It’s All About the Water, Boys

Is Gov. Perry trying to take over the Lower Colorado River Authority?


A version of this story ran in the April 2012 issue.

For the better part of the past eight decades, the Lower Colorado River Authority has played a key role in the massive growth of Central Texas. The organization, known more commonly as the LCRA, is one of 14 public river authorities that watch over Texas’ 15 major rivers. Its purview includes wholesale power sales—which originated with hydroelectric dams dating to the late 1930s and early 1940s—water management, and environmental stewardship.

Oversight and leadership of the LCRA is provided by a 15-member board of directors appointed by the governor, and thus subject to the whims of a Democrat/Republican/what-have-you administration. For the past 11 years, that decision-maker has been Rick Perry. The longest-serving governor in Texas history has exerted increasing influence over perhaps the state’s most influential river authority—to the potential benefit of Perry’s friends and water speculators.

In 2003, the Legislature granted Perry’s office authority to directly appoint the LCRA board’s chair. Before that, board members had elected their own chair, vice chair and secretary. It was a dramatic change. Perry and his staff now had the ability to control day-to-day board operations through a chair of his choosing. By extending his reach to the levers that control the LCRA, Perry forced an end to then-General Manager Tom Mason’s brief tenure. More consequentially, Perry moved long-time ally Tim Timmerman into the LCRA chairmanship.

Timmerman replaced Rebecca A. Klein, a former staffer in the White House of George H.W. Bush who has also served as chair of the state’s Public Utility Commission. Klein is no raging liberal. She had unsuccessfully run for Congress in 2004 against Democratic stalwart Lloyd Doggett. Klein and her husband (himself a former chair of the Nuclear Regulatory Commission under President George W. Bush) each contributed $2,500 to Perry’s recent presidential effort. She did not contribute to any of Perry’s state runs. (Klein still sits on the LCRA board, where she now serves as vice chair.) The problem for Klein is that she’s not as close to Perry as Timmerman is.

Timmerman and Perry go way back. In a 2010 piece, the Houston Chronicle reminded readers of a now well-known real estate deal involving the pair. “Timmerman steered Perry into paying $122,000 for a 9.3-acre plot that became critical to the construction of a 33,000-square-foot home being built by computer millionaire Michael Dell,” the article read. “Perry sold the land to Dell two years later at a profit of $343,000.”

There was also, the Chronicle reported, an issue regarding high-voltage LCRA transmission lines in and around the city of Hutto. Citizen preference was for the lines to go around, rather than through, the city. The around route was opposed by Timmerman, who was developing his Star Ranch residential project along the alternate corridor. Timmerman was appointed to the LCRA board and the organization steered its lines back through town, away from Timmerman’s property. Both Perry and Timmerman have denied exerting undue influence on the project. Still, a stain remains.

Timmerman is both a developer and a major political donor to Perry. Since 2000, Timmerman has contributed more than $83,000 directly to Perry’s state campaigns. Long-time watchers of the LCRA and some former board members worry that Timmerman was appointed chair to push the governor’s agenda.

Timmerman inherited an organization that had continually expanded its reach. The LCRA was born of an effort to bring portions of Central Texas out of the literal dark, but some argue that over the past two decades in particular, as it built water infrastructure for small municipalities across the Hill County, the LCRA has overstepped. In delivering water to more and more communities, the organization has ignored the possibility that there may not be enough water to sustain the level of development visited upon Central Texas. Now, with its board seemingly bowing to the governor’s office, and a general manager stripping away layers of staff and experience, critics fear the LCRA may be wide open for plunder by development interests and water speculators.

Except for a summer break in July, the LCRA’s board of directors meets at least once a month. Before they get to the serious stuff, directors like to take a few minutes to recognize departing employees.

Over the past year, the number of ex-LCRAers has been on the rise. By February, the utility had lost nearly 6,000 years of collective experience in the preceding 12 months. The losses cascaded through a host of critical LCRA operations and ran the gamut from experienced field hands to experienced managerial staff—folks who knew the volatile business of utilities and were equipped to help the organization pivot to meet its ever-changing needs of balancing power generation, water utilities, and managing the river. Critics argued that it was an irreplaceable brain drain.

