Council briefed on GLO grant disruption and options after pipeline stalls Flag Lake drainage work

Staff described a complex problem with federally and state-funded drainage work tied to two grants (HAZMAT and MITMod) and a blocked construction corridor where an Energy Transfer pipeline runs through a ditch. Staff explained the options and their trade-offs, saying that Texas GLO prefers terminating or re-scoping parts of the HAZMAT contract instead of simply pivoting the funds.

“Energy Transfer … they’re gonna fight us tooth and nail,” the Presenter said, describing a company refusal to remove a pipeline in the Flag Lake Drive corridor that prevents safe ditch work. Staff outlined four options: (1) continue with an amendment request to use HAZMAT funds for Penn Money Phase 1 and request a waiver; (2) terminate HAZMAT and recraft MITMod to complete Penn Money Phase 1 (creates approximately $1.5M funding gap); (3) terminate both and reapply under a relocation opportunity (risk of losing funds); or (4) continue both and seek planning-grant reclassification to cover professional services.

Council members asked technical questions about hydrology sequencing and the risk of moving to Phase 2 without Phase 1. Staff warned the GLO expenditure deadline and HUD processes limit flexibility: if HAZMAT is terminated staff would face significant replacement-funding gaps and potential repayment obligations if waivers are later denied. Staff said they would follow up with GLO and return with the preferred option and legal/financial implications.