Water disputes cost county residents millions as agencies continue to increase monthly water usage fees


Hundreds of thousands of Montgomery County residents—including those in and around The Woodlands—are footing the bill for water fee increases as the stakes continue to mount in legal disputes between neighboring communities and local water authorities.

Due in part to ongoing litigation, effective Sept. 1, monthly groundwater and surface water usage fees paid to the San Jacinto River Authority will increase by 14 cents per 1,000 gallons pumped for residents of The Woodlands and Oak Ridge North.

Water disputes cost county residents millions The SJRA—a state agency that conserves water resources of the San Jacinto River watershed—filed a lawsuit in August 2016 against the cities of Conroe, Magnolia and three other plaintiffs for breach of contract after refusing to pay a previous fee increase.

The lawsuits—combined with a decreased demand for water—have forced the SJRA to raise water fees, SJRA officials said.

“We’ve had quite a substantial increase in water fees, and they are getting too high by comparison to those that are still able to use groundwater,” said Gordy Bunch, The Woodlands Township board chairman. “Some of the reasoning behind the fee increases has to do with increased rainfall last year, so they’re actually surcharging us for not using enough water—I think that’s absolutely asinine.”

Since 2015, the Lone Star Groundwater Conservation District—a separate entity that regulates groundwater use in Montgomery County—has likewise been engaged in a lawsuit filed by the city of Conroe and seven other plaintiffs challenging the district’s policies.

Montgomery County water users also pay water usage fees to the LSGCD, which has also increased water fees as a means of covering litigation fees.

Both entities project additional water fee increases for fiscal year    2017-18 and beyond.

Water users foot SJRA bill

The SJRA pumps and distributes surface water from Lake Conroe and sells it to select entities—including The Woodlands and Oak Ridge North—as part of a groundwater reduction plan to comply with countywide water regulations established by the LSGCD. Both communities entered into the agreement in 2010.

In addition to the 14-cent increase in September, the agency increased its water usage fees in 2016 by 18 cents per 1,000 gallons of water.

The SJRA has projected annual fee increases since the $480 million surface water plant and pipeline system to distribute Lake Conroe water began in 2011; however, the past two fee increases were higher than original projections.

For FY 2016-17, the monthly groundwater and surface water fees were 18 cents more than the SJRA projected in 2015. Additionally, in FY 2017-18, the groundwater and surface water fees are set to be 22 cents higher than originally anticipated.

“A lot of the water fee increases we’ve been seeing had been communicated years ago as part of the original pipeline program [and construction of the surface water plant],” Bunch said. “I complained about the more than 300 percent increase in water rates in the original plan. People didn’t pay attention to it because it hadn’t materialized. Now it’s materializing, and people are paying attention.”

As of July, the SJRA has spent approximately $882,000 in legal fees.  SJRA officials attribute 12 cents of the approved 14-cent fee increase in September to covering litigation fees.

“If [the]SJRA wins, or hopefully settles, its lawsuit, the result would be an immediate decrease in projected legal expenses, so we would be able to reduce our GRP fee that we charge our participants,” SJRA Public Relations Manager Ronda Trow said. “This would mean a reduction in the fees that our participants pass through to their retail customers.”

Vicky Rudy, Oak Ridge North’s city manager, said while Oak Ridge North City Council is not actively opposing the fee increase, it is voicing concerns. Mayor Jim Kuykendall released a statement recommending mediation among participants involved in the lawsuits.

Because The Woodlands is not a city and receives water service through multiple municipal utility districts under the Woodlands Joint Powers Agency, Bunch said the township does not have any type of oversight when it comes to the SJRA. The SJRA owns and operates all groundwater wells in The Woodlands and is also the sole provider of surface water to the region.

LSGCD fee tipping point

While the SJRA water fee increases affect only entities participating in the GRP, the LSGCD affects all of the county’s communities, including The Woodlands, Oak Ridge North and Shenandoah. The LSGCD is proposing a 3.5-cent increase per 1,000 gallons of monthly groundwater used effective Jan. 1.

The proposed LSGCD fee will increase from 7.5 cents to 11 cents per 1,000 gallons of groundwater.

