Agua SUD settles lawsuit, avoids higher rates for customers

PALMVIEW — As construction of a project to bring sewer to the city of Palmview continues, a factor that could have raised sewer rates was resolved earlier this week.

The Agua Special Utility District, which is bringing services to the city with its Palmview Wastewater Project, reached a settlement with Hidalgo County Irrigation District No. 6 over the cost of easements.

The irrigation district had initially estimated a cost of upward of $800,000. However, the parties were ultimately able to agree to a price of $175,000.

The easements, or rights of access to private and public land, are needed to install the underground sewer lines. In court records, attorneys for Agua SUD state they notified the irrigation district of their plans in late 2013/early 2014. The irrigation district then informed Agua they planned to charge “substantial fees at each location where the Palmview Project crossed HCID 6’s lines.”

In July 2016, the Agua SUD executive director at the time notified the irrigation district that they expected to cross six of their lines at about 51 of their locations to which the irrigation district responded they would be charging $427,000 for crossing fees and an additional $50,000 for “administrative fees.”

The irrigation district later said it would charge for 85 crossings which Agua estimated would cost over $800,000. Agua SUD subsequently filed the lawsuit against the irrigation district in May 2017 which was resolved with the settlement agreement.

A message left for one of the attorneys representing the irrigation district seeking comment was not returned as of press time.

“The progress of the scope of work was never interrupted,” Frank Garza, the attorney of record for Agua SUD, said of the dispute. “What the uncertainty was what was going to be the cost of those crossings or those easements and so there was a dispute over the fair valuation.”

Garza added the settlement put to rest the question of whether there was going to be an additional cost to the wastewater project that would be passed on to the customers.

“Given the reasonable amount of settlement, it basically clarifies the uncertainty of the potential cost,” he said, adding that rate payers will not have to absorb the cost given that contingency funds will cover the cost of the settlement.

“The settlement amount was favorable in the sense that you get away from the exposure of it being in the neighborhood of $800,000,” Garza said. “Obviously, it’s a much lower amount but like I said it appears to be favorable for both parties involved and for the customers, as well.”