While the corporation says making the change to become a governmental entity would save it money, some of those present raised issues ranging from whether it would allow the entity to control private wells to whether the change would let the state control all the district’s water.
Other concerns expressed included that the change would not actually save money, that it would create “a bureaucracy,” whether it could allow the district to limit who does household trash collection in the area, and that it would expand the voter pool for the district to include all registered voters in it rather than one vote per household.
The district could be formed only if a majority of the PWSC’s current membership votes to apply to the Texas Commission on Environmental Quality for the change. If TCEQ (which already regulates the corporation) approves the application, a majority of registered voters in the district must then approve the proposal to make the conversion.
Once a district is formed, it cannot levy taxes nor be abolished. At least one such district exists in Upshur County in the Diana community.
PWSC General Manager Robbie Arrington, who was among those answering the numerous questions posed during Thursday’s more than 1-1/2 hour meeting, said that within a month to six weeks, the corporation will mail ballots to its members who cannot attend a called meeting to vote on the proposal. The PWSC board is expected to set the date for that meeting when it meets Feb. 4.
Answering most of the questions raised Thursday was Eddy Daniel of Daniel and Brown Inc., a Farmersville engineering/consulting firm which is working with PWSC on the proposal. Also fielding questions was Kevin Spence, field supervisor for the Franklin County-based Cypress Springs Special Utility District which serves four counties. (Daniel’s firm worked on forming that SUD.)
Daniel explained that the PWSC board had voted to pursue converting to a SUD, and the next step would be having the 2,900 current corporation members vote on it at the called meeting. When and if application is made to the state, he said, the approval process takes 6-9 months and Daniel said he had never heard of such an application being rejected.
The state would issue an order creating the district with a temporary Board of Directors (which would be the current board), Daniel said. Then all registered voters in the district could decide whether to make the conversion, he said.
If they approve forming the district, then all registered voters in the SUD would elect its board. The voting is now limited to one person per meter (essentially one vote per household.)
While the entire conversion process costs about $25,000 and requires about a year, “it’ll ultimately save an awful lot of money,” Daniel asserted.
Later in the meeting, when Pritchett resident Lewis Hewitt said the current corporation setup had worked 63-65 years and asked “Why change it?,” Daniel said it would save money by lowering the district’s spending.
If a district pays less for insurance and vehicle registration than PWSC now does, “you don’t have to bring in as much money,” Daniel added.
“You’re not gonna save no money,” Hewitt shot back.
Spence responded that forming the Cypress Springs district saved $30,000-50,000 the first year. Later in the meeting, he said its biggest savings involved a sales tax exemption on buying supplies, that insurance cost savings were “huge,” and that the entity also saved on registration fees.
He estimated that 75 percent of the savings came from the sales tax exemption..
Arrington meanwhile said that if the proposed Pritchett district could save tens of thousands of dollars annually, “that means we do not have to go up on the rates” as much.
He speculated the change could prevent a rate increase for another year.
By becoming a district, Arrington said, the entity would also become totally tax-exempt, which is part of the projected $30,000-50,000 a year in savings. (He estimated the total will be about $40,000 yearly). The organization could also save on interest rates since it would be in a larger “pool” for borrowing, the general manager added.
In addition, Arrington said, changing to a district would give PWSC more protection against lawsuits since the state has capped the amount for which an SUD can be sued.
Asked by The Mirror how the proposed change would affect PWSC’s applying for grants from the state, Arrington said it would help because the state favors governmental entities over corporations.
The conversion would “move us up the ladder just a little,” he said.
When Daniel said the change would also save the Pritchett organization from paying the 30-cent-per-gallon federal tax on gasoline, Hewitt complained, “The more y’all save on taxes, the more we have to pay.” He also said the SUD would result in “more bureaucracy and all this malarkey.”
Added Michael Wilson, Development Services Engineer and Floodplain Administrator for the City of Tyler, “It’s not gonna save any of us money and beware of government saying” it will.
Asked about how the proposed change would affect water rights, Daniel said the district would have the right of eminent domain for a pipeline, but the corporation already does.
Another change, he said, would be that while the PWSC is now a member-owned corporation, “you’re just a customer” if it becomes a district. Customers would pay a $100 deposit instead of a $100 membership fee, he explained.
As for expanding the voting pool for the annual election of the board of directors, which Daniel termed a “key difference” from the current setup, Spence said voting by persons who didn’t have water meters had never been an issue.
Added Daniel, “Most customers don’t go vote, much less non-customers.” He added that customers who don’t live within the district boundaries cannot vote if the SUD is formed and that no election need be held if there is no contest for places on the board.
On another issue, Daniel assured those present the SUD would not control their private wells. When Hewitt said “I don’t believe that,” Daniel explained that was the case because the county has no groundwater district and cannot convert into being one.
Another concerned citizen, Rip Hill, said he understood the SUD would own all water in the district. Daniel said the corporation now has the authority to do that.
“Why give it over to the state and let them control it?” Hill asked. When Arrington said the state could not take over private wells, Hill and Hewitt expressed skepticism of that comment, but Daniel added, “They don’t have the right to take your water away from you.”
Another citizen who offered several comments and questions, Don McElvogue, expressed concern that voters might eventually approve transforming the SUD into what is called a Municipal Utility District (MUD.) In Smith County, he said, the MUD’s tax rate is higher than the county government’s tax rate and forming a MUD means “you’re worrying about your property taxes.”
McElvogue, who pays taxes in Smith County, said the MUD threatened to fine him $500 unless he used a certain trash collection service, which resulted in his discontinuing business with the district. He said governments regulated trash collection, not “private corporations of good people like us.”
Daniel replied that the Pritchett SUD board could be excluded from having that authority.