‘Find the money somewhere else’: Woodlands Water Agency votes to not pay anticipated SJRA rate increases related to legal fees, uncollected revenue

Lawsuits over surface water in Lake Conroe have led to increased water rates. (Community Impact Newspaper staff)
Lawsuits over surface water in Lake Conroe have led to increased water rates. (Community Impact Newspaper staff)

Lawsuits over surface water in Lake Conroe have led to increased water rates. (Community Impact Newspaper staff)

The Woodlands Water Agency, the managing body for the 11 municipal utility districts in The Woodlands, has sent a clear message: The Woodlands residents should not have to pay for the legal fees and uncollected revenue of other entities.

At its May 13 meeting, the board voted to direct its Woodlands Groundwater Reduction Plan representative to vote to not pay for anticipated increased San Jacinto River Authority surface water rates related to legal fees or budget shortfalls due to other entities not paying their share.

Prior to the vote, SJRA’s Deputy General Manager Ron Kelling outlined four potential rate scenarios based on the outcomes of legal scenarios. Depending on how lawsuits pan out, rates could increase next fiscal year by between 0.4% to 14.5%. The rates will be set May 26 by the SJRA GRP committee and approved, along with the fiscal year 2020-21 budget, by the SJRA board June 22.

A significant portion of the rate increase hinges on the city of Conroe. In 2016, the cities of Conroe and Magnolia refused to pay for the increased rates, deeming them an unfair burden to residents. According to the SJRA, these cities owe a total of $4.78 million and $252,397, respectively, as of March 31.

Quadvest, a private utility company, has also sued the SJRA on the grounds the entity is monopolizing surface water resources in the area and has set costly and unjust rates. Quadvest has filed for a temporary injunction from having to pay GRP fees while its lawsuits are going on, Kelling said.


When entities do not pay the current GRP rates, the cost burden falls on other GRP participants, SJRA officials said. SJRA officials said they anticipate expenses to increase as they have spent $1.5 million on legal fees within its GRP division thus far and anticipate an additional $2.5 million by the end of FY 2020-21.

But officials with the Woodlands Water Agency said they cannot support passing these costs onto residents.

“The 3.7% [increase], ... we’d just look our community in the eye and say that’s fair and reasonable,” WWA President Eric Heard said, referring to the second rate scenario SJRA outlined. “I will say though, Scenario C, where we ask our residents to pay 14.5% increase, probably not truly workable for a number of reasons. And really more than anything it reflects a breakdown from what we bargained for in the agreement.”

Board members agreed the rate increases should reflect operating expenses, not legal fees and costs associated with entities not paying up-to-date rates.

“SJRA has to find another way to pay for these lawsuits,” trustee Arthur Bredehoft said. “Quadvest is not our issue, and the suit with Conroe and Magnolia is not our issue as we are meeting our contractual obligation. And why should the residents of the Woodlands pay for lawsuits and nonpayment by two parties in the contract?”

Kelling said he had anticipated the 14.5% rate increase scenario was unrealistic, which is why he had come up with a fourth scenario, which involves reducing production at the surface water plant.

“I still think your Scenario D at 8.5% is still not workable,” Heard said. “That is basically a 10% increase, and that is because other participants aren’t paying. I think you’re just going to have to find the money somewhere else.”

Kelling said the only option the SJRA would have is to draw from its debt service reserve, which currently holds $34 million. The SJRA is required to have at least a year's worth of debt service payments in its debt service reserves.

“The GRP is its own separate enterprise, so the only money that the SJRA GRP has to take is what is sitting in the GRP,” Kelling said. “When you’re saying find some other place to take the legal fee, if it isn’t coming in from rates ... or reserves... there is no place to pull money from. If we’re not allowed to use the rates to pay for the legal fees or to pay for the uncollected revenue, the only place to pull it from would be the debt service reserve.”

The board unanimously voted to direct its GRP representative to vote to not pay for rate increases related to legal fees or uncollected revenue. Any other options of legal nature related to the contracts will need to be discussed in future closed sessions, officials said.
By Eva Vigh
Eva Vigh joined Community Impact Newspaper in 2018 as a reporter for Spring and Klein. Prior to this position, she covered upstream oil and gas news for a drilling contractors' association.


MOST RECENT

A new substation could be coming to Montgomery to better serve customers in the next 10 years. (Courtesy Adobe Stock)
Entergy Texas considering new substation in Montgomery area at FM 1097 and FM 149

The project is part of Entergy’s 10-year plan but could be built sooner.

See how some Greater Houston area school districts are planning to go back to school for the 2021-22 academic year. (Courtesy Adobe Stock)
See how some Greater Houston area school districts are planning to go back to school for the 2021-22 academic year

While some school districts in the Greater Houston area are doing away with face mask requirements and virtual schooling completely, others are pivoting to continue offering online learning options for students and plan to require face masks.

masks
CDC ends all mask requirements for fully vaccinated people

The guidance states fully vaccinated people do not need to wear masks indoors or outdoors.

The festival is estimated to bring in at least $1.1 million to the city. (Courtesy Adobe Stock)
Conroe music festival in the works

The four-day festival would include more than 30 bands and 40 shows across multiple venues and pop-ups.

Single-family home sales were up 47.4% compared to last April with 9,105 units sold versus 6,175 a year earlier. (Courtesy Houston Association of Realtors)
HAR: Houston-area home sales in April up 47% compared to last year

Single-family home sales were up 47.4% compared to April 2020.

House Bill 1024, signed into law May 12, allows restaurants and bars to permanently sell alcoholic beverages to-go. (Courtesy Pexels)
Cocktails to-go are here to stay in Texas: Gov. Greg Abbott signs change into law May 12

Supporters say the change will help restaurants continue to recover from the economic effects of the coronavirus pandemic.

Marcos Pizza is an American restaurant chain. (Courtesy Fishman Public Relations)
Marco's Pizza opening in Conroe May 13

The resataurant is owned by the Lee family, who formerly owned the Donut Wheel in Conroe.

Residents will have until May 2023 to obtain a Real ID. (Courtesy Adobe Stock)
US Department of Homeland Security extends Real ID deadline until 2023

Drivers will have until May 2023 to get the Real ID, which will be required for adults boarding a U.S. commercial flight.

Construction on a three-story medical office building is underway at 3786 FM 1488, Conroe, following an April 22 groundbreaking, the development company, Egrets Group, announced in a May 10 release. (Courtesy Egrets Group)
3-story medical office building breaks ground on FM 1488

Construction is anticipated to take a year to complete for the medical office building.

The Woodforest Bank Stadium vaccine hub is set to close June 3. (Andrew Christman/Community Impact Newspaper)
Montgomery County announces last day for vaccines at Woodforest Bank Stadium

The Woodforest Bank Stadium vaccine hub is set to close June 3. First doses are no longer being provided at the location.

Susan Bailey was elected president of the American Medical Association in June 2020. (Courtesy American Medical Association)
'I am convinced we will beat COVID': American Medical Association President Susan Bailey discusses vaccine successes, myths, challenges

Bailey was elected president of the American Medical Association in June 2020. Much of the organization's focus during that time has been on vaccine transparency and distribution.