the proposed, related firm raw water
contract would be for an amount of 506 acre-feet per year, and LCRA’s Water Contract Rules call
for Board approval of contract requests for more than 500 acre-feet per year.
Budget Status and Fiscal Impact
    The administrative costs associated with the negotiation of these agreements are included in the
FY 2008 Business Plan and the revenue generated from the additional service has been incorporated
into the long-range strategic planning for the West Travis County Regional Water System.
Summary
     Background. In 2003, LCRA executed an agreement to provide treated water to the City for
areas it would serve outside its City limits. The City has only recently requested service under the
agreement.
     In LCRA’s agreement with the City, LCRA is expected to provide many services that are
considered “retail” in nature, like owning and operating distribution facilities and providing retail
billing and collection services.
LCRA Board Agenda - May 2008                                                                            43
    At this time LCRA staff and the City propose to amend the existing agreement to cover
wholesale service only in the area covered by the Headwaters Development, which will have about
1,400 residential and commercial connections. The proposed amendments include: a) designating a
delivery point beyond which the city accepts responsibility for ownership, operation and
maintenance of facilities; b) stating a maximum daily flow rate for delivery; c) requiring the City to
obtain its own raw water contract from LCRA for the water to be treated and transported under this
agreement; and d) establishing wholesale rates and charges consistent with other West Travis
County wholesale contracts. The proposed wholesale rates are:
    • Monthly Charge: $7,000
    • Volume Charge: $2.12 per 1,000 gallons
    The proposed amendments would also require the City to pay a living unit equivalent (LUE)
reservation fee of $160 per LUE for reserving water from the Highway 290 water line. This fee was
established by LCRA after the execution of the original contract and is charged to all other parties
who have requested water from this line. In addition, as with all wholesale customers in West Travis
County Regional Water System, the proposed amendments require Dripping Springs to pay the
Board adopted water impact fees that are currently $5,180 per LUE.
    Water delivered to the City would be from the Highway 290 water line and would be subject to
water quality protection measures required for customers served by that water line, as specified in
the Memorandum of Understanding with the U.S. Fish and Wildlife Service adopted by the Board in
May 2000. The Headwaters consulted with the U.S. Fish and Wildlife Service on its development
plans. Service to this area is consistent with the long-range and strategic planning for the West
Travis County Regional Water System.
    LCRA requires wholesale treated water customers to hold a raw water contract for an amount
needed to meet their treated water needs. To meet the needs of the Headwaters Development, the
City will need a raw water contract for 506 acre-feet of firm water. The City has filed an application
for a raw water contract in this amount, which staff is in the process of reviewing. The City will be
required to accept all other standard terms and conditions of LCRA’s current standard firm water
contract. Also, note that the City will be required to comply with the LCRA Utilities Drought
Contingency Plan.
    LCRA has sufficient firm water supplies in lakes Buchanan and Travis or other sources of supply
to meet this request. These sources include significant run-of-river water rights, portions of which
will be amended in the future as customer use of reserved water supplies increases.
Presenter(s)
   Suzanne Zarling
   Executive Manager, Water Services
Exhibit(s)
  A - General Location Map




44                                                                       LCRA Board Agenda - May 2008
EXHIBIT A




LCRA Board Agenda - May 2008   45
FOR ACTION (Discussed at April Board meeting)

