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McAllen asks state to review Water District #3 rate increase

The McAllen Public Utility wants the state to review a nearly 17% rate increase from Hidalgo County Water Improvement District #3.

McAllen filed a petition with the Public Utility Commission of Texas on Oct. 27, claiming the rate increase is an “unprecedented example of a wholesale service provider’s abuse of its monopoly power.”

“It is a fight. But it’s not about us versus them,” said utility General Manager Mark Vega. “This is about the citizens of McAllen. Because water is a necessity. It’s not a luxury.”

The rate increase will cost the public utility roughly $250,000 every year. District #3 board President Othal E. Brand Jr. said the money will pay for infrastructure projects.

“We’ve spent every penny we get our hands on to improve this district for the reliability of the city of McAllen,” Brand said.

The petition is the latest salvo in a long series of disputes between McAllen and District #3.

During the past decade, the city backed several attempts by state Sen. Juan “Chuy” Hinojosa, D-McAllen, to dissolve the district.

District #3 pumps water from the Rio Grande to reservoirs owned by the public utility, which provides water to customers throughout McAllen.

The public utility is locked in a permanent contract with District #3 and must pay for a certain amount of water annually.

While the contract provides McAllen with a guaranteed source of water, it also forces the public utility to pay whatever District #3 charges.

District #3 increased the rate nearly 33% in 2012 and 10% in 2014, according to the petition. District #3 increased the rate again in July.

“You can’t just keep doing that,” Vega said. “I mean, where does it end?”

If District #3 keeps increasing the rate, Vega said, the public utility will eventually be forced to pass the increase along to customers.

The public utility also buys water from three irrigation districts, which charge much lower rates.

Hidalgo County Irrigation District #2 charges $51.25 per acre foot, according to General Manager Sonny Hinojosa, and hasn’t changed that rate since 2010.

An acre-foot — nearly 326,000 gallons — is an agricultural measurement that describes the amount of water required to flood an acre of land with 1 foot of water.

United Irrigation District charges $59.96 per acre foot, according to the petition. Hidalgo County Irrigation District #1 charges $65.89 per acre foot.

District #3 charges $113.96 per acre foot.

The petition asks the Public Utility Commission to order District #3 to charge a lower, fair-market rate.

“It’s about the citizens,” Vega said. “It’s not a personal vendetta.”

While he acknowledged that District #3 charged more than neighboring districts, Brand said the raw numbers don’t tell the whole story.

“I don’t charge them a loss,” Brand said, referring to the charge irrigation districts assess to cover water lost through evaporation and seepage. “The other two do. One charges all capital improvements — a percentage of all capital improvements.”

District #3 plans to spend the additional money on infrastructure projects, Brand said, and complying with a new law passed by the Texas Legislature.

A pipe links the District #3 canals north and south of the floodway, Brand said. It’s connected to large “breather” pipes in the middle of the floodway.

During a flood, debris in the floodway could damage the breather pipes and send floodwater pouring into the pipe, Brand said. To prevent that from happening — and potentially flooding south McAllen — Brand said District #3 needs to install a gate on the north side of the floodway.

“This project alone is $200,000 plus,” Brand said.

District #3 frequently touts infrastructure projects, but Vega questioned if District #3 had actually fixed any legitimate problems.

“What improvements has District 3 made to their delivery system?” Vega said. “Every time they charge up the canal — their pipe — to deliver water to the north, they spring leaks everywhere. It’s 100 years old.”

Brand disagreed.

District #3 made investments to serve McAllen better, Brand said, and prevent bad weather from disrupting the local water supply.

“Mark can say that,” Brand said. “But Mark is wrong.”

Brand said District #3 also needs money to comply with Senate Bill 2185, which became law in September.

The bill prohibits Brand or any other member of the board from serving as the general manager.

Along with a salary, benefits, retirement, travel and other expenses, District #3 needs a bigger building, Brand said, to accommodate the general manager.

“We got treated real ‘special’ by the legislature,” Brand said. “We got a bill passed that says I can no longer be manager. Well, if we’re going to have to hire one, no manager is going to do what I’ve done for 18 years — and that’s work on the conference table in the conference room.”

District #3, which operates from a tiny, decrepit building near the intersection of Pecan Boulevard and North Main Street, simply had no space for a general manager.

Construction on an office is already underway. Within the past few weeks, District #3 demolished part of the building and poured a new foundation.

In the meantime, District #3 abolished the position of general manager. Employees report directly to officers of the District #3 board, including Brand, Vice President Mark Freeland and Secretary Chris Burns.

The two foremen employed by District #3 turned down the general manager position, Brand said, because they didn’t want to handle legal or legislative issues.

“I guess it’d be safe to say they don’t like to handle anything confrontational,” Brand said. “Which I do.”

Asked how District #3 employees would handle a disagreement without a general manager to resolve the conflict, Brand said the foremen — who are part of the same family — don’t ever disagree.

“Since I’ve been here, I’ve never had any of them come in and have an argument between any two of them,” Brand said. “Ever.”

The District #3 board plans to meet Monday to discuss the petition and find an attorney to handle the Public Utility Commission proceedings, Brand said, which may cost $30,000 to $50,000.

“I will win the case,” Brand said. “I’m not worried about it. Because everything we did is on solid ground. Absolute solid ground.”

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