Editorial: Are we having a fair conversation about water?


FORNEY, Texas [EDITORIAL] — What is fair water and, more specifically, are we having a fair conversation about it? In short, no.

With Kaufman County projected to be one of the fastest growing counties in the state of Texas over the next decade, how will the City of Forney address its ever-growing population, city limits, extra-territorial jurisdiction (ETJ), its certificate of necessity and convenience (CCN), and those of its neighboring entities, among other things.

The issue at hand isn’t uncommon, but, somewhat new to Forney. As the city expands and annexes portions of its ETJ, they are pulling residents into the city limits who may not fall within their CCN, which grants the CCN holder exclusive rights to provide water and/or sewer utility services within its boundaries. Those residents pay city taxes but buy water through a water supply corporation (WSC), district, or special utility district (SUD) instead of direct from the city as its water customer.

The topic came to the forefront with Forney City Council discussion over the Wynne Jackson development, which proposes building approximately 1,000 homes in between Farm-to-Market (FM) 548, FM 741, and Pecan Lane, and also during the latest city council election earlier this year.

Then-Mayor Pro-Tem Ray Stephens, a Grayhawk resident and currently one of two City of Forney representatives on the North Texas Municipal Board of Directors, said it wasn’t fair for a brand new development, just across the street from Grayhawk, to opt-out of Markout WSC’s CCN and instead petition to be included in the City of Forney’s CCN and city limits — resulting in lower water rates than their Grayhawk neighbors. Some Grayhawk residents took notice and joined the discussion.

As noted, Grayhawk is within the city limits of Forney but in the Markout WSC’s CCN. Grayhawk isn't the only development inside the city limits of Forney being serviced by a water district and that’s a key point as we move forward with the discussion of fair water. Wynne Jackson would also fall under these guidelines if not for their petition and voluntary annexation request.

Stephens, along with several other current council members, former council members, and former city council candidates, have gone on record to say they would not be in favor of purchasing the CCN rights of Grayhawk, specifically, if it did not make financial sense.

So, does it make financial sense? At this time, we don’t know. Why? Because, for nearly a year, the citizens have been promised a feasibility study to determine the cost of obtaining a “portion” of Markout WSC’s CCN.

The Forney City Council took action in April 2016, voting 7-0, to begin negotiations with Markout WSC to determine the feasibility of obtaining the portion of the CCN encompassing Grayhawk. The council’s actions also took into consideration negotiations with Talty Special Utility District (SUD) and Mesquite because, at the time, Markout WSC members were considering a merger with Talty SUD.

A majority of the Markout WSC members voted in favor of the merger however, the vote didn’t meet a required two-thirds vote for the measure to pass, according to Markout WSC Board President Brian Andrews in a newsletter to their members.

Conversations began shifting to negotiations between the four parties to determine who could best serve portions of Markout’s CCN in the event the district would be split in pieces — which eventually led to the shifting of the public’s perception that the City of Forney was seeking to takeover all of Markout WSC’s CCN — a matter never affirmed by the city council or considered for citizen comment.

Some suggesting it is a political move solely to gain leverage in negotiations with Mesquite over ETJ boundaries.

City Manager James Fisher, in an interview with inForney.com last week, says its frustrating the amount of misinformation being shared on social media — some of which he says is borderline false in an attempt to divide the community.

“It’s not accurate, it’s misleading, it’s dividing a community, and we don't need that,” he said.

After a tumultuous city council meeting last week, when the city council voted, affirming a previous split decision, to end a newly-inked maintenance and service agreement with Markout WSC, Fisher confirmed to inForney.com that, to this date, there has not been a feasibility study conducted nor has the City of Forney officially extended an offer to Markout WSC to purchase or otherwise takeover their entire district.

Doing so, he said, would be premature.

