Corpus Christi advances desalination project amid Southwest states' water hunt

Corpus Christi is moving forward with Texas' first seawater desalination treatment plant for municipal use with the aim of providing the Gulf Coast city a drought-proof water supply.

In a 6-2 vote last week, the city council approved several measures including the issuance of $221 million of utility system senior lien revenue improvement bonds to help fund the Inner Harbor Desalination Water Treatment Plant.

The debt will be privately placed in one or more series with the Texas Water Development Board's State Water Implementation Fund for Texas lower-cost loan program.

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The city council also approved an ordinance to apply for grants of as much $180 million from the U.S. Bureau of Reclamation for the project based on a feasibility study the city contracted for with a consultant in October. The desalination plant carries a price tag of $757 million, according to reports in multiple local news outlets.

"Given our area's critical water scarcity, we must continue to prioritize establishing water resilience," Mayor Paulette Guajardo said in a statement, adding the affirmative vote "ensures a long-term water solution for our families and our economic future." 

The Corpus Christi Water Authority, which is the primary water supplier to a seven-county region, expects the plant to produce about 30 million gallons of potable water daily. A water rights permit for the project was approved in 2022 by the Texas Commission on Environmental Quality. 

The city depends on rainfall replenishing surface water. City Manager Peter Zanoni announced Jan. 18 Corpus Christi's combined reservoir storage dropped below 30%, but stopped short of implementing stage 2 water use restrictions. Stage 1 restrictions have been in place since 2022.

The need for more water statewide led voters in November to approve a constitutional amendment creating a $1 billion Texas Water Fund administered by the water board, with a minimum of 25% allocated to a New Water Supply for Texas Fund. Enabling legislation signed into law June 9 by Gov. Greg Abbott directs the water development board to use the supply fund to finance projects that will lead to 7 million acre feet of new water supply by the end of 2033. Projects can include desalination, aquifer storage and recovery, and infrastructure to transport water and can involve public-private partnerships.

While there are no operational seawater desalination facilities in Texas, 53 municipal facilities treat brackish ground and surface water, according to the state water board.

New Mexico is plowing forward with Gov. Michelle Lujan Grisham's $500 million proposal to spur private investment to treat brackish aquifer water and water produced from oil and natural gas extraction so that it could be used by industries the state wants to attract or expand.

In January, the state's environment department said it issued a request for information "from individuals, businesses, academia, government agencies, and other stakeholders related to the sourcing, treatment, delivery, storage, and industrial uses of brackish water and produced water."

Responses are due by March 31 with the state eying the issuance of a request for proposals and project-specific concept papers this summer. 

The Democratic governor's proposal, which calls for an initial $250 million raised from an internal debt sale backed by oil and natural gas severance tax revenue, was met with some pushback when it was presented to the New Mexico Senate Finance Committee Jan. 22. 

The state would sell overnight senior severance tax notes to the New Mexico Treasurer's Office and the proceeds would flow to the capital project fund where it would be used to purchase the treated water.

State Board of Finance Director Ashley Leach told the committee the notes would "sponge up cash" in the state bonding fund that is not otherwise used for debt service on long-term severance tax bonds, noting the state has used this practice for decades.

Democratic State Sen. George Munoz, who chairs the committee, said while he favors the idea of desalinating brackish water, he's "not on board with the sponge bond issue."

Using treated brackish water to augment New Mexico's water supplies was highlighted in a 50-year water action plan Lujan Grisham unveiled Jan. 30.

"New Mexicans throughout the state need to take actions now to ensure we can have resilient water supplies in the future," the governor said in a statement. "The 50-Year Water Action Plan elements are guided by science and innovation to ensure that our diverse communities and economies will continue to thrive." 

The state will be short 750,000 to 1 million acre feet of water within the next 50 years, according to the action plan, which also calls for tapping state, federal, and private sector money for conservation, infrastructure, and water and watershed protection efforts. Moderate to exceptional drought conditions covered 91.4% of New Mexico, according to the latest weekly data from the National Integrated Drought Information System.

Parched Arizona is looking at imported desalinated water as an option under a long-term water augmentation fund created by a 2022 state law that called for appropriations totaling $1 billion over three years. While the fund received $333 million in fiscal 2023, only $189 million was allocated in fiscal 2024 and Gov. Katie Hobbs' proposed fiscal 2025 budget calls for appropriations of just $33 million a year over the next three fiscal years.

Still, the Arizona Water Infrastructure Finance Authority is taking steps to begin soliciting water supply projects with its board holding a workshop Friday on the potential roles it could play in them.

Authority Board member Andy Tobin said WIFA should be confined to making financial decisions.  

"I think we're supposed to be the loan company," he said. 

Chuck Podolak, WIFA's director, told the board the purpose of the workshop was to lay out various approaches. 

"These are a universe of choices and then we can get into the pros and cons and make some value judgements or express preferences," he said. 

Podolak has previously said bonds "are on the table" in conjunction with the augmentation fund and potential future public-private partnerships for water importation projects, which will be allocated at least 75% of the money.

A few of the 28 responses the agency received from its September request for information cited the potential for bond issuance.