Agenda No. 5.
CITY COUNCIL MEMORANDUM
| City Council Meeting: | March 3, 2026 |
| Department: | Executive Team |
| Subject: | Resolution 26-R-039 - Authorizing a Wastewater Transmission and Treatment Capacity Lease Agreement with Green Valley Special Utility District (GVSUD) for temporary sewer capacity (S.Williams/B.James) |
BACKGROUND
The Cibolo Creek Municipal Authority (CCMA) provides wastewater treatment services for most of the City of Schertz as well as areas outside the City of Schertz. CCMA operates two wastewater treatment plants, the Odo J. Riedel Regional Water Reclamation Plant, which is off of Schaeffer Road and serves northern Schertz, and the South Plant, that as the name implies, serves southern Schertz. Staff presented a work session item to City Council on April 15, 2025 about the need to quickly move forward in partnership with CCMA to expand the South Plant (presentation attached), which council provided. On September 16, 2025, City Council approved Resolution 25-R-129 authorizing a contract with CCMA for the expansion of the South Plant and on November 18, 2025 City Council approved Resolution 25-R-159 approving a bond order for CCMA for the design of the expansion.
By way of background, in late 2014, the City entered into the Southern Plan Wastewater Services and Funding Agreement By and Among Cibolo Creek Municipal Authority, City of Schertz and City of Cibolo to provide for construction of the CCMA South Sewer Treatment Plant. There was a subsequent amendment and a related agreement also approved. The effect of the agreements is that CCMA would build a 500,000-gallons per day sewer treatment plant. Schertz would pay the bonds for the first 10 years. Cibolo would have to decide by late 2023 whether they would opt in to the plant - if they did they would have rights to half of the capacity, but would pay half of the cost (splitting the next 10 years bond payments with Schertz and paying the last 10 themselves). If they did not opt in, Schertz would pay all of the bond costs, but have rights to all of the capacity.
In December 2022, the City and Green Valley Municipal Utility District (GVSUD) entered into a mediated settlement agreement. Per that agreement, the City assigned 75,000 gallons per day to GVSUD at no cost and agreed to provide another 50,000 gallons per day with GVSUD paying Schertz's cost for this capacity. So, in total, the City gave up 125,000 gallons per day of capacity to GVSUD. Cibolo opted in to the South Plant, and as such, they have rights to half of the 500,000 gallons per day of capacity. As a result of this, Schertz has only 125,000 gallons per day of capacity in the plant.
At present, only Schertz is contributing flows to the plant. As noted during the April 15, 2025 presentation, Schertz is already using its allocated 125,000 gallons per day of capacity. There are a number of projects in process that would have to lift up north to the OJR Plant or provide for pump and haul if the City does not obtain more capacity.Schertz has reached out to Cibolo and GVSUD about utilizing their capacity until the plant can be expanded. Per the discussion at the April 15, 2025 Council meeting, staff began discussions about leasing capacity in the south plant from GVSUD until the plant expansion is competed and the City has rights to capacity needed to support new development. GVSUD agreed to lease the City capacity until the plan expansion occurs, estimated to be four to five years, for $250,000 per year.
As part of this agreement, the City is agreeing to provide GVSUD a right of first refusal if the City sells it rights to water leases in the Cibolo Valley Local Government Corporation (CVLGC). The City has been a founding member of CVLGC, which was created over a decade ago, along with the City of Cibolo. CVLGC was created in order to provide additional water to the City of Schertz. At that time, the City of Seguin was not experiencing the growth it is today and did not anticipate needing more water from the Schertz Seguin Local Government Corporation (SSLGC), the City of Schertz' primary source of water. Given the changed conditions, since that time and rather than paying for the overhead costs of two water providers, City staff is of the opinion that the City should extricate itself from CVLGC and get the additional water it needs from SSLGC. Staff will come forward with a separate workshop on that topic in the near future. To be clear this agreement with GVSUD does not require the city to relinquish its rights to the CVLGC water leases, but if it does, GVSUD has a right of first refusal to acquire them.
By way of background, in late 2014, the City entered into the Southern Plan Wastewater Services and Funding Agreement By and Among Cibolo Creek Municipal Authority, City of Schertz and City of Cibolo to provide for construction of the CCMA South Sewer Treatment Plant. There was a subsequent amendment and a related agreement also approved. The effect of the agreements is that CCMA would build a 500,000-gallons per day sewer treatment plant. Schertz would pay the bonds for the first 10 years. Cibolo would have to decide by late 2023 whether they would opt in to the plant - if they did they would have rights to half of the capacity, but would pay half of the cost (splitting the next 10 years bond payments with Schertz and paying the last 10 themselves). If they did not opt in, Schertz would pay all of the bond costs, but have rights to all of the capacity.
In December 2022, the City and Green Valley Municipal Utility District (GVSUD) entered into a mediated settlement agreement. Per that agreement, the City assigned 75,000 gallons per day to GVSUD at no cost and agreed to provide another 50,000 gallons per day with GVSUD paying Schertz's cost for this capacity. So, in total, the City gave up 125,000 gallons per day of capacity to GVSUD. Cibolo opted in to the South Plant, and as such, they have rights to half of the 500,000 gallons per day of capacity. As a result of this, Schertz has only 125,000 gallons per day of capacity in the plant.
At present, only Schertz is contributing flows to the plant. As noted during the April 15, 2025 presentation, Schertz is already using its allocated 125,000 gallons per day of capacity. There are a number of projects in process that would have to lift up north to the OJR Plant or provide for pump and haul if the City does not obtain more capacity.Schertz has reached out to Cibolo and GVSUD about utilizing their capacity until the plant can be expanded. Per the discussion at the April 15, 2025 Council meeting, staff began discussions about leasing capacity in the south plant from GVSUD until the plant expansion is competed and the City has rights to capacity needed to support new development. GVSUD agreed to lease the City capacity until the plan expansion occurs, estimated to be four to five years, for $250,000 per year.
As part of this agreement, the City is agreeing to provide GVSUD a right of first refusal if the City sells it rights to water leases in the Cibolo Valley Local Government Corporation (CVLGC). The City has been a founding member of CVLGC, which was created over a decade ago, along with the City of Cibolo. CVLGC was created in order to provide additional water to the City of Schertz. At that time, the City of Seguin was not experiencing the growth it is today and did not anticipate needing more water from the Schertz Seguin Local Government Corporation (SSLGC), the City of Schertz' primary source of water. Given the changed conditions, since that time and rather than paying for the overhead costs of two water providers, City staff is of the opinion that the City should extricate itself from CVLGC and get the additional water it needs from SSLGC. Staff will come forward with a separate workshop on that topic in the near future. To be clear this agreement with GVSUD does not require the city to relinquish its rights to the CVLGC water leases, but if it does, GVSUD has a right of first refusal to acquire them.
GOAL
Provide for a safe and livable community. Make infrastructure investments. Promote a thriving economy.
COMMUNITY BENEFIT
Effectively plan and manage land use. Develop and maintain water, wastewater and drainage infrastructure.Promote environmental stewardship and health.
SUMMARY OF RECOMMENDED ACTION
Approval of Resolution 26-R-039 to authorize the City to enter into an agreement with GVSUD to lease capacity in the CCMA south treatment plan until the expansion of the south plant provides the City more capacity.
FISCAL IMPACT
The cost of the lease of capacity is $250,000 per year. It is estimated that the CCMA south plant expansion will be completed in four to five years. Funds to pay for this lease will come from the sewer fund.
RECOMMENDATION
Approve Resolution 26-R-039.