Several Markout WSC members, mostly from Grayhawk, and some of the district’s representatives were in attendance of the city council’s meeting last week. A handful of those residents say campaign promises led them to believe the City of Forney would be taking over their district and the maintenance and service agreement between the City of Forney and Markout WSC was the “mechanism” used to achieve that goal. Without the contract, they were told their rates would increase and, with it, they would be lowered.

The contract (attached below) however, only provides for a licensed system operator, an assistant, daily operations, maintenance, support services, and determines other fees associated with larger repairs, among other things, and does not change Markout WSC member rates.

Instead, Fisher says the maintenance and service agreement was a means for the City of Forney to evaluate and familiarize itself with the district’s systems and operations as the ongoing negotiations with the district continue.

Fisher says he can’t speak to any campaign promises but two issues must first be addressed before further negotiations with Markout WSC — ETJ boundaries with the City of Mesquite and the contested take-or-pay methodology of the North Texas Municipal Water District (NTMWD).

Given the council’s vote in April and December of last year — to begin negotiations and to enter into a maintenance and service agreement with Markout WSC — many are left wondering why the sudden change of heart or if some of the council members were led into the agreement under false pretenses.

So far, the negotiations with Markout WSC have primarily been led by Forney Mayor Rick Wilson and city management which has also seen change since the onset of the negotiations — from then-interim City Manager Charles Daniels to his permanent replacement, Fisher. Those meetings however, have been behind closed doors. What the City of Forney stands to gain or offer have not been made public.

In fact, even council members, on both sides of the issue, are being left in the dark —as evident in their comments during city council meetings and on social media — as to what is actually being negotiated all the while they are being pressed to take action on items which ultimately impact the overall negotiation. Not to mention the lack of transparency to the citizens of Forney — those mandated to fund their decisions.

To that end, Markout WSC members and City of Forney citizens were never given a fair shot at negotiations because a fair, split, or otherwise unbiased representation was never provided in part by the City of Forney.

The future of Markout WSC and the City of Forney’s involvement in the purchase, in part or whole, of their CCN was at the forefront of the voter’s minds earlier this year as they headed to the polls. The issue was featured in every meet the candidate forum, voter’s guide, and candidate questionnaire. Come election day, those candidates endorsed by the push to overtake Markout WSC didn’t meet the approval of the voters.

Campaign season rhetoric only pushed both sides further from compromise.

Those in Grayhawk or in Markout WSC’s district had hoped for a takeover and a promise of reduced water bills.

Those outside of Grayhawk, but in the city limits, say they will bear the financial burden of delivery, infrastructure construction and upgrades, and CCN purchase rights, among other things, for Grayhawk residents who chose to call Grayhawk their home before considering their utility providers or their water rates.

Leading up to the election, in an effort to endorse then-candidates Jimmy Hanks and Cheryl Ballard for city council, Wilson claimed there was not adequate fire flow, or water pressure, to Grayhawk fire hydrants and a vote for his candidates would ensure their future protection with Grayhawk’s move to City of Forney water.

City of Forney Engineer Richard Dormier, in a budget workshop meeting with the council last month, confirmed there is adequate fire flow to Grayhawk which is required by City of Forney building standards. A quick phone call last week to Markout WSC also confirmed adequate fire flow. This however, has not calmed the fears of some of Grayhawk’s residents who brought the issue to council members last week.

Threats of a Talty SUD-Markout WSC merger and withdrawal from purchasing wholesale from the City of Forney have also been proven baseless. In fact, the Talty SUD on Thursday will be requesting to purchase an additional 1.44 million gallons of water per day from the City of Forney in an amendment to their long-term, take-or-pay contract with the city. Talty SUD representatives could not be reached on Monday for comment.

In response to the claims, and at the request for comment from inForney.com, the NTMWD said they historically look to their member cities for direction when considering requests for service within their service area.

“We have a contract with the City of Forney – one of 13 Member Cities served by the North Texas Municipal Water District,” NTMWD spokesperson Janet Rummell told inForney.com. “Historically, we have looked to our Member Cities for direction on serving other entities within their service area and in response to requests for service from their adjacent communities.”

