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Opinion

North Texas water war reignites between granddaddy suburbs and boomtowns like Frisco

Why everyone who pays a utility bill in these 13 Dallas-area suburbs should care about a fight that Plano, Richardson, Garland and Mesquite want Austin to resolve.

If Plano, Richardson, Garland and Mesquite get their way, a water-rate dispute among a swath of North Texas suburbs is headed back to Austin.

The war, however politely waged, comes down to this: Do the four granddaddy suburbs have a legitimate “pay our fair share” argument or are they trying to weasel out of a contract that suited them just fine for many years.

The litigation has dragged on so long that most of us forgot it even existed. But it should be on the radar of anyone who pays a water bill in the four petitioning suburbs or in fast-growing Frisco, McKinney and the other seven member cities of the North Texas Municipal Water District.

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The disagreement centers on the cost-sharing “take or pay” methodology that the 13 cities long ago agreed to for wholesale water purchases. Under the 1988 contract, each pays an amount based on its highest year of usage — a big chunk that winds through the municipal budget pipeline to land on your monthly statement.

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The four petitioning cities maintain that this isn’t an “us vs. them” fight with the other cities. It’s just past time, they say, for some relief because they no longer need nearly as much water as they’re contractually obligated to buy.

“This isn’t about placating four cities, but rather setting us all on a new path,” Richardson city manager Dan Johnson said when I sat down with him and the bosses of Plano, Garland and Mesquite last week.

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Sounds simple and fair, right? Not so much in the minds of the other nine cities. If the granddaddies pay less, the kiddos would have to pay more.

Construction crews work on upgrades to the Plant 1 settling basins at the North Texas...
Construction crews work on upgrades to the Plant 1 settling basins at the North Texas Municipal Water District complex in Wylie. Annual payments by the 13 member cities help fund infrastructure and future projects.(Ryan Michalesko / Staff Photographer)

That’s been a hard, if not impossible, sell to the other city managers, whose No. 1 priority is to look out for constituents’ best interests, especially when it comes to their wallets.

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Since the four cities filed their appeal of the water rate with the Public Utility Commission of Texas in late 2016, they have met regularly with the other district members in hopes of a solution. Any move to amend the contract would require unanimous agreement by all 13.

Austin’s most recent action came in May when — despite a State Office of Administrative Hearings recommendation that the case has merit — the PUC tabled the four cities’ review request and suggested all parties keep talking.

Seven months later, the granddaddies have just knocked again on the PUC’s door, asking for the regulatory group to put the case on its agenda as soon as possible.

“There hasn’t been a path to find an agreement,” Plano city manager Mark Israelson told me. “Having that neutral third party with the expertise to come in and say, ‘This is what should be,’ will help this district out.”

All 13 cities, which also include Allen, Farmersville, Forney, Princeton, Rockwall, Royse City and Wylie, agree on this much: The methodology issue needs to be addressed. Participants have negotiated in good faith. They are willing to keep talking.

But the four petitioning cities’ move to try to plug the PUC back into the process hasn’t enhanced the kumbaya spirit.

Roy Cooke opens the door to a pump station on Lavon Lake at the North Texas Municipal Water...
Roy Cooke opens the door to a pump station on Lavon Lake at the North Texas Municipal Water District complex.(Ryan Michalesko / Staff Photographer)

“I wish we could find a solution to this and not have to appeal to Austin to solve our local problems,” Frisco city manager George Purefoy said when I asked him about the latest development.

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“From the very beginning, we’ve tried to do the best we could and find alternatives to the problem and suggested solutions to it,” he said.

McKinney city manager Paul Grimes agreed, arguing that this is a local contractual matter, not a regulatory one. “We believe a solution can be found, but it’s going to take a lot of patience.”

Exactly what’s prevented a resolution after three years of negotiations isn’t public because those talks are sequestered behind a confidentiality agreement. But it’s not hard to figure that rejiggering costs wouldn’t suit any city that would come out with a bigger wholesale cost.

Even the language used to frame the issue is in dispute. The Plano, Richardson, Mesquite and Garland city managers label it “paying for water we don’t use,” and they support, for example, an adjusting feature in the contract that would reward municipalities for using less.

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Garland’s Bryan Bradford put it like this: “If Plano is using 20 percent of the water, they should be paying 20 percent of the costs. That’s what’s fair. But that’s not what’s happening.”

The water district and other member cities strongly disagree with what they see as a catchy but inaccurate argument: They point out that the annual payments cover the cost of the overall system — not just the wet stuff but the infrastructure and investments for both present and future needs.

Work crews at the North Texas Municipal Water District complex. The water usage of the 13...
Work crews at the North Texas Municipal Water District complex. The water usage of the 13 member cities makes up about 82 percent of the annual demand on the district, which serves 1.8 million people.(Ryan Michalesko / Staff Photographer)

The 13 member cities’ water usage makes up about 82 percent of the annual demand on the district, which serves 1.8 million people.

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A key piece of the petitioning cities’ argument is the conservation measures adopted throughout North Texas in the aftermath of the devastating 2012 drought and zebra mussel infestation of water supplies. Cities ratified stringent measures, still in place today, that included shrinking unlimited watering to twice a week.

But because of the highest-year-of-usage charge, the four granddaddy cities are still paying based on the long-ago days when they sold unlimited amounts of water to their large populations.

“If we continue the spirit of conservation, we’ll never hit that max again,” Richardson’s Johnson said. “What’s the sense of it if I’ve already bought the water, and I’m never going to get relief?”

Other city managers, including Frisco’s Purefoy, pointed out that conservation didn’t just start in 2014 and the district has long incentivized water-saving strategies. The younger suburbs learned from the mistakes of others and, even as they boom, they carefully conserve.

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Tom Kula, executive director of the North Texas Municipal Water District, told me that unusually rainy periods such as those of the past five years often prompt cities to question contract stipulations. Weather can greatly affect year-to-year usage, he said, but the contract effectively determines cost-sharing of the regional system over a longer timeframe.

“No perfect contract exists, but wholesale water providers all have some kind of demand built into the contract,” he said.

When I pressed him about the fact that the four cities’ highest usage years were long before mandatory two-day-a-week watering, Kula acknowledged it’s “a valid point, and the district understands their message about that.”

Under an alternative contract, he said, “Frisco and McKinney, as two of the fastest-growing, those two cities would stand to have to pay quite a bit more. That’s why it’s not an easy one to solve.”

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Plano’s Israelson maintains that changing the methodology will eventually benefit every city as it reaches its zenith of water usage and then drops off.

He and the three other city managers hope to see their review request on the PUC agenda before the end of February. If the commissioners eventually rule that the rates are unfair, the next step most likely would be studies to determine what would be fair.

“That puts us on a path,” Israelson said. “But they might come back with something else we might not like. … That’s why our preference has always been to settle it locally.”

Yet the four granddaddies are frustrated that they can’t make headway on that conversation.

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This much is clear: The four petitioning cities are on the wrong side of a contract that now best serves the up-and-comers. The granddaddies are now looking for relief with appointed officials in Austin — and hoping to win in the court of public opinion.

Everyone, whether ratepayers or other water districts, should be paying attention to this one.