“There is no new water that has been added to this system since ... late August,” Norman McGuire, assistant city administrator and director of public works, said at the May 7 workshop meeting.
As Conroe’s moratorium stretches into its ninth month, development leaders say the long-term effects are becoming clearer.
“To completely shut down development in such a large city would crush a lot of our members,” said Cody Miller, director of government affairs for the Greater Houston Builders Association.
Two-minute impact
The city of Conroe is weighing the decision to expand its development moratorium citywide due to ongoing water infrastructure limitations. Currently, the moratorium—first enacted in August 2024—affects roughly 5,000 residential lots in the city’s northern region, Cody Miller said. These lots range from raw, undeveloped land to platted lots that builders are unable to build on.
City officials said they believe the expansion is necessary to prevent overloading a strained water system, although developers and industry advocates warn the impact could be severe. Jason Miller, assistant director of public works, said at the April 23 workshop that last April, the city was producing 15.4 million gallons a day. This year, the number has increased to 17 million.
Cody Miller said the moratorium is already disrupting business and stalling economic growth. Builders have been forced to halt projects or relocate development plans to nearby cities with more reliable infrastructure.
In a May 2 interview, Mayor Duke Coon said the city immediately needs six water wells and will need up to 13 wells between now and 2037, with each costing around $12 million to $15 million.
Community Impact reached out to city officials for further comment on its water infrastructure projects but did not hear back prior to press time.
How we got here
The water concerns came to light in April 2024 after the city’s first-ever boil water notice, council member Howard Wood said in a May 2 email.
Coon and council members Wood and Harry Hardman pointed to years of underinvestment.
“The previous administration was extremely opaque in submitting water and sewer CIP [capital improvement project] projects to [City] Council for approval and chose to focus on nonstrategic, ‘feel good’ projects like the hotel instead of boring infrastructure projects,” Hardman said in a May 2 email. “We are now seeing the effects of that misprioritization.”
In a presentation to council May 7, Brandy Taylor, purchasing contract administrator for the city of Conroe, said a pattern of underfunding key water projects began in 2011.
“Our requests were always way more than what was approved,” Taylor said. “We fell behind every year based on what we needed to continue growing as a city.”
Between 2011-22, she said over $112.5 million was spent on beautification or developer-driven projects instead of water infrastructure.
Taylor also said theoretically six additional water wells would have been producing water today had funding been allocated as requested.
Officials with Landmark Properties, which is developing a build-to-rent community, The Everstead at Conroe, said their project hasn’t been deeply affected so far but warned that market dynamics are shifting.
“Development moratoriums tend to change market dynamics by limiting new supply,” said Rex Warner, a development manager at Landmark Properties. “The water capacity challenges present a complex issue that requires an experienced development team and close collaboration with local stakeholders.”
A spokesperson for Howard Hughes, developer of The Woodlands Hills, said the company went through the city’s formal waiver process last fall and was ultimately denied.
Cody Miller said The Woodlands Hills officials confirmed that over 1,200 lots are currently under review and cannot move forward until the city lifts the moratorium. He said he believes other developers—including those not directly impacted by the moratorium zone—are watching closely.
Approximately 5,000 lots have been impacted in the northern part of the city since the moratorium began in August, which includes raw land, pending plats and fully platted lots that builders can’t touch, Cody Miller said.
“The city of Conroe’s moratorium is kind of the biggest thing that’s happening in our region right now,” he said.
Miller also said that $1,281 in annual property tax revenue per home is lost for every $300,000 house that cannot be built. Conroe’s tax rate for fiscal year 2024-25 is $0.4272 per $100 valuation.
“That’s money that could go towards water infrastructure projects,” Miller said.
According to Conroe ISD’s 2022 demographic study, over 53,000 housing units are expected to be occupied within the district by October 2032.
“A citywide moratorium would be detrimental—not just to developers, but to the entire local economy and to future residents,” Cody Miller said in a May 8 interview.
Meanwhile, legal uncertainty is also a concern to city officials. City Attorney Mike Garner said the city can be fined up to $25,000 per day from the Texas Commission on Environmental Quality for being out of compliance with regulations.
“The [Commission] can also refer the matter to the state [attorney general] and then we’re looking at legal battles from both sides of the state as well as future developers,” Garner said. “We’ve got to do what we have to do right now to protect our citizens who are already on the water system.”
What they’re saying
- “To sum it up, all the projects just described are going to put a scratch on the surface of the situation that you’re looking at.” —Norman McGuire, assistant city administrator and director of public works
- “We ... believe the city has not been given enough ... information to move forward with ... a citywide moratorium.” —Cody Miller, director of government affairs, Greater Houston Builders Association
- “The city should focus on promoting opportunities ... that would bring incremental value to the city without necessitating increased water demand.” —Harry Hardman, council member
- “Before moving forward with a [citywide] moratorium we need to study the economic impact this can have on our community." —Duke Coon, Conroe mayor
During its May 8 meeting, Conroe City Council voted 3-2 to direct staff to begin the process to implement a temporary citywide moratorium. Council members Shana Arthur, David Hairel and Marsha Porter were in favor, and council members Wood and Hardman voted against.
“This is not voting on a moratorium. This is voting on the process of a moratorium,” Porter said during the May 8 meeting. “The fact of the matter is, we can get out of this pretty quick. ... We have three different [entities] saying we’re not in compliance. I don’t want to be that council that ... ignores that.”
While it’s unclear where funding for future water infrastructure projects will come from, options such as a bond were discussed during council’s May 7 workshop meeting. Coon said if the city’s crisis is as severe as City Council is being told, all options are on the table moving forward.
“Asking the citizens to vote on specific projects ... is significantly better than asking for a general tax increase,” Hardman said. “We cannot currently fund these future projects ... so some type of incremental funding mechanism needs to occur.”
A vote on a decision to enact the citywide moratorium will be cast at a future council meeting after two public hearings are held, Garner said.
