The North Texas Municipal Water District (NTMWD) can be considered a co-op distributor of treated water for use by several “member” and “customer” cities in North Texas. The NTMWD was developed as a political subdivision of the State of Texas and is governed by a board of directors appointed by the member cities. The District is responsible for acquiring, treating, and distributing potable water, and to collect, treat and dispose of waste water, both liquid and solid, in order to reduce pollution, conserve and develop the natural resources of Texas.

Allen, Farmersville, Forney, Frisco, Garland, McKinney, Mesquite, Plano, Princeton, Richardson, Rockwall, Royse City, Wylie

Ables Springs WSC, Bonham, Caddo Basin SUD, College Mound SUD, Copeville SUD, Crandall (Kaufman Four-One), East Fork SUD, Fairview, Fate, Forney Lake WSC, Gastonia-Scurry SUD, Greater Texoma Utility Authority (GTUA), Josephine, Kaufman, Kaufman Four-One, Lavon SUD, Little Elm, Lucas, Melissa, Milligan WSC, Mount Zion WSC, Murphy, Nevada WSC, North Collin WSC, Parker, Prosper, Rose Hill SUD, Rowlett, Sachse, Seis Lagos UD, Sunnyvale, Terrell, Wylie Northeast SUD

There are three main differences:

1. Member cities are the only guarantors for the District’s debt and are responsible for a proportional share of the debt issued while they are a member.
2. Member cities appoint representatives to the NTMWD Board of Directors. Customer cities do not.
3. Customer cities have a 5 cent markup on their water rates per 1,000 gallons.

Under the North Texas Municipal Water District (NTMWD) contract, cities pay for water based on their greatest single year of usage. In 2002, Richardson used11,019,311,000 gallons of water, at a time when its population was booming. Since then, the city has been required to purchase that amount every year, even though the community has not reached that consumption level since.

In the 1950s our region experienced an historic drought. Many communities in Collin County, with a population of only 42,000 came together to form the NTMWD. The founding cities and other neighbors who later became member cities, were all small, agriculture-based communities that needed to work together to secure a resource that would be vital to future growth. In order to meet peak demands, NTMWD builds infrastructure and acquires water to supply the member cities. The revenue received from its member cities and customers pays for the infrastructure in place and for future needs.

In the last three years, Richardson has paid for 9,916,295,000 gallons of water that its residents and businesses did not use, resulting in approximately $18.8 million in water that the city was not allowed to use due to the need to meet water conservation goals set during the most recent drought. Because the “take or pay” system goes against encouraging conservation, the City of Richardson is joining other cities to work with the District to address the pricing structure for water.

The City of Richardson supports an initiative being set forth by the North Texas Municipal Water District (NTMWD) to create a series of meetings designed to work with the member cities to discuss and develop a more equitable and sustainable rate structure for water service. These meetings are anticipated to begin in late 2015.

The long-term goal for changing the contract is to develop a more equitable level of billing based on usage as opposed to paying for water based on our greatest single year of usage. Under the current contract, this rate can only go up. It can never adjust down. NTMWD member cities are asking to work with the NTMWD to re-evaluate the water rate methodology to account for water conservation needs. The hope is that an approach will be developed that supports responsible conservation practices, while also starting to limit the large percentage cost increases experienced during the last several years.

Richardson currently uses approximately 65 percent of its total water purchase from the North Texas Municipal Water District. The cities maximum contribution was set in 2002 during a period of high growth and no water restrictions.

The recent severe drought put the North Texas Municipal Water District in a position it had never been in before, where its customers were mandated to conserve water. Conservation of water was never foreseen as a necessary measure 60 years ago when the contracts were first created. In addition to that, the needs of the cities that formed NTMWD have changed. Collin County now has more than 780,000 residents and is projected to reach more than 1.5 million. Five member cities – Richardson, Plano, Frisco, Allen and McKinney – have populations over 100,000. Some member cities are projected to reach more than 300,000, while others are largely built-out. Small family farms have given way to residential, commercial, and industrial developments, resulting in a Collin County that no longer resembles the agriculture-based community of the 1950s. Growth balanced with the needed implementation of permanent conservation measures has created the desire to redefine the billing system to a more equitable and sustainable system.

The recent drought has shown the need for regional and local emphasis on conservation. Stage 4 water conservation measures were able to be avoided because of the decrease in demand created by water restrictions. If water were used anyway, then the supply would have reached dangerous levels which could threaten the economy of our entire region. The goal is to be responsible with water use and to design an approach that is right for our future.

There are many different contract options that can offer solutions while addressing NTMWD’s financial obligations. The City of Richardson is supportive of working with other member cities to develop a rate structure that will support current needs and promote growth to cover future demand.

This analogy is not comparable to water payments by member cities. A typical mortgage has a 15, 20 or 30 year term where an individual pays on a house while having exclusive use of the house. At the end of the term, if all payments have been made, the individual will own the home and no longer has to make payments for the house. Additionally, individuals can renegotiate the terms of the mortgage if they can find a willing lender. Finally, if financial circumstances change, individuals have options: They could choose to rent a room, lease the house and, if all else fails, sell the house.

In contrast, the water contract has no definite term, because member cities are obligated to pay for the debt of the District. Every time new debt is issued, the term of the contract is extended. At the end of the term, the member cities do not own any asset, since the contract is for a service. Each August 1st the water service contract resets and member cities pay in full for a contractual minimum amount of water that they are restricted from utilizing. If that water is not taken by July 31st, the water is available for NTMWD to sell the next year. The cities are paying for a service and not an asset.

At the end of their fiscal year, the North Texas Municipal Water Districts' Board of Directors vote to grant a rebate to the cities for unused water. The rebate represents the cost of chemicals and electricity they did not incur for treating or pumping water the cities did not use. For Fiscal Year 2013-2014, the City of Richardson received a rebate of $1.6 million. That sum equals $0.45/1,000 gallons for the approximate 3.6 billion gallons of water the City did not use.

The District is taking final preliminary steps to build Bois D’Arc Lake, a $1 billion project. This undertaking will necessitate 30 to 50 years of debt. For Richardson, that translates into an approximate 10% increase in the city’s wholesale water rates every year for the foreseeable future while water conservation measures will continue to restrict water usage into the future.