The LCRA pointed out that it was expecting many of the departures. Official speculation suggested a recent change in retirement benefits prompted some of the exodus. But a recent culling by General Manager Rebecca Motal that relied on voluntary and involuntary force reduction to cut staff factored in as well. The agency is facing tough economics. Because the organization receives no fiscal support from the state, it is entirely reliant on its own devices for revenue. In addition to hefty losses associated with its purchase, construction, and eventual sale of more than 30 municipal water utilities in central Texas, the LCRA is staring at a loss of 10 of its 43 wholesale electric customers by 2016. That could bring the utility as much as a 50 percent drop in revenue.

Underneath the disarray lurks a current of rumor that the organization has undergone a major, and negative, cultural shift. That perception broke into the open on August 24, 2011, when the sitting board paused to send off five of its own. It first passed resolutions honoring outgoing commissioners Richard Scott and Ida Carter. There were accolades and acknowledgements of hard work. Board members rushed to offer motions of approval and seconds. Scott and Carter offered gracious comments.

Former board member Linda Raun of Wharton County came next. Motal listed a host of Raun’s contributions during her six-year tenure.

Raun then approached the podium and began what started as another genteel speech. “I feel very fortunate to have had a small part, in the last six years, of such an amazing organization,” she said.

But Raun became more pointed as she continued. “We … worked very hard as a board to be united and [to] look at the basin as a whole … Every decision we made, I can honestly say, was based on what was best for LCRA, and what was best for the basin as a whole … I hope that philosophy continues, because if the board is not following that philosophy [then] no one else will either, and it’s very difficult to accomplish anything unless you have that mindset.”

Raun’s statement could be read as a nod to insiders. The board that Raun served on determined what was best for the LCRA and what was best for the basin, as Raun put it. For about four years that meant keeping General Manager Tom Mason in his job. Mason has earned a reputation for openness, bringing transparency to LCRA decision-making. Under Mason, the LCRA seemingly considered development and utility projects based on the basin’s needs, not what was best for developers. But that wasn’t the agenda Perry had in mind.

By supporting Mason, the board ran afoul of Perry’s office. One former board member, who requested anonymity, said that as the most recent crop of directors’ terms expired, Timmerman hand-picked five new directors who would hew more closely to the governor’s line.

The resolution acknowledging another departing board member—Llano County’s W.F. “Woody” McCasland—followed Raun’s. The resolution closes by noting that the LCRA is “grateful” to McCasland for his “candid and constructive dialog and considerable initiative.”

Part of that candidness was McCasland’s steady support of Mason. McCasland, Raun and former board member B.R. “Skipper” Wallace were part of a board majority that continued to back Mason even as pressure from Perry’s office mounted to fire Mason. “We had the majority of the votes on there,” McCasland said, adding that Mason was “the best thing that we had.” Under Mason and the board that supported him, McCasland said, organizational transparency increased. “We were turning the LCRA around,” he said.

Wallace confirmed McCasland’s account. “[The governor] wanted us to go along with what he wanted to do, and I wasn’t going to do that,” Wallace said. “It wasn’t good for the people of Texas or the LCRA.”

“[A] majority of the board agreed with me,” he continued. “Tom was doing a great job.”

Raun was more reluctant than her former colleagues to go into detail about the politics. Still, she said she “sometimes” felt pressure from Perry’s office to make certain decisions, though she declined to elaborate.

As for Mason, Raun said, “He was doing an awesome job,” adding later that “it was disappointing to me that Tom made the decision to [resign].”

Departing members of the board weren’t the only LCRAers honored in August. After the board bid farewell to Mason’s defenders, Motal read a resolution honoring the now-former general manager himself. It cited his 24 years of service to the LCRA, much of which had been spent as the organization’s deputy general counsel and general counsel. It noted accomplishments in all phases of LCRA business and noted that, under Mason, the authority had begun the difficult process of selling off its water and wastewater utilities. Then the resolution turned to the organizational change that McCasland had referenced. Mason was credited with helping the LCRA become more transparent through the publication of business plans, and cited for his role in posting expenditures on the organization’s website.