13. Repeal of West Lake Hills Wastewater Collection
System Impact Fee
Proposed Motion
    Repeal the West Lake Hills Wastewater Collection System Impact Fee effective upon receipt by
staff of a certified copy of the West Lake Hills Ordinance adopting a wastewater impact fee.
Board Consideration
   Board action is required to repeal the West Lake Hills Wastewater Collection System Impact Fee
adopted in August 2003 in accordance with Chapter 395 of the Local Government Code.
Budget Status and Fiscal Impact
   The City of West Lake Hills pays for all costs associated with the West Lake Hills capital
improvements. The impact fees currently collected offset part of this cost. Under this action, aside
from a small administrative labor savings to LCRA, there would be no net financial change.
Summary
    At its April meeting, the Board authorized staff to negotiate and execute amendments to the
wastewater collection and transportation agreement between LCRA and West Lake Hills to enable
construction of Phase 2 of the wastewater collection system to move forward. An amendment was
executed on April 20, 2008. As a part of that amendment, consistent with Board direction, West
Lake Hills will adopt its own impact fee for the project, and the LCRA impact fee will be repealed.
    To carry out this action, staff seeks Board authorization to repeal the West Lake Hills
Wastewater Collection System Impact Fee adopted in August 2003, effective upon staff receiving a
certified copy of the West Lake Hill Ordinance adopting a new impact fee.
    This proposed arrangement would relieve LCRA from tracking the interest on the impact fees
collected and the responsibility of refunding impact fees if wastewater service is not provided to the
paying customer within certain time periods, as specified under state law.
    Staff recommends that the Board repeal the LCRA impact fee in West Lake Hills, to take effect
only upon staff receiving a certified copy of the West Lake Hills ordinance adopting a wastewater
impact fee.
Presenter(s)
   Suzanne Zarling
   Executive Manager, Water Services
46                                                                        LCRA Board Agenda - May 2008
FOR ACTION (Discussed at April Board meeting)

14. Adopt Conservation Outdoor Watering Measures
for West Travis County Regional Water System
Proposed Motion
    Amend the LCRA Water Utilities Drought Contingency Plan (Drought Plan) to include a
mandatory summertime watering schedule to promote conservation in the West Travis County
Regional Water System (WTC) for both retail and wholesale customers, and an enforcement process
to encourage adoption of the schedule by wholesale customers.
Board Consideration
  Amendments to the LCRA Water Utilities Drought Contingency Plan require Board approval.
Budget Status and Fiscal Impact
  • The costs associated with administering this program are estimated at $15,000 and are
     included in the FY 2009 Business Plan.
  • Implementation of these restrictions will not affect revenue assumptions contained in the
     FY 2009 Business Plan. Revenue assumptions contained in the Business Plan are
     conservatively developed using base load volumes and because of weather variability, do not
     rely on revenue from the highest volume use, where conservation savings are expected to
     occur.
  • Slowing the increase in water demands in WTC could delay or reduce future capital
     investments and subsequent debt service required to provide service in this area.
Summary
    Staff is recommending that the LCRA Board amend the Drought Plan to include a mandatory
twice-weekly watering schedule from May 1 through September 30 of each year for WTC customers
to promote conservation in the WTC, to reduce or delay the need for future capital investments, and
to help ensure reliable service during the peak use periods.
    WTC currently serves approximately 7,500 connections, of which about 40 percent are served
through wholesale contracts. A recent capital project increased the system capacity from 9.8 million
gallons per day (mgd) to 11 mgd, and another expansion is under way that will further increase
capacity up to 20 mgd in 2009. Even with the recently completed capacity increase, projections
show that under expected drought conditions, peak water use this summer could reach or exceed the