LSGCD officials said they are seeking ways to reduce the fee increase and considered approval of the fee during its Aug. 8 board meeting. As of press time, the fee had not been voted upon.

The entity implemented a 1.5-cent increase per 1,000 gallons of monthly groundwater used last year.

The LSGCD mandated a 30 percent reduction of annual groundwater usage for all major water users in Montgomery County, effective January 2016. The decrease in groundwater use resulted in a loss in revenue for the entity, forcing the LSGCD to raise fees to sustain its revenue.

“Even with aggressive budget cuts, that is extremely difficult to sustain; our board members have always been strong fiscal conservatives and have run a pretty tight ship,” LSGCD General Manager Kathy Turner Jones said.

The pumping reductions, ongoing litigation and the need to hold a future election are all factors contributing to the proposed fee increase, Jones said.

“The board could have adopted a fee increase for 2016 or 2017 to counter drastic reductions in revenue, but as fiscal conservatives, they elected to make further budget cuts and expend reserve funds,” Jones said. “The substantial loss realized in 2016 and the forecasted loss for 2017 is the trend the committee is working to reverse.”

Shenandoah City Council unanimously approved a resolution opposing the LSGCD fee increase July 12.

“In 2016, it was 6 cents per 1,000 gallons of water pumped, and now it’s going to 11 cents, so it’s almost doubling in 24 months—that’s just something that is not acceptable to us,” Shenandoah City Administrator Greg Smith said. “While the city understands this litigation standpoint that they’re in, we feel that they have not taken enough action to alleviate the fee increase.”

Shenandoah, which has been paying the 2017 LSGCD fee increase for its residents, is considering withholding payment of additional fee increases. Smith said it will be the council’s decision whether the city will pass the bill on to its residents in FY 2017-18.

As of July, the LSGCD has spent approximately $424,951 in legal fees.

“Assuming LSGCD wins the lawsuit and the judge awards LSGCD its attorney’s fees, those benefits will be enjoyed by the end users,” Jones said. “As LSGCD is a nonprofit entity with an annual budget, that benefit would probably be reflected through a reduced water use fee in future years, as the board would have additional funds to help fund the budget.”

Going forward

In May, the 85th Texas Legislature passed House Bill 1982 filed by Rep. Will Metcalf, R-Conroe; Rep. Cecil Bell Jr., R-Magnolia; and Rep. Mark Keough, R-The Woodlands. The bill converts the LSGCD board of appointed directors to a board of elected officials effective Sept. 1. Sen. Brandon Creighton, R-Conroe sponsored the bill.

“When you have an elected board that has to actually answer to constituents, I think you have a better situation for the board to be more in tune with the needs of the residents and the business owners,” Smith said.

Jones said regardless of how board members are chosen for office, they would still face the same issues the LSGCD board members are dealing with. Some of these challenges include following the laws of the governing district, addressing water needs of one of the fastest-growing counties in the U.S., falling available groundwater levels and protecting the private property rights of landowners—while trying to keep fees as low as possible, she said.

“A new governing board, whether elected or appointed, is still a group of individuals charged by statute to conserve and protect the groundwater resources of Montgomery County,” Jones said. “What those individuals may decide to do in setting policy for LSGCD will obviously depend upon who the individuals are.”

Officials are also concerned with the outcome of ongoing legal battles with both water agencies. Stinson said if the SJRA does not win its legal battle with Conroe, the cost of water for all other GRP members would increase further.

“The purpose of the lawsuit is to defend the validity of the contract because it is the source of revenue to pay off the bonds [that funded the surface water treatment plant],” SJRA General Manager Jace Houston said. “We don’t have a choice but to enforce the validity of the contract and make sure everybody pays.”

Bunch said future incorporation of The Woodlands could put the entity in a better position to have a say in water-related matters.

“It’s frustrating that we want to be involved in all things that our residents rely on, but our current form of government doesn’t put us in a position to be so involved,” he said. “The only way for the township to consolidate water and have stronger representation would be through  incorporation.”

Additional reporting by Jesse Mendoza

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