Because of the way the contract with the NTMWD is structured, any time a city sets a new high water usage level in a single year—known as the minimum annual demand—it is obligated to pay the district for at least that much water the next year, regardless of whether it actually uses that much again.

Once a city sets a new minimum annual demand, the amount of water it is required to purchase from the district will never go down, under the terms of the current contract.

The city of Frisco became a member city in 2001. Frisco set its minimum annual demand for water usage in fiscal year 2012-13 at 9.97 billion gallons of water. Because of drought and substantially increased water restrictions and conservation measures, the city used much less water the following two years.

For FY 2014-15, Frisco used only 7.7 billion gallons of water but paid for 9.97 billion gallons.

Kula said the North Texas region is currently faced with all three challenges, including the rising cost of water, which is occurring across the country.

[caption id="attachment_145322" align="alignright" width="460"] Officials from the North Texas Municipal Water District’s member cities listen as NTMWD Executive Director Tom Kula (right) explains the district’s history.[/caption]

New study group

The study group, which is the first of its kind in the district’s 65-year history, will consist of city-appointed representatives, members of the water district and a team of water rate and management experts appointed by the district and/or the member cities.

The group will meet to determine how the member city contract could better reflect current regional factors, such as population growth and the cost of maintaining aging infrastructure, as well as extended periods of drought.

Chris Ekrut of NewGen Strategies & Solutions said he and other experts with the consulting firm would participate in the study to provide data and guidance while exploring the existing contract, a document the firm helped create.

“We bring a number of aspects to this process that we feel would be beneficial [to member cities] as they continue to go through this study,” he said. “We’ve experienced changing conditions. We’ve been through a record drought. Because of these conditions, we feel that now is the best time to go through this and we think now is the best time to achieve success. But success can only be achieved if we look long term.”

Frisco City Manager George Purefoy said the city would be willing to participate in the study and attend the monthly work meetings, to which Plano Deputy Mayor pro tem Ben Harris and Plano City Manager Bruce Glasscock agreed.

Harris said the North Texas region has benefited from being a part of the district over the years and hoped it and its member cities could find a way to revise the contract to take conservation into account.

Plano officials expressed concern last year about the cost tied to the contract. In recent years, most cities have not reached their maximum usage in periods of ample rain or during periods of drought.

“We really see it as a responsibility issue,” Harris said. “Conservation is the right thing to do. [We want] to figure out a way to incorporate conservation into the contract mutually as opposed to being exclusive, as they are now. [This is] the way to sustaining our future together.”

McKinney City Manager Tom Muehlenbeck said while the member cities support the capital needs of the district, the district should also understand the capital needs of the member cities. The city of Plano, for instance, is expected to issue approximately $36 million in revenue bonds this year for its water and drainage system projects. The city has not had to finance these infrastructure projects since 1993, according to city staff.

“[The NTMWD’s rate increases] are impacting our local budgets for water and sewer,” Muehlenbeck said. “We have capital needs that are going unmet because we cannot afford to raise the rates to compensate not only for the purchase of water, whether we use it or not, but also needed capital improvements to the tune of $30 [million] to $35 million a year that we need. We just can’t afford both of them [and] we cannot impact our ratepayers to that extent.”

The study group will hold monthly meetings to discuss ideas and suggestions.

“We hope that it will only take a few meetings for the working group to develop alternatives to present back to the primary group of city leaders for consideration,” said Janet Rummel, NTMWD public relations manager. “However, the cities are really the ones who will drive this process.”

Nicole Luna contributed to this story.