Bill would create process for Agua SUD to be placed under court supervision

State Sen. Juan “Chuy” Hinojosa filed a bill last week that would allow Texas to place the perpetually troubled Agua Special Utility District under court supervision.

Senate Bill 1188, which Hinojosa filed on Feb. 24, would create a process for Agua SUD to be placed in receivership, which is a type of court supervision.

“When we created Agua — it used to be La Joya Water Supply Corporation — the issue of placing Agua in receivership was not in the legislation that we passed,” Hinojosa said.

Lawmakers created Agua SUD after they concluded the La Joya Water Supply Corporation, which served western Hidalgo County, had so many problems it simply couldn’t be fixed.

As part of the transition process, a judge placed the water supply corporation in receivership. After three years under court supervision, the water supply corporation was dissolved and replaced by Agua SUD.

The do-over didn’t fix the problem. Within a decade, Agua SUD had become a source of non-stop scandal.

In 2021 and 2022, allegations that former members of the utility board had participated in bribery and kickback schemes convinced Hinojosa that Texas needed a process to place Agua SUD in receivership.

The bill would allow the Texas Commission on Environmental Quality to request that Agua SUD be placed in receivership if:

* Agua SUD receives three consecutive audit reports with anything other than a clean opinion.

* Agua SUD runs a net loss for five consecutive fiscal years.

* Agua SUD defaults on debt obligations.

* Any member of the Agua SUD board or “agent” of Agua SUD “has been convicted of or has pleaded guilty to a civil or criminal offense related to the management or governance of the district within the past 10 years.”

In the bill, an “agent” of Agua SUD is defined as someone “who exercises discretion in the planning, recommending, selecting, or contracting of a vendor or contractor for the sale, lease, or purchase of real property, goods, or services on behalf of the district.”

* Agua SUD violates a court order.

If the Commission on Environmental Quality determined Agua SUD had run afoul of the law, the Texas Attorney General’s Office would ask a court to appoint a receiver.

The receiver would run Agua SUD until a judge believes the utility district is ready to be independent again.

State Sen. Juan “Chuy” Hinojosa, D-McAllen. (Photo courtesy of state Sen. Juan “Chuy” Hinojosa.)

In addition to creating a process for Agua SUD to be placed in receivership, the bill would require candidates and members of the utility board to file their campaign finance reports with the Texas Ethics Commission.

Under the current system, they submit campaign finance reports to Agua SUD. Candidates routinely submit incomplete reports — or no reports at all.

Hinojosa said he plans to amend the bill to fix that. Under his proposed amendment, any member of the board who failed to file a campaign finance report or personal financial statement would be removed from office.

Director Homer Tijerina, the longest-serving member of the Agua SUD board, said the bill would make the utility district more transparent and improve accountability.

“I’ve always supported the senator,” Tijerina said. “And I am in favor of it.”