Somervell County makes cuts as Comanche Peak’s value drops

For almost 25 years, the Comanche Peak Nuclear Power Plant helped transform Somervell County, which had long been one of the poorest counties in the state.

The massive 2,300-megawatt plant, which opened its first unit in 1990 and is operated by Luminant, pumped millions into local coffers, allowing the county to add amenities that would have once been unthinkable.

County officials built the Squaw Valley Golf Club, Somervell County Expo Center and Texas Amphitheatre with the thought of luring more visitors to the area.

But those flush times are over.

With natural gas prices slumping and Luminant’s owner, Energy Future Holdings, having filed for Chapter 11 bankruptcy in April, the county of almost 8,700 residents faces uncertain times.

In July, a negotiated agreement between Luminant and Somervell County dropped the value of Comanche Peak from $2.2 billion to $1.95 billion. Luminant will pay about $7.8 million in property taxes, or about $1 million less than it did a year ago. Under the agreement, Luminant agreed to pay its taxes by Jan. 31.

To County Auditor Brain Watts, Comanche Peak accounting for 75 percent of the county’s property tax base has been both blessing and curse.

“When you have one taxpayer that controls so much with their one payment, that is a unique and delicate situation,” Watts said. “It's a blessing when the payment comes in, but it certainly creates an amount of uncertainty.”

In May, a bankruptcy judge allowed Energy Future Holdings access to $2.33 billion of its debtor-in-possession financing to meet obligations. At the time, Energy Future Holdings said the “company intends to continue to comply with all regulatory and tax obligations.”

“Nothing changes,” Luminant spokesman Brad Watson said. “We have said normal operations will continue, and this is part of it.”

‘A rough four years’

The drop in the plant’s value has already forced Somervell County to cut its budget, which included laying off four of the 14 employees at the money-losing Expo Center. As recently as 2007, Comanche Peak was valued at $2.7 billion.

“It’s been a rough four years,” County Judge Mike Ford said. “We’ve lost $600 million in property value over about three years. For every $300 million we lose, we’ve lost about $1 million out of our actual budget.”

In August, county commissioners voted to keep the same tax rate, meaning that the county will take in less revenue than it did a year ago.

Expenditures are projected to be $12,224,195, but revenues are projected at be $11,847,004, forcing the county to dip into cash reserves to make up the difference. The county still has about $7.5 million in reserves.

The Expo Center is still a drain. Its budget is $528,000 — down from $921,000 a year ago — but Watts believes that the county will likely have to use reserves in the second or third quarter of the fiscal year.

“I suspect they will need an additional $200,000,” Watts said. “ I do not have much confidence in their proposed operations budget.”

The Expo Center’s calender is filled with team roping, barrel racing and other equine events. But with the exception of local PRCA rodeos, most of those events bring in little or no revenue.

For longtime resident Jim Willis, who has been critical of the county’s operations, the losses at the Expo Center are no surprise. And he doesn’t believe that the county has really addressed the issue.

“They're losing their butt on it,” Willis said. “The horse shows and all are great, but they’re filler. You don’t sell all your prime dates to something that doesn’t make it money. I would like to see them bring in new management.”

Ford, whose term as county judge expires at year’s end, said the county may be forced to decide whether to keep the Expo Center.

“Even if we’re successful in cutting costs, the court will be faced with a difficult decision next year,” Ford said. “The question becomes, Is this an important part of the county, Does it make a vital contribution to the community? All of those people who come here spend money. We know it has an economic impact. As a result, I’ve tried every way possible to make it more efficient.”

Incoming County Judge Danny Chambers, who doesn’t face a challenger in the November election, said he has watched as the Commissioners Court has tried to pare expenses. He isn’t ready to say what he will recommend regarding the Expo Center.

“What I am going to have to do is meet with the Expo Center folks and see what we can do to get closer to a break-even situation,” Chambers said. “I hate to make any bold or brash statements about what we might do.”

Showing improvement

The county has made headway on its two other facilities.

In November, the county signed a 10-year-lease with the producers of a popular religious play, The Promise, to operate the Texas Amphitheatre. The show, which started in 1989, started its annual fall run Friday night and will have performances every Friday and Saturday night through Nov. 1.

Under the agreement, the county is still responsible for major expenses, such as a tear in the outdoor theater’s canopy that is scheduled to be repaired this fall. But Joe Ragon, The Promise’s general manager, said the organizaton has already spent around $100,000 painting buildings as well as improving lighting and sound.

“The place was in disrepair,” Ragon said.

Now that the producers control the facility, Ragon said, they are planning other events throughout the year, including a Living Nativity before Christmas and an arts and crafts festival in April. They hope to stage a play about the Old Testament in the spring of 2016 as a companion piece to The Promise.

The outlook for the golf course has also improved since the county took over operations in October.

The projected deficit this year is expected to be $388,538, down from an average of almost $540,000 annually to keep it afloat.

Ford said the staff is doing better at of holding tournaments designed to bring new golfers to the course. Both Ford and Watts now believe that the golf course will eventually be able to survive on its own.

“I expect that the golf course could be self-sufficient within the next three years,” Watts said. “I see aggressive marketing and the creation of new revenue streams such as sponsorships and advertising revenue coupled with increased paid rounds leading the path to self-sufficiency.”

This story was originally published September 6, 2014 at 3:35 PM with the headline "Somervell County makes cuts as Comanche Peak’s value drops."