The SJRA approved the fee increase on May 25 and it will go into effect Sept. 1. The new fees will be $2.64 per 1,000 gallons of water for groundwater used, and $2.83 for surface water used. The fees are in addition to the regular water rates of the corresponding water provider used by residents.
Thursday’s resolution is the latest development in an ongoing dispute between the city and the SJRA—which provides surface water from Lake Conroe to members of its Groundwater Reduction Plan, such as Conroe, Magnolia and The Woodlands. The SJRA is also the sole provider of groundwater in The Woodlands.
“This seems to be an ongoing situation with the SJRA and their demands on continuing to impose upon the citizens these annual increases,” Conroe Mayor Toby Powell said during the workshop meeting on Wednesday preceding Thursday’s vote. “This council will not stand by solemnly and let the SJRA continue to place these undue increases in their fees and further burden our citizens.”
Thursday's resolution opposes the rate increase, requests that the SJRA does not implement the increase and also requests mediation related to the city’s contract with SJRA GRP, Conroe City Attorney Marcus Winberry said.
The city is already involved in an ongoing lawsuit with the state agency that was filed in 2016 after Conroe—and later, Magnolia—approved resolutions stating they would not pay an 18-cent fee increase that went into effect Sept. 1, 2016.
SJRA GRP General Manager Mark Smith said the 2017 increase is necessary to cover the cost of ongoing litigation with the cities of Conroe and Magnolia. The SJRA has spent about $700,000 to date on legal fees, and expects an additional $1.3 million in legal costs by 2018, according to the agency. The SJRA also projects an outstanding balance of $776,000 in unpaid fees by the cities of Conroe and Magnolia by the end of 2017.
“Between our attorneys fees and the fact that Magnolia and the city of Conroe are not paying the rate that was approved in 2016 we had to approve a 14-cent rate increase," Smith said. "If Conroe and Magnolia would pay the outstanding amount they haven't paid, the penalties and interest—and reimburse our litigation cost—we could drop our rate from a 14 cent increase to a 2 cent increase. We attribute 12 cents of the increase this year directly to litigation costs."
Place 1 councilman Duane Ham said the fee increases are unfair to Conroe residents because they are being increased due to a lack of water sales, which pay for outstanding bonds funding the approximately $480 million surface water plant the SJRA built on Lake Conroe in 2015.
“If I sound like I am kinda of irritated, I am," Ham said. "We were sold a bill of goods that is totally false and untrue. They have spun [the story] because $500 million worth [of] bonds were sold out there [to build the SJRA surface water treatment plant] and they have gotten themselves in a bind.”
However, Smith said the SJRA did increase its rates in 2016 because heavy rainfall in the past two years depleted the SJRA's reserves, but reiterated that the 2017 increase is necessary because of the ongoing litigation.
"The rate increase that we had last year was primarily driven by that situation," Smith said. "The two wettest years ever recorded in this part of the state did cause financial stress and we needed to raise our rates to let our reserves recover. Now, the current rate increase is not being driven by that, it is the litigation cost is driving the rate increase."