Texarkana, Arkansas, weighs selling Millwood Lake water to Texas in deal city manager calls biggest in city history
Texarkana, Arkansas, could earn $16 million to $20 million a year by selling water it already pays for but never uses, City Manager Tyler Richards told the Board of Directors on Monday night.
Richards laid out a plan to sell up to 110 million gallons a day of the city’s Millwood Lake water rights to buyers in Texas through a private pipeline company, Heartland Water Partners. He called it “the single greatest economic impact in our city’s history.”
The board took no vote. Richards said he expects to call a special meeting, tentatively Tuesday, Oct. 13, to approve a resolution letting Southwest Arkansas Water District apply to the state on the city’s behalf.
“This is just an exploration,” Richards said. “It is not obligating us to any sale.”
Water the city pays for but cannot use
The city holds rights to about 150 million gallons a day from Millwood Lake, acquired in four installments. The last and largest, 100 million gallons a day, was bought in 2016 with the idea that it could someday be sold.
That water costs the city about $540,000 a year under a 50-year contract with the U.S. Army Corps of Engineers that runs through 2066, whether the city takes the water or not. Mayor Allen Brown said the city has paid about $6 million for those rights so far and received nothing in return.
The city’s average demand is about 7 million gallons a day, peaking at 10 million or 11 million in summer. The state water plan projects demand of 9.2 million gallons a day in 2050.
“We currently hold water rights that are 21 times the amount of our current demand,” Richards said.
After selling 110 million gallons a day, the city would keep about 40 million gallons a day, more than four times its projected 2050 demand. The Millwood treatment plant can process 15 million gallons a day, and an upgrade to 20 million is in planning.
How the deal would work
Heartland Water Partners would pay to upgrade the water district’s intake at Millwood, which is already at capacity, and build a 72-inch pipeline into Texas. Richards said the city would pay nothing except its own legal fees to Rose Law Firm.
In exchange for an exclusivity agreement, Heartland would make two $500,000 reservation payments to the city, the first when the application is filed, which Richards expects by the end of October, and the second when the state approves.
Arkansas has no history of out-of-state water transfers, and Richards said the Arkansas Natural Resources Commission had to create an application form for this project. The commission would have 120 days to review and would then send a recommendation to the General Assembly, which Richards expects to take it up in March or April.
Only after legislative approval would the city negotiate sale agreements, which Richards said must come back to the board. An interstate compact approved by the Texas Legislature may also be needed.
Over a 40-year contract with annual escalators, Richards said, the city could see more than $1 billion.
The cities of Ashdown, Ogden and Hope, which hold smaller rights in Millwood, have been invited to join the application. Richards said their participation does not affect the city’s ability to proceed.
A sustainability study commissioned by Heartland and done by Spheros Environmental modeled the sale against 36 years of lake data and found no significant impact, Richards said. In the 2011 drought, the lake would have been 3 feet lower but the district would have kept 25 percent of its allotted storage. He said four times the amount of water under discussion already leaks through the Millwood dam.
“Currently the water that we have is virtually going through the dam and into the Gulf of Mexico,” Richards said.
Director Laney Harris asked whether the buyer was an Oklahoma company or an AI data center. Richards said no to both. Harris also said he recalled a clause in the 2016 agreement requiring any sale to benefit residents through their water bills and asked to see the contract.
Brown said the revenue could be used to offset future rate increases, but not to cut rates, because recent increases are tied to bond payments for infrastructure work.
Harris’ agenda ordinance tabled after sharp debate
A proposed ordinance from Harris to change how items get on the board’s agenda was tabled after a lengthy exchange with Brown, Richards and City Attorney Joshua L. Potter.
Under a 2017 ordinance, a director whose agenda request is denied by the city manager must call a workshop and get a second from another director to force the item onto the agenda. Harris said the rule was aimed at him and that elected officials should not have to “jump through hoops.”
“I think I have the right to put something on the agenda,” Harris said. “I just don’t think the city manager should have that much power.”
Brown said the items Harris had tried to place on the agenda this year, including a proposal to give a prospective College Hill grocery store $75,000 a year, were held because Harris never gave the city attorney enough information to draft a legal resolution, such as where the money would come from.
“I’m not going to approve anything or vote on anything until I know where the money’s coming from,” Brown said. “He asked you where the money was coming from and you never answered.”
Potter said Harris’ draft would eliminate the workshop remedy without replacing it, leaving a director with no recourse if a request is denied. Potter also noted that the city manager “serves at the will of the board.” Richards said he places any item on the agenda once the city clerk and city attorney have vetted it and that in eight years no director had complained to the mayor about a city manager refusing an item.
Director Danny Jewell sided with Harris on the principle, saying a director cannot legally poll colleagues for a second ahead of a meeting and should be able to place a vetted item without another director’s blessing.
Resident Brenda Burcy told the board Harris should have a way to bring constituents’ concerns forward and noted that an ordinance brought before the board in her own case contained a legal error.
The board voted to table the ordinance and bring it back with language requiring items be vetted by the city clerk and city attorney.
TWU budget: 1 percent raise, 10 fewer positions, reserves drop
The board approved Texarkana Water Utilities’ fiscal 2027 budget, which includes a 1 percent raise for all employees and cuts 10 positions, from 185 to about 175.
TWU staff said the utility tried to trim its budget 3 percent. Its combined fund balance is projected to fall from about $6.2 million, or 125 days of reserves, to about $3.9 million, or 77 days, as the utility spends down savings on infrastructure projects.