The sitting board closed with praise of its own. Motal offered a resolution that read in part: “[Mason] exemplifies three of his favorite mottos: When you expect the best from people you usually get it; there is no right way to do the wrong thing; and no act of kindness, no matter how small, is ever wasted.”

When Motal concluded, the audience gave Mason a standing ovation.

Mason was named
the LCRA’s ninth general manager in 2007. He followed the reign of Joe Beal, who is widely remembered for the construction of wind-power transmission lines and a series of water lines that helped support development in the Hill Country. Beal’s critics thought him too in-line with the familiar LCRA pro-growth-at-all-costs agenda, which clashed with growing environmental concerns in an environmentally sensitive region. Mason—a seasoned environmental attorney—was at least superficially something of a change.

Mason’s run, it seems, was spoiled by political machinations. Perry appointed Rebecca Klein to chair the board in 2008, just a year after Mason became general manager. McCasland says that Klein tried to remove Mason “immediately,” but could never get the necessary votes.

At the time, it was widely rumored that Perry favored his legislative affairs director and former state Sen. Ken Armbrister for the general manager position. The board went with Mason, and Armbrister remained in Perry’s office.

Klein served as LCRA chair for three years. Perry appointed Timmerman as her successor in January 2011. McCasland says that Timmerman played a key role in naming replacements for the five most recent board departees. “It got to the point where the chairman ended up really picking the majority of the directors.”

Raun is more circumspect. “Five of us rotated off, it’s a normal cycle,” she said. “But we also were the ones that hired Tom Mason.”

On May 1, 2011, Wallace was more direct. “I guess Perry finally found someone for my place that [Horseshoe Bay Republican Senator Troy] Fraser couldn’t veto,” he tweeted amid speculation that Fraser had dragged his feet to keep Wallace on the board as long as possible. “Been great working with you.”

Timmerman had swept away the core of Mason’s support on the board. The next move wasn’t hard to figure. Mason resigned in summer 2011 and took a job with the Austin law firm Graves Dougherty Hearon and Moody in late November. (He declined to comment for this story.) He was replaced by Motal, a former chair of the Travis County Republican Party.

Mason had contributed to Democratic candidates, including $500 to Bill White’s 2010 gubernatorial run against Perry, but partisan politics doesn’t explain the changes at LCRA. McCasland, who also wasn’t reappointed to the board, has donated thousands of dollars to various Perry campaigns. Wallace leans Republican too; he thinks Perry’s 12 years in office have been mostly positive. If the general manager shuffle was about Mason’s political affiliation, it would be logical to assume that the board of Wallace, McCasland and Raun would never have hired him in the first place.

What’s happening at LCRA seems less about partisan politics than cronyism. “He’s wanting to take care of his buddies,” says McCasland of the governor. “There were some people [the governor] wanted us to hire,” he says. “We didn’t do that … We would not vote to hire [Armbrister].”

Though Armbrister may be qualified for the general manager position—he spent substantial time in the Legislature working on natural resources issues, to the chagrin of those who considered him a development-friendly figure—it should be noted that taking over the LCRA would have meant quite a bump in salary. In Perry’s office, he collects an annual income of $176,460. In his last year on the job, Mason stood to make $345,000.

A Perry spokesperson denied that the governor’s office influences the board on internal decisions. He also pointed out that the governor has the right to make appointments as he sees fit.

In fact, for some former board members, the problem isn’t that Perry has been installing friends and allies on the LCRA board. The problem is the policy that will follow.

As growth outpaces
Texas’ water supply, municipalities find themselves reaching further to bring ever more acre-feet of water to their doorsteps. Drought and development has made water scarce all over Texas.

Against this backdrop, water speculators, some with connections to Perry, have been trying to sell water to the LCRA.

In September 2010, the Austin American-Statesman reported on what the paper termed a “massive deal.” The plan was to work with a handful of rights-holders to pump groundwater out of a host of Central Texas counties and into a $400 million pipeline to San Antonio. San Antonio would have received 80 percent of the water.

The groups involved have been referred to as “water developers”—a euphemistic turn for water speculators—firms gobbling up water rights in the hopes of selling them for a profit down the line.

Former Williamson County Commissioner Frankie Limmer’s company End-Op and a firm called Sustainable Water Resources—which included San Marcos Developer Terry Gilmore, attorney Pete Winstead, and engineering consultant Paul Bury—were part of the deal.

