AUSTIN, TEXAS — Today, Senator Juan "Chuy" Hinojosa filed Senate Bill 2185 relating to procedures for the dissolution of the Hidalgo County Water Improvement District No. 3 (District). The bill is a local bill that sets forth an option for the City of McAllen to dissolve the District and upon dissolution would take over its obligations, rights, operation and responsibilities. The bill also contains safeguards to ensure that all current customers and farmers of the District continue receiving services. Further, the bill eliminates any flat tax paid by farmers if the District is dissolved.

Senator Hinojosa released the following statement on the filing of SB 2185:

"There is no greater waste of taxpayer money than the continuation of the Hidalgo County Water Improvement District No. 3. This irrigation district was founded in 1921 to provide water to serve agricultural interests, but now serves less than 10 active farmers. Its biggest customer is the City of McAllen, nearly 150,000 in population, which accounts for almost 85% of the District's operating revenue. The District has outlived its purpose and simply serves as an expensive middleman driving up the cost of supplying water to citizens and businesses in the City of McAllen at nearly $1.3 million per year.

The District has a long history of mismanagement, as was as identified by the State Auditor's Office in a report published in 2012. That report found that services were provided by businesses that were owned or operated by the individual who is both general manager of the District and president of the board of directors for the District. This is a conflict of interest and should not be permitted for any governmental entity. For too many years, this individual has used the District to financially benefit his businesses at the expense of the ratepayers in the City of McAllen. This must stop.

Not much improvement has been made in management and accountability since the audit in 2011 and some of those same issues persist today. The general manager and the board of directors continue failing in their responsibility to follow procurement policies for contracts and remain inconsistent with handling matters regarding potential conflicts of interest. In 2019, the annual audit of the district again identified issues with procurement. The auditors found several purchases without written approval.

After reviewing the finances of the District, I am not surprised to learn that the expenses of the District continue to exceed the revenue. What's more, in addition to paying for water supply, the McAllen taxpayers in 2019 paid more than $500,000 to the District for crossing fees and higher than market value for purchase of easements.

Year after year the citizens of McAllen support an obsolete, burdensome, and unnecessary layer of government. The Hidalgo County Water Improvement District No. 3 has outlived its purpose, lacks proper oversight, and is an unnecessary waste of taxpayer funds. It is time to dissolve it and transfer the operation to the City of McAllen."

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