Water and sewer rates will no longer rise under the multiyear rate study, but a cost-of-living increase tied to the consumer price index takes effect in January.
Arkansas’ share of TWU costs rises from 39.17 percent to 41.22 percent, based on actual consumption. The utility’s biggest single increase is about $555,000 for employee health insurance.
The utility’s smart meter project is about 95 percent complete, with 13,539 meters installed. Revenue from the more accurate meters is running above the $195,000 a year that contractor Johnson Controls projected.
Director Terry Roberts said the meters are a headache for directors fielding complaints about higher bills. “Is there a better explanation than just the old meters weren’t very good?” he asked. “No, that sums it up,” a TWU official said.
TWU Executive Director Gary Smith said the new ultrasonic meters are 99.9 percent accurate and that of the meters customers have asked to have tested, the lowest reading was 99.54 percent. Customers who request a test pay a $50 fee if the meter proves accurate. He also said about 30 percent of water the utility treats goes unaccounted for through plant processes, flushing, fire use and maintenance.
Other TWU items: a 500,000-gallon elevated tank on Manor Way is expected to be complete in December, a customer portal for real-time usage monitoring is launching, and upgrades to the North Texarkana wastewater plant are beginning.
Airport budgets carry $1.5 million in combined deficits
The board approved the Texarkana Regional Airport’s 2027 operating and capital budgets.
The operations budget carries a $1,017,523 deficit, split between the cities by population. Arkansas’ share is $455,952 and Texas’ share is $561,571. The capital budget has a $472,222 deficit for a replacement fire truck, vehicles, grant matches and debt service. Arkansas’ share is $211,602.68.
Airport Director Russ Henderson said the city subsidy returned to about $1 million after the airport overestimated the cost of running its new terminal in 2024 and carried a $729,000 fund balance into the following year.
August numbers Henderson cited:
Measure August 2026 Tower operations 1,584 Enplanements 2,852 Parking revenue $40,457 Rental car revenue $35,615, best since January 2023 Load factor 66 percent Landing fees $6,208 Fuel sold 46,565 gallons
Henderson said a planned aircraft maintenance, repair and overhaul operation could bring 150 to 160 jobs paying $50,000 to $60,000 by the end of the decade and serve as a springboard for others. Director Danny Jewell asked about the airport’s contract with Signature, its fixed-base operator, which expires in September 2027. Henderson said a rent study is underway and will take a few more months.
Other business
Salty Pilot private club. The board suspended the rules and gave final approval, with an emergency clause, to an ordinance granting municipal approval of a private club application by Jack Lovelis on behalf of the Salty Pilot LLC at 2905 Arkansas Blvd. No one spoke for or against.
Byrne grant. After a public hearing, the board authorized Police Chief Ed Chattaway’s department to apply for a $22,122 Edward Byrne Justice Assistance Grant split with Miller County. The city’s $14,748 share will buy body armor. The county’s $7,374 share will go toward in-car radios.
Street change order. Harris pulled from consent and the board approved a $164,154.04 change order with Francis Excavating for additional milling, cement stabilization and base repair after soft spots were found on Oak Street. It raises the East 24th Street, Oak Street and East 48th Street rehabilitation contract to $1,984,643.32, within the approved budget. Harris asked whether the stretch of the project between Preston Street and the railroad tracks would be finished. Richards said yes.
Consent. The board approved the Sept. 21 minutes and a construction contract with Francis Excavating for the County Avenue detention basin and Bobby Ferguson Park spillway.
Service awards. Christine Schultz of the police department was recognized for five years of service. Aaron Matthews and Ronald Dotson of TWU, recognized for five and 10 years, were not present.
Residents raise ballot issue, park lights, truck noise
Richard Burns urged the board to back Issue 3, a constitutional amendment on the Nov. 3 ballot that would let Arkansas cities create economic development districts. He said the Texas side has used similar financing for Summerfield Lane, Gibson Lane and the hospital at Gibson Lane and University Avenue.
A resident identified as Ms. Montgomery asked for an update on the closed bridge on Seibert Street, lights for a dark park and a streetlight at Garfield Street and Ferguson Street that she said shines up the road instead of onto the intersection. Richards said park lighting can be added to the list for next year’s budget. Harris said he would check on the streetlight through the utilities commission.
Another resident asked the city to restrict loud engine braking by trucks on Interstate 30 between Jefferson Avenue and Fairgrounds Park, where neighborhoods sit on both sides of the highway. Richards said any signage would have to come from the Arkansas Department of Transportation and said staff would connect the resident with the district highway representative.
Board commentary
Harris asked Richards to look into whether the Arkansas Council of Governments could pursue a housing rehabilitation grant for the city, noting Texarkana, Texas, recently landed $2 million to help residents 65 and older stay in their homes. Richards said a housing study is still needed to direct any money to its best use. Harris disagreed.
Harris also asked for a meeting with Union Pacific Railroad about a flashing light on Ninth Street and a pedestrian underpass at Seibert Street, and asked about a proposed joint student council with the Texas side. Richards said he has had brief talks with the Texas city manager but nothing further.
Brown left before the end of the meeting, and Assistant Mayor Ulysses Brewer presided over its close. Brewer asked for prayers for Brown and his family.
National Night Out events are set for Tuesday, Oct. 6. The board next meets at 6 p.m. Monday, Oct. 19, in the board room at City Hall, 216 Walnut St.