LCRA Board Agenda - May 2008                                                                      47
trigger points that require a mandatory response in the current Drought Plan. Acting now will allow
LCRA to assist its customers in reducing peak water use before experiencing any problems.
    Strategies to Reduce Peak Demand
    A review of landscape irrigation audits conducted over the past three years in the WTC service
area found that the majority of customers were watering an average of four times per week. By
changing the watering schedule to twice per week, the amount sufficient for landscapes in this area,
staff estimates that a customer could decrease peak monthly landscape water use by an average of 15
to 20 percent.
    Another opportunity to reduce peak demand is by distributing the days when landscape watering
occurs. Distributing the days when watering occurs will not only help reduce peak demand, but also
save capital and operational expenses, because LCRA is required to build for peak demand.
Reducing peak demand could delay or reduce the need for future capital expenditure. To reduce
peak demand, staff is proposing to assign specific watering days to various customer types. During
the summer period, WTC water customers would be limited to irrigation of landscaped areas on the
following days:
    • Residential customers: odd-numbered addresses - Wednesdays and Saturdays
    • Residential customers: even-numbered addresses - Thursdays and Sundays
    • Commercial customers: Tuesdays and Fridays
    In addition, landscapes could not be irrigated between the hours of 10 a.m. and 7 p.m. But
customers could water by hand at any time.
    Retail Enforcement Processes
    Penalties through surcharges and processes for enforcement for retail customers are already
included in the current Board-approved Drought Contingency Plan. Under the current plan, the first
violation would result in a written notice that carries no penalties but encourages the customer to
make adjustments in watering habits or malfunctioning equipment. The notice would also include
an offer to assist the customer with resetting sprinkler controllers. Following the written notice,
subsequent violations would result in a surcharge of $200 for the second violation and a $700
surcharge for a third violation. Service could be terminated for a fourth violation, resulting in a $500
reconnection fee and a $500 deposit requirement. Staff is not proposing to change these surcharges.
    These penalties are similar to those of other area retail water providers. Water Control and
Improvement District (WCID) No. 17, adjacent to the WTC service area, has adopted these same
penalties. The penalty authority of the City of Austin differs from that of LCRA. Violation of the
City of Austin’s watering restrictions results in a penalty for the first and subsequent violations of a
Class C misdemeanor punishable by a fine not to exceed $2,000. Austin’s practice has been to
provide an initial warning prior to assessing fines, which has resulted in 99 percent of the violations
being brought into compliance without the need for a fine.
    Wholesale Enforcement Processes
    For wholesale customers, the Drought Plan currently requires that wholesale treated water
customers have drought plans “at least as stringent” as the current LCRA Utilities Drought Plan.
More consistency in penalties and enforcement processes for wholesale customers would facilitate
improved compliance. The proposed enforcement process is designed to encourage wholesale
customers to adopt the watering schedule into their own drought plans and make a reasonable effort
to enforce them. The penalties are not intended for wholesale customers that are seeking to adopt
and implement these measures.
    If wholesale customers do not adopt and reasonably enforce their plans, then LCRA staff would
take the following action:

48                                                                        LCRA Board Agenda - May 2008
   •    First violation: provide a written notice of the violation, which carries no penalties but
        encourages the wholesale customer to adopt and/or implement plans with these measures.
    • Second violation: assess a penalty of up to $2,000.
    • Third and subsequent violations: assess a penalty of up to $10,000.
    These penalties were established to provide an appropriate level of incentive for LCRA’s
wholesale customers, some of which pay annual water-use charges of almost $400,000. Other
wholesale providers in Texas have different authority and enforce using a range of methods. The
City of Austin uses the enforcement options specified in their wholesale contracts. The Tarrant
Regional Water District provides a written notice for the first offense, publishes the name of the
wholesaler in violation in local print media for the second offense, and then seeks TCEQ
enforcement for continued violations. The North Texas Municipal Utility District requires the use of
flow restrictors and assesses financial penalties.
    Implementation Plan
    For the first year of implementation, staff proposes a 60-day grace period in applying the formal
enforcement process for wholesale customers, to allow staff an opportunity to better educate the
customers on the proposed changes and allow the customers time to make needed changes to their
plans, unless the system peak demands exceed the trigger points for mandatory conservation in the
current Drought Plan.
    Implementing the mandatory schedule at this time will also allow LCRA to leverage its
communication efforts. Both the City of Austin and WCID No. 17 have adopted the same
mandatory schedule. Communication of the program could benefit from promotion of the schedule
in the Austin media.
    Staff will be providing outreach to our customers regarding these proposed changes and will also
be available to assist retail customers with resetting irrigation controllers.
Presenter(s)
   Suzanne Zarling
   Executive Manager, Water Services




LCRA Board Agenda - May 2008                                                                       49
FOR ACTION

15. Partnerships In Parks Recommendations
Proposed Motion
   Approve Partnerships In Parks (PIP) grant project recommendations.
Board Consideration
    LCRA Board Policy 403 - Community Services requires Board approval for the grant of funds to
assist with community park projects through the PIP program.
Budget Status and Fiscal Impact
  The PIP grant funds are expected to be funded with FY 2007 Above Budget Net Revenues.
Summary
    LCRA’s PIP program provides matching grants to cities, counties and municipal utility districts
for local public park capital improvement projects in LCRA’s service area. LCRA encourages grant
recipients to forge local and state partnerships to raise matching funds from other sources. These
partnerships result in parks and recreation facilities that benefit the community by serving local
residents and also attracting visitors from surrounding areas. Depending on the construction start
date, communities have three to four years to complete their project.
    The LCRA contribution to any project is a minimum of $25,000, and a maximum of $200,000.
LCRA received 10 PIP grant applications requesting $1.7 million in funding. Staff is recommending
three grant awards for a total of $500,000 in funding.
Presenter(s)
   Frank H. Morgan
   Executive Manager, Community Services
Exhibit(s)
  A - Partnerships In Parks Grant Recommendations




