Previously, institutions—tax-exempt, nonprofit or government entities such as churches and schools—were grouped in the same category as businesses and charged the same rate, Community Impact Newspaper previously reported.
Magnolia City Administrator Paul Mendes previously told Community Impact Newspaper that 24% of the city’s water and wastewater usage comes from residents and businesses, while the other 76% comes from those in the institutional user category. Water bills are issued in a tiered fee schedule; the more water used, the more it costs, he said.
“Our homeowners—less than 2,000 people—are subsidizing the institutions who service a much larger area,” Mendes said. “The whole purpose of this rate was to make it fair across the board, not target the churches.”
Originally, the city, represented by law firm Lloyd Gosselink, filed a petition Nov. 14 in a Travis County district court seeking legality and validity on the city's tiered fee schedule, including the institutional rates, said James Parker, the city's counsel at Lloyd Gosselink.
The court ruled Feb. 7 that the city's institutional user category was legal and valid and issued a permanent injunction—a judicial order restraining an entity from pursuing a specific action that threatens the legal right of another—against any entity that contests the court’s ruling, Community Impact Newspaper previously reported.
Jeremy Dys, the deputy general counsel for First Liberty Institute, said no one had informed the churches or First Liberty about the Feb. 7 ruling.
“The city has intentionally tried to avoid the accountability that the law provides by going hundreds of miles away from any voter in the city of Magnolia and trying to get a judge down there to relieve them from this liability that they knew was coming,” Dys said.
First Liberty filed a petition June 13 in a Travis County district court requesting a new trial, claiming the city violated the due process clause of the 14th Amendment.
The Aug. 16 ruling granted the churches' request for a new trial, according to the court documents. A new trial date has not been announced as of publication Aug. 19, Dys said.
"I’m grateful that the court has allowed these churches to evaluate this issue in an open court and allow their voice to be heard," Dys said. "The city has not allowed them to do so this entire time."
Mendes said the decision is up to the lawyers.
"We're leaving it to the lawyers to find the best course of action. It's all up to [them] now," Mendes said.
Read the Aug. 16 ruling below.