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Senator Juan "Chuy" Hinojosa: District 20
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August 6, 2021
Contact: (512) 463-0120
Hidalgo County Water Improvement District No. 3 Water Rate Increases are Unnecessary
Column by State Senator Juan "Chuy" Hinojosa, August 2021

The Hidalgo County Water Improvement District No. 3 ("District") continues to prove it is an unnecessary layer of government that has outgrown its purpose. To the detriment of McAllen residents, the District will increase rates for the water it provides the McAllen Public Utility ("Utility "), effective September 1, 2021. Even though the Utility currently provides top tier water service to McAllen residents at one of the most competitive rates in the state, the rate increase is expected to have a negative impact. The City of McAllen pays the District nearly $1.3 million per year for water. The District already has the highest water rate compared to other districts within the region. They are about 80 percent higher than the City of McAllen pays other water providers. The District's notice to the Utility leaves the door open for additional rate increases in the future. The new water rate increases by the District will lead to higher water bills for Utility ratepayers.

The District partially justifies the increase to fulfill its new "responsibilities" required under the bill I authored and passed this year. As enacted, Senate Bill 2185 is intended to improve transparency, end conflicts of interests, such as the District's General Manager also being the President of the Board, and prohibit contracts such as those entered by the District with private businesses owned by this same individual. State audits have revealed these unethical practices of the District's leadership which have plagued the District for more than a decade. Essentially, with this new rate increase, the District is passing on the costs to correct years of improper actions, mismanagement, and abuse of power that has financially enriched the District's President at the expense of the ratepayers in McAllen. The new revenue for the District from September's rate increase will also go towards recouping the money spent by the District to hire a highly compensated team of lobbyists who opposed Senate Bill 2185’s anti-corruption, common-sense reforms.

As introduced, the Senate Bill 2185 would have eliminated this unnecessary layer of government the District has evolved into and enabled the Utility to provide the same water services but in an efficient and transparent manner. The initial version set forth an option for the City of McAllen to dissolve the District and upon dissolution would take over its obligations, rights, operation, and responsibilities. As the Utility testified in the hearing for the bill, the City of McAllen was (and remains) in the position to continue to serve Utility ratepayers and the District's few agricultural customers without any disruption of services throughout the district’s territory. These safeguards were included in the bill. Because the Utility's board of trustees is elected by the public, any rate increase proposals made by the Utility's board are scrutinized by the public. Unlike the District, the Utility board of trustees answers directly to the residents they serve, making accountability a paramount priority. Had the Senate Bill 2185 passed as it was originally written, there would be no increases in water rates for McAllen ratepayers.