50                                                                      LCRA Board Agenda - May 2008
EXHIBIT A


                 PARTNERSHIPS IN PARKS RECOMMENDATIONS


   County      Organization    Project Title   Recommended       Elements and Project Cost
                  Name                            Amount
                                                             Project elements: Boat and canoe
                                                             launch, picnic tables, deck area, volleyball
                 City of       Cottonwood                    court, swimming area, amphitheater,
   Burnet      Cottonwood      Shores Park      $200,000     pavilion, play area, trails and pool
                 Shores          Project                     renovations
                                                             Project Cost
                                                                                               $1,651,000
                                                             Estimate:
                                                             Project Elements: Multiuse trails, picnic
                                                             tables, park benches, playground
                                                             equipment, baseball field, soccer field,
                  City of      Lampasas                      softball field, multipurpose court, wetland
 Lampasas                                       $200,000     interpretation dock, wildflower seeding
                Lampasas       Sports Park
                                                             area, and historical/cultural signage
                                                             Project Cost
                                                                                               $3,135,005
                                                             Estimate:
                                                             Project elements: Water access to
                                                             Cypress Creek, multiuse trails, tent camp
                                                             sites, picnic grounds, trails, pavilions,
                City of        Jacob's Well
    Hays                                        $100,000     swimming areas, bicycle trails, and
               Woodcreek       Natural Area                  birding/education center
                                                             Project Cost
                                                                                               $5,600,000
                                                             Estimate:


 RECOMMENDED                                    $500,000




LCRA Board Agenda - May 2008                                                                               51
FOR ACTION

16. Contracts and Contract Changes
Proposed Motion
   Authorize the general manager or his designee to negotiate and execute the following contracts
and contract changes, as shown in the attached exhibits.
Board Consideration
    LCRA Board Policy 205 - Procurement establishes guidelines for the procurement of materials,
services, software and construction and the disposal of goods in accordance with LCRA Board
Policy 102 - Authority and Responsibilities.
Budget Status and Fiscal Impact
   All contracts and contract changes recommended for Board approval are for budgeted items
contained in the operations and capital budgets.
Summary
   Each month the Board approves the contracts and contract changes in accordance with LCRA
Board Policy 205 - Procurement.
Presenter(s)
   Andy Betz
   Manager, Purchasing
Exhibit(s)
  A - Exceptions
  B - New Contracts
  C - Contract Changes




52                                                                     LCRA Board Agenda - May 2008
EXHIBIT A



                                             Exceptions
LCRA Board Policy 205 - Procurement requires that procedures be established for departing from
the competitive process and awarding contracts prior to Board approval when circumstances dictate.
Each month any exceptions to the policy are noted in Exhibit A.

Policy Exception: Departure from full and open competition
Contract No. 52772
Amount:         Not to exceed $1,352,810
Time Period: Until contract fulfilled
Contractor: ALSTOM Power Inc.
Competition: Departure from full and open competition
Description: This contract is to provide design, fabrication and material procurement for Fayette
Power Project Units 1 and 2 boiler burner nozzles and tips. The existing burner nozzles and tips are
at the end of their service life. This contract is a departure from full and open competition because it
is issued in accordance with the Alliance Agreement between LCRA and ALSTOM Power Inc.,
dated Aug. 1, 2002. An Alliance Agreement is a long-term contract that emphasizes the importance
of the relationship to both parties. The ALSTOM Alliance Agreement covers maintenance services
relating to the LCRA-owned boilers originally supplied by Combustion Engineering (now ALSTOM
Power Inc.) This project will be included in the FY 2009 Wholesale Power Services Capital
Improvement Plan.