The Statesman’s Asher Price described the potential agreement in a manner that might alarm those who worry about who controls Texas water. “In effect, they are competitors aiming to corner the water-rich underground reserves around the Simsboro formation of the vast Carrizo-Wilcox Aquifer, which stretches beneath the counties east and northeast of Austin,” he wrote. “Under the river authority’s plan, they would lay down their differences to make money collectively supplying water to the San Marcos area and San Antonio.”

Around the same time, San Antonio issued a call for 26 billion additional gallons of water. The plan fell through when Limmer’s End-Op company failed to acquire the rights for its portion of the water.

Seven months before Price’s story on the Limmer deal, a similar pitch had been made to the LCRA by Sustainable Resources, represented by Gilmore and Winstead. McCasland says that Timmerman—then not yet board chair but already a sitting board member—and Scott Spears, husband of the director of Perry’s appointments office Teresa Spears, pushed hard for some kind of arrangement with Sustainable Water. “They were trying to promote water out of Milam County,” McCasland says. “They wanted the LCRA to buy the water and build a pipeline.”

Price’s reporting in the Statesman offered the blow-by-blow: “John Dickerson, a board member from Matagorda County, asked how much the project would cost. Terry Gilmore told them water would cost in the $900s per acre-foot, including the $220 million cost to build a pipeline and other infrastructure to deliver it. Currently, LCRA sells water at $138 an acre-foot out of the Colorado River.”

Price noted vocal skepticism from Wallace, who still was on the LCRA board at the time. Though nothing came of the push, McCasland believes that Winstead is still trying to sell groundwater to the LCRA.

Perry’s office announced a list of three potential replacements for departing LCRA board members at the end of March 2011. An El Campo real estate manager for the Legacy Trust Corporation named J. Scott Arbuckle and former Pflugerville Mayor John Franklin would eventually make their way to the board. Bobby Limmer wasn’t so lucky.

Limmer is a dermatologist who specializes in hair restoration. He’s also Frankie Limmer’s brother. Though Bobby Limmer was not a partner in his brother’s enterprise, and insisted that he would recuse himself should an End-Op project ever come before the board, he was forced to pull his name from consideration.

At the LCRA’s January 2012 board meeting, Motal announced that the organization would begin a search for an additional 100,000 acre-feet of water supply. The move came roughly six months after Mason’s departure, when the last of Perry’s most recent slate of board appointees took their seats.

Timmerman, responding to the Observer by email, refutes the idea that the governor’s office exercised any inappropriate influence over board decisions. He further denies that the board felt pressure to force Mason from his job. Asked about the failed Sustainable Resources water deal, Timmerman wrote that he and Spears didn’t lean on colleagues to accept the deal. Unprompted, however, he then connected that deal to Motal’s recent call for 100,000 more acre feet of water. “It’s an ambitious goal, but doable,” he wrote. LCRA, it seems, will continue looking to buy water from speculators.

Wallace closed his
goodbye to the LCRA with a frank assessment of the role of a board member. “To [be asked] to … serve on this board by the governor is probably one of the biggest challenges you as a board member will ever take on,” he said. “You’re asked to make multi-million-dollar decisions that affect millions of people on things that very likely you know absolutely nothing about…. Now, you’re given the opportunity to get educated, and the longer you serve on the board—at the end of six years you’ll know pretty much what the hell is going on. But then it’s your time to move on, and let some other fella take your spot, become educated, and be a proponent of LCRA throughout the state of Texas.

“This is probably one of the greatest public service opportunities I’ve ever had an opportunity to make,” he continued. “It’s been a great ride.”

Though McCasland was as gracious in his remarks to the board as Wallace , he was more candid in a later interview. “The last six years serving on this board have really turned me off,” he said. “The things that are going on are just ridiculous.”

McCasland says he worries about the future of the LCRA. “I realize politics, I’m 77 years old,” he said. “But I think that our governor has crossed the line.” He is harsh in his assessment of his colleagues who have been reappointed to the board. “They sold their soul to the governor.”

Mike Kanin is an Austin-based freelance writer. He covers the LCRA for the Austin news site In Fact Daily.