Quadvest, along with the cities of Conroe and Magnolia, are currently in a legal battle with the SJRA over what Quadvest President Simon Sequeria alleges are illegal and forced contracts imposed by the SJRA for pumping groundwater.
According to the July 14 news release, Quadvest is seeking a refund for its customers from the "overcharging and misappropriation of funds" by the SJRA, but Texas law prevents plaintiffs from obtaining a full refund.
"So, every month that goes by, a portion of SJRA’s illegal fees can never be recovered from the agency," the news release stated.
Quadvest alleges this incentivizes the SJRA to stall, appeal and file new lawsuits, dragging out the process so it can charge these costs back to plaintiffs to increase water fees. On July 10, the SJRA lost in a district court over the issue of sovereign immunity—essentially whether GRP participants have the right to not be sued for breaking a contract—and SJRA General Manager Jace Houston said in a phone interview the SJRA intends to appeal.
"Essentially, we are paying the government to fight us," the Quadvest news release stated.
In the statement, Quadvest said it would, effective immediately, escrow all SJRA fees in an account that can be refunded to customers when the final verdict is rendered. If Quadvest were to lose in court, customers' funds will be remitted to the SJRA, minus the refunds if the court finds the SJRA has overcharged the plaintiffs.
The city of Conroe is also shuttling SJRA fees paid by customers into a separate account, Community Impact Newspaper previously reported. This means customers are still paying the SJRA fees, but they are not going to the SJRA.
Houston had previously said when entities refuse to pay the full water rates, it drives up the costs for other participants, as was the case when Conroe stopped paying full rates in 2016. More recently, the Woodlands Water Agency also refused to pay rising SJRA rates related to legal fees and uncollected revenue.
Houston did not say if this latest move by Quadvest would affect water rates; the SJRA had opted to keep rates the same for next fiscal year due to pressure from the WWA. He did, however, note that Quadvest's lawsuits have contributed to rising rates.
“The great irony in Quadvest’s announcement is they are refusing to pay their bill because they feel their money is funding lawsuits—lawsuits that they themselves filed against SJRA," Houston said in an email. "They’re the ones driving up people’s costs. SJRA will continue to do what’s right and fight for reliable future water supplies for all of our customers.”
Houston also said Quadvest's decision did not surprise him.
“Quadvest’s irresponsible decision to default on a joint water supply project with 80 other utilities comes as no surprise,” Houston said. “It’s absolutely par for the course with them. But it doesn’t change the fact that the vast majority of utilities in the project believe the contracts are valid, and they know the future of Montgomery County’s growth depends on increased water supply and conservation of our aquifers.”