Policy Exception: Early release
Contract No. 52510
Amount:        Not to exceed $380,614
Time Period: Until contract fulfilled
Contractor: CFM/VR-Tesco LLC
Competition: Full and open competition
Description: This contract is to provide for the replacement of the main boiler-feed repair element
and booster-pump mechanical seals, repair a stop check valve, and overhaul the main turbine-reheat
and intercept valves at Thomas C. Ferguson Power Plant. Early release of this contract was
necessary in order to meet the required plant maintenance schedule. During the Spring outage, staff
discovered that these items were at the end of their service life and needed to be replaced now
instead of during the Fall outage when they were scheduled to be replaced.




LCRA Board Agenda - May 2008                                                                          53
EXHIBIT B
 Page 1 of 2

                                         New Contracts
LCRA Board Policy 205 - Procurement requires Board approval for contracts in excess of $50,000
for consulting and $300,000 for all other contracts. Each month, any new contracts that exceed these
limits are noted in Exhibit B.

Contract No. 52746
Amount:         Not to exceed $3,466,145
Time Period: Until contract fulfilled
Contractor: Keystone Construction, Inc.
Competition: Full and open competition
Description: This contract is to provide construction of the West Lake Hills Wastewater Collection
System, Phase 2. The contract includes labor, materials, equipment and supervision to construct the
last phase of the West Lake Hills Wastewater Collection System and is a fixed price contract. At the
direction of the City of West Lake Hills, the scope has been reduced by approximately 40 percent
from the original project.

Contract No. 2325
Amount:        $640,000
Time Period: Until contract fulfilled
Contractor: Mercer LLC
Competition: Full and open competition
Description: This contract is to provide an external Total Rewards Study. All aspects of LCRA’s
compensation and benefits programs, including job creation, executive compensation and retiree
medical benefits will be reviewed. After a four-phase vendor evaluation process, the project team
selected Mercer, LLC because of the thoroughness of their response, the expertise of their staff, and
the feedback from former clients. When Human Resources presented a recommendation for
conducting a compensation study several months ago, Board members requested adding benefits to
the review. LCRA has not conducted a large-scale external compensation review since 1990, but did
partner with consultants for benefit reviews in 2000 and 2005. The results of this study should
provide LCRA with information to assist us in remaining cost-effective and make LCRA’s expenses
more transparent to its customers as well as help attract and retain valuable employees.

Contract No. 52764
Amount:         $634,746
Time Period: Until contract fulfilled
Contractor: Powell Electrical Systems Inc.
Competition: Full and open competition
Description: This contract is to provide for the design and manufacture of one 5-kilovolt Type 2
arc resistant switchgear for Lost Pines Power Park, Sim Gideon Unit 3. This contract includes the
equipment, additional hardware options and technical services.




54                                                                      LCRA Board Agenda - May 2008
EXHIBIT B
 Page 2 of 2

                                        New Contracts
LCRA Board Policy 205 - Procurement requires Board approval for contracts in excess of $50,000
for consulting and $300,000 for all other contracts. Each month, any new contracts that exceed these
limits are noted in Exhibit B.

Purchase Order No. 52879 to Contract No. DIR-SDD-239
Amount:        $450,000
Time Period: Until contract fulfilled
Contractor: INX Inc.
Competition: Full and open competition
Description: This contract is to provide network switching equipment for the primary LCRA data
center. The data center network equipment will be upgraded to meet the increase in the number of
LCRA servers connecting to the network, to provide increased network capabilities, and to meet
industry standards and best practice.




LCRA Board Agenda - May 2008                                                                      55
EXHIBIT C


                                       Contract Changes
LCRA Board Policy 205 - Procurement requires Board approval for contract changes when the
accumulated changes are in excess of $50,000 for consulting and $300,000 for all other contracts.
Each month any change orders that reach these limits are noted in Exhibit C.


For May 2008, there is a competitive electric contract change that will be discussed in Executive
Session.




