Lawsuit: Lobbyists say Agua SUD owes them $52,500

Lobbyists who represented the Agua Special Utility District last year claim the utility district refused to pay them for months.

Former Executive Director Oscar Cancino hired Austin-based Strategic Public Affairs during May 2017, when the utility district wanted to kill a bill.

aguasudThe utility district agreed to pay $7,500 per month. Lobbyists started working the Texas Legislature, but lawmakers passed the bill just two weeks later.

In April 2018, long after the legislature adjourned, the utility district filed a lawsuit against Strategic Public Affairs, claiming Cancino signed the contract without board approval. The lobbyists fired back on June 11, filing a counterclaim against the utility district.

Strategic Public Affairs claims the contract is valid — and wants $52,500 plus interest, along with attorney fees and court costs. To support the claim, the lobbyists produced a resolution signed by utility board President Roger Hernandez.

“We obviously disagree with their assessment of the situation,” said attorney Armando Marroquin, who represents the utility district.

Attorney Michael A. McGurk of McAllen, who represents the lobbying firm, didn’t respond to a request for comment.

The utility district, which provides water and sewer service to more than 15,000 customers in western Hidalgo County and a small part of Starr County, didn’t always keep high-powered lobbyists on the payroll.

In December 2016, a public notice published in The Monitor caught the utility district by surprise.

State Sen. Juan “Chuy” Hinojosa, D-McAllen, planned to file a bill related to the utility district, according to the tiny ad tucked away in the newspaper.

Cancino sent a sternly worded letter to the utility district’s longtime lobbyist, Rene Ramirez of Pathfinder Public Affairs.

Before becoming a lobbyist, Ramirez served as the state senator’s chief of staff. Cancino wanted to know why Ramirez didn’t warn the utility district about the bill.

“As Executive Director of the Agua SUD, let me emphasize my concern that this public notice appeared in a printed publication without our legislative representative advising any Agua SUD representative of this legislative matter,” Cancino wrote.

Hinojosa filed the bill in February as Senate Bill 814.
The bill included a provision designed to stop elected officials from hiring each other.

“If a director is an employee of another taxing entity within the district, the board may not employ as an employee, as a consultant, or on a contract basis an elected official of the other taxing entity that employs the director,” according to the bill.

That posed a problem: At the time, four members of the utility board worked for the La Joya Independent School District. And two members of the school board worked for the utility district.

The bill would force them to choose between elected positions and public employment.

Ramirez suggested the utility district work with the senator and reach a compromise. Members of the utility district board, however, had started wondering whether Ramirez really represented them or remained loyal to Hinojosa.

The utility board passed a resolution opposing Senate Bill 814 and authorized Cancino to “act on behalf of the Board and in the best interest of the District regarding any and all legislation affecting and/or related to the District, its composition or operations.”

They were joined by the La Joya school board, the Sullivan City Commission, the La Joya City Commission and the Peñitas City Council, which also passed resolutions opposing the bill.

Ramirez resigned on April 24.

“On numerous occasions I have advised and conferred with you about the contradictory impact your actions have had on our efforts to reach Agua SUD’s legislative goals,” Ramirez wrote to Cancino in an email. “My suggestions and advice have been ignored and I can no longer represent you in your efforts.”

With the legislative session winding down, the utility district needed to find a new lobbyist — fast.

Cancino hired Austin-based Strategic Public Affairs on May 12, according to a copy of the contract. The utility district agreed to pay $7,500 per month, the same fee charged by Pathfinder Public Affairs, for a year.

Lawmakers passed Senate Bill 814 two weeks later.

Strategic Public Affairs remained on the payroll.

Financial records reviewed by the utility board in August 2017 and October 2017 show payments to the lobbying firm.

In April 2018, though, the utility district sued Strategic Public Affairs, attempting to void the contract. The lawsuit claims Cancino signed the agreement without informing the utility board.

“In January 2018, during an internal audit, the above mentioned agreement was discovered,” according to the lawsuit.

Strategic Public Affairs filed a countersuit on June 11, citing the resolution passed by the utility board as proof Cancino had authority to sign the contract.

The countersuit also claims the utility district failed to pay the monthly retainer.

“Agua has defaulted under the terms of the Contract by failing to make payments as they became due,” according to the countersuit. “The current amount owed and past due is $52,500, with interest continuing to accrue at the rate of 6% per annum.”

Strategic Public Affairs also asked a judge to award the lobbying firm attorney fees and court costs.

Cancino, who resigned in September 2017, maintains he acted with authority from the board. He’s not a party to the lawsuit.

The case, C-1500-18-J, remains pending before state District Judge Israel Ramon Jr.

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