“If the City of Forney supports a change to the way their current direct customers are served, we would work closely with all the entities involved to address those needs,” she said.

The City of Forney serves four direct customers for which they are in long-term, take-or-pay contracts — Talty SUD, Markout WSC, High Point WSC, and Kaufman County Fresh Water Supply District (FWSD) #1A in Windmill Farms.

Talty SUD, Markout WSC, and High Point WSC purchase water from the City of Forney on a take-or-pay basis for $4.12 per 1,000 gallons — a 63% markup from the $2.53 paid by the City of Forney to purchase the water from NTMWD.

The terms of those agreements will likely become unsustainable as the rates from the NTMWD are expected to increase 10 percent each year over the next several years. The contracts were originally negotiated at a time when the NTMWD rates remained relatively flat, or unchanged.

Additionally, the NTMWD’s current take-or-pay rate methodology is being challenged by four NTMWD member cities with the Texas Public Utilities Commission (PUC).

The City of Forney’s wholesale contract with the Kaufman County FWSD #1A in Windmill Farms is not based on a 63 percent markup, instead, a flat markup of 61 cents over the NTMWD purchase rate for the City of Forney per 1,000 gallons.

Talks of renegotiating those contracts to be equitable and fair for both the City of Forney and the district’s they serve will not likely talk place until the PUC makes a determination on the NTMWD’s take-or-pay methodology, Fisher told inForney.com. Again, this is one of the factors to be considered before negotiations continue with Markout WSC, he said.

At the onset of the rate discussion and its fairness to those in the city limits, then-Council member, now-Mayor Pro-Tem, Mary Penn suggested a change in the billing structure or a rebate until either a rate change could be negotiated or the feasibility studied to consider the purchase of Markout WSC’s CCN around Grayhawk. Penn’s suggestions were dismissed by Wilson at the time and last week subject to ridicule by Grayhawk members upset with her vote to exit the maintenance and service agreement.

What do the customers of the surrounding districts stand to gain if the rate is renegotiated?

The City of Forney charges a base rate of $14.49 for the first 2,000 gallons of usage, $4.62 per 1,000 gallons over 2,000 and under 15,000 gallons, and $5.78 per 1,000 gallons over 15,000.

Markout WSC charges $36.25 for the first 3,000 gallons of usage, $7.25 per 1,000 gallons over 3,001 and under 20,000 gallons, $8.25 per 1,000 gallons over 20,001 and under 40,000, and $9.25 per 1,000 gallons over 40,001.

Currently, an average City of Forney residential water customer uses 6,200 gallons. Based on the average usage, a City of Forney customer’s bill would be approximately $33.89 and a Markout WSC customer, assuming the same usage, would be approximately $59.45 — a difference of $25.56.

IF, emphasis added, the markup was reduced by 30 percent to 33 percent, the districts would realize a savings of 76 cents per 1,000 gallons, or $4.71 on the average water bill. That’s also assuming the savings would be passed directly to the customer.

The districts however, must consider their operating, maintenance, infrastructure, and cost of delivery, among other things, before considering a pass-through savings to their customers or a total rate structure change.

The cost of delivery between a city’s water district and a rural water supply corporation are often far apart with the cities serving a more condensed customer base and the water supply districts delivering to a smaller customer base over greater distances resulting in increased infrastructure and maintenance costs.

With these considerations, the districts and cities determine their water rate. These considerations remain factors if the City of Forney were to takeover a portion or all of Markout WSC and would likely increase the cost of delivery and the overall rate.

A move for Grayhawk residents from the Markout WSC to the City of Forney’s CCN would prove beneficial due mostly in part to the disparity in the cost of delivery the separate CCNs must consider.