56                                                                      LCRA Board Agenda - May 2008
FOR ACTION

17. Renewal of the Revolving Credit Agreement for the
Tax-Exempt Commercial Paper Line of Credit with
JPMorgan Chase Bank
Proposed Motion
    Authorize the general manager or his designee to negotiate and execute an amendment to the
Revolving Credit Agreement with JPMorgan Chase Bank supporting a portion of LCRA’s $350
million Series A Tax-Exempt Commercial Paper Program to extend the $175 million Commitment
A portion for one year. This agenda item requires approval of at least 12 members of the Board.
Board Consideration
   Section 8503.013 of the Texas Special District Local Laws Code (LCRA Act) authorizes the
Board to issue debt under certain conditions, including the requirement that 12 members must
concur with the resolution.
Budget Status and Fiscal Impact
   The current cost of the Revolving Credit Agreement is reflected in the FY 2008 Business Plan
and the proposed FY 2009 Business Plan. The business plans includes budgeted amounts that will
cover the costs of the commitment fee and administrative fee associated with the requested renewal
and extension of the Revolving Credit Agreement.
Summary
    With this action, the Board will authorize staff to extend a portion of the credit facility
supporting the LCRA’s Series A, Tax-Exempt Commercial Paper Program. LCRA has two lines of
credit with JPMorgan Chase Bank: $287.5 million that secures LCRA’s Series A, Tax-Exempt
Commercial Paper Program and $40 million that secures LCRA’s Series A, Taxable Commercial
Paper Program. The commercial paper programs are used to fund capital expenditures for Water
Services and Wholesale Power Services, as well as some minor Corporate capital projects, that have
been approved by the Board. Periodically, staff recommends refunding short-term, variable-rate
debt with long-term, fixed-rate debt when market conditions are favorable.
    This Revolving Credit Agreement has supported the Series A Tax-Exempt Commercial Paper
Program since June 1, 2000, when LCRA entered into a three-year Revolving Credit Agreement
with Morgan Guaranty (now JPMorgan Chase Bank). In October 2000, the Revolving Credit
Agreement was amended and increased, resulting in two commitment levels totaling $125 million.
LCRA Board Agenda - May 2008                                                                      57
In June 2003, the Revolving Credit Agreement was amended and increased again to $150 million,
which is comprised of two separate $75 million commitments (Commitment A and Commitment B).
The Revolving Credit Agreement was amended again in December 2003 to increase Commitment B
from $75 million to $112.5 million. In June 2007, the Revolving Credit Agreement was amended
again to increase Commitment A from $75 million to $175 million to facilitate the anticipated
increase in need for tax-exempt, short-term borrowing capacity necessary under the generation
resource plan. Commitment A expires on June 27, 2008.
    Staff now requests Board authorization to extend the Commitment A portion of the Revolving
Credit Agreement with JPMorgan Chase securing LCRA’s Series A Tax-Exempt Commercial Paper
for 364 days to June 26, 2009, at its current level of $175 million. The fee during the extended term
of the agreement will be 35 basis points per year, which is in line with current market pricing.
Presenter(s)
   Brady Edwards
   Interim Chief Financial Officer and Treasurer




58                                                                      LCRA Board Agenda - May 2008
FOR ACTION (Discussed at the April Board meeting)

18. FY 2009 LCRA Capital Improvement Plans
Proposed Motion
   Approve FY 2009 LCRA Capital Improvement Plans, provided under separate cover:
   • Wholesale Power Services and GenTex Power Corporation FY 2009 Confidential Capital
      Improvement Plan
   • Water Services FY 2009 Capital Improvement Plan
   • Corporate Services FY 2009 Capital Improvement Plan
   • Community Services FY 2009 Capital Improvement Plan, which is the FY 2009 Park,
      Recreation and Open Space Master Plan (PROSMP)
   • LCRA Transmission Services Corporation FY 2009 Capital Plan and the Transmission
      System Improvements Plan for FY 2009
Board Consideration
   LCRA Board Policy 304 - Financial Planning Policy requires each LCRA business unit to
prepare a capital plan for approval by the Board on an annual basis.
Budget Status and Fiscal Impact
    The capital plans and the PROSMP are incorporated into the FY 2009 Business Plan. Individual
projects from the LCRA plans and the PROSMP will be brought to the Board for specific approval
in accordance with LCRA Board Policy 304 - Financial Planning Policy.
Summary
   Each capital plan describes the capital projects and expenditures necessary to carry out key goals
and strategies in LCRA’s business plan. Approval of the LCRA FY 2009 Capital Improvement
Plans authorizes the following:
   • Staff initiation of those projects identified as “Recommended” and their lifetime budget as
        included in the Plan.
   • The capital spending limit for FY 2009 of $468.6 million on those projects identified as
        “Recommended” or “Approved”. Pre-spending of $3 million has been identified in the plan
        for FY 2009 associated with “Future” projects and has been included in the total
        authorization requested, as shown in Exhibit A.



LCRA Board Agenda - May 2008                                                                       59
    For informational purposes, future anticipated projects have been included in the Plan appendix.
They are identified as “Future” projects, and the associated forecasted expenditures have been
included in the LCRA business plan to estimate future funding requirements and the impact on cost-
of-service. “Future” projects are not being recommended for approval or initiation at this time. Any
of these projects that are later determined to require initiation in FY 2009 will be brought back to the
Board individually for approval in accordance with LCRA Board Policy 304 – Financial Planning
Policy.
Presenter(s)
   Brady Edwards
   Interim Chief Financial Officer and Treasurer
Exhibit(s)
  A - FY 2009 LCRA Capital Plan Summary of Board Approval




60                                                                         LCRA Board Agenda - May 2008
EXHIBIT A

                      FY 2009 LCRA Capital Plan Summary of Board Approval

                    Approval of this Capital Plan authorizes the initiation of "Recommended"
                    projects at their stated lifetime budgets totaling $1.138 million.

                                              FY 2009 LCRA Capital Plan
                (Dollars in Thousands)
                Lifetime Spending Summary
                                                                                                   Lifetime
                Recommended Projects                                                               Budgets
                                               1
                Wholesale Power Services                                                  $     1,004,707
                Transmission Services Corporation                                                   64,954
                Water Servi ces                                                                     17,529
                Community S ervices                                                                  1,725
                Corporate S ervices                                                                 49,270
                Total Lifetime Recommended P rojects                                            1,138,185
                LCRA Lifetime Share (WPS Projects)                                                973,090

                    In addition, approval of this Capital Plan authorizes LCRA to
                    spend the following in FY 2009:

                FY 2009 Spending Summary                                                          FY 2009
                Recommended Projects                                                              141,550

                A pproved Projects                                                                324,773
                               2
                Prespending                                                                          2,293
                Total FY 2009 Spending (LCRA share only)                                          468,617
                A ustin Energy FY 2009 Share                                                        96,999


                LCRA FY 2009 Spending Total                                                       FY 2009
                Wholesale Power Services (LCRA share only)                                        276,141
                Transmission Services Corporation                                                 128,573
                Water Servi ces                                                                     45,300
                Community S ervices                                                                  3,922
                Corporate S ervices                                                                 14,681
                Total FY09 Spending (LCRA share only)                                             468,617
                1
                    Includes Austin Energy's Share
                2
                    Associated with future projects which will require Board approval prior to initiation




LCRA Board Agenda - May 2008                                                                                  61
FOR DISCUSSION

19. FY 2009 LCRA Business Plans
Board Consideration
    LCRA Board Policy 304 - Financial Planning Policy requires approval of a business plan prior to
the start of each fiscal year.
Summary
    The draft FY 2009 business plans were presented to the LCRA Board in a work session on
May 7 and 8, 2008. Individual business units presented their goals and individual budgets for the
upcoming fiscal year. The business plans are LCRA’s comprehensive operations plan and budget.
Approval of the FY 2009 business plans provides authorization for all expenditures and plans of
LCRA, including budgets for the water and wastewater systems that are part of LCRA and budgets
for LCRA’s affiliated nonprofit corporations, LCRA Transmission Services Corporation and
GenTex Power Corporation. The Board is required by law to approve each of the affiliates’ budgets.
    Drafts of the FY 2009 business plans have been provided to the Board under separate cover. The
general manager provides the Board with monthly fiscal updates and quarterly business plan updates
for LCRA and for the affiliates.
    The FY 2009 business plans, incorporating key policy elements from the May work session and
from today’s discussion, will be brought to the Board for approval at the June 2008 Board meeting.
Presenter(s)
   Brady Edwards
   Interim Chief Financial Officer and Treasurer




62                                                                     LCRA Board Agenda - May 2008

				
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