IF, again, emphasis added, the City of Forney begins renegotiating its contracts with Talty SUD, Markout WSC, High Point WSC, and Kaufman Co. FWSD #1, its imperative a rate study is conducted to determine the actual cost of delivery to these individual districts and how those changes might impact the City of Forney’s budget.

But, when we talk about fair water, we must also consider others who live within the city limits that are also being served by water supply districts. Not only that, we must consider the entire taxpayer base to determine the feasibility of such an undertaking.

Enter Talty SUD, High Point WSC, and Forney Lake. Each of these district’s also serve customers in the city limits of Forney.

Notably, Talty SUD serves areas in and around the fast-growing Gateway Parks addition which proposes a total of 1,800 homes within the city limits — roughly eight times the size of Grayhawk. On the north side of the Gateway development and U.S. Highway 80, High Point WSC serves the Gateway multi-family residential, Antique Row, and other proposed developments on the northern edge of city limits.

Last week, Fisher said the estimated cost of taking over Markout WSC would be between $7 and $11 million, a very preliminary estimate. To be fair, this isn’t taking in to consideration any purchases of the other districts’ CCNs that fall within the city limits of Forney.

Proponents of a Markout WSC takeover say proposed developments in the area will offset the cost to the city because developers will foot the bill.

However, the City of Forney is on the hook for decertifying Markout WSC’s CCN for the proposed Wynne Jackson development, per the development agreed passed by council earlier this year in a 5-2 vote, as well as delivering utilities to the property. The City of Forney would also be responsible for the cost of infrastructure and decertifying Markout WSC’s CCN in Grayhawk. Neither of which detracts from the overall assumed cost of a Markout WSC takeover because it would have already been paid for, in a roundabout way, by the City of Forney.

The City of Forney does, however, stand to collect impact fees from the Wynne Jackson development as homes were added to the city’s water and sewer systems which would alleviate some, if not all, of the infrastructure costs. Those impact fees must be segregated from the general fund and cannot be used for any other purpose than by which they were established and collected.

Future negotiations between Markout WSC and the City of Forney are at a perceived stalemate given the ongoing challenge to the NTMWD’s take-or-pay rate methodology and the stalled ETJ negotiations with the City of Mesquite.

Moving forward, Fisher says the City of Forney will work on better communication in hopes of preventing further misinformation.

“Growth is hard, I’ve gone through this, and it does get peoples’ emotions high,” he said. “But, you've got to be willing to look at it and confront it and realize it’s an opportunity to make yourself even better.”

“Forney is in a good, good spot,” Fisher said in terms of growth possibilities and development. “I’ve had several people tell me they're really looking at Forney as a place to expand or looking at opportunities for their company. But they're not going to come here if we’re busy fighting each other and being divided. It doesn’t help any of us.”

As for Markout WSC, a representative says they will use the six-month termination period to weigh their options — whether it’s returning to Talty SUD for maintenance and service or continued merger talks with Talty, among other options.

On Thursday, the Forney City Council, for the third time, will seek a motion to reconsider or allow public comment on the maintenance and service agreement between the City of Forney and Markout WSC.

For those claiming they weren’t given an opportunity to speak on the cancellation of the maintenance and service agreement, look across the aisle at the next city council meeting to those who weren’t given the same respect when the contract was considered for adoption last year.

It’s the opinion of this writer that the City of Forney should provide fair representation at any future negotiations to provide insight from both sides of the table, not just one. Doing so will allow for more transparency, a better knowledge of the facts, and will allow for fair and educated decisions as we move forward.

Hopefully, this too, will prevent misinformation or public perceptions on both sides of the issues.

We must have a fair conversation.

Correction: An original version of this editorial incorrectly stated Stephens was involved in the ongoing negotiations with Markout WSC. Last year, Stephens attended a public meeting of the Markout WSC Board of Directors, for which he is a water customer, and was not involved in the ongoing negotiations.

Markout Water Supply Corporation maintenance and service agreement with City of Forney by inForney.com on Scribd