[0:00] Also an audio communication between board members participating by video conference establishing a quorum.

[0:08] The public may attend the meeting in person. Audio and video of board members participating by video conference will be visible.

[0:18] So members of the public wishing to listen to live audio from the meeting may do so by calling in.

[0:25] Committee members, please remember your video must be on to be considered present.

[0:30] And I'll now call the roll and confirm committee members attendance.

[0:35] Terry Sam Anderson.

[0:37] Here.

[0:38] Thank you, sir.

[0:39] I'm here.

[0:41] Jack May.

[0:42] Here.

[0:43] Thank you, Jack.

[0:44] Don Paskell.

[0:46] Here.

[0:47] Thank you, Don.

[0:49] Randy Rowland.

[0:50] Here.

[0:51] Thank you, Randy.

[0:52] Jody Sutherland.

[0:54] Present.

[0:55] Thank you, sir.

[0:56] And Steven Terrell.

[0:58] Here.

[0:59] Thank you, Steven.

[1:01] Now is our time for public comments.

[1:04] Do we have any members of the public wishing to speak?

[1:07] We have no request for public comment.

[1:09] Okay.

[1:09] With that, we'll move on to our opening remarks.

[1:12] And I would just begin by thanking Director Pascal for agreeing to be the vice chair of this committee.

[1:22] So David, at this point, we'll turn it over to you for any opening comments that you have.

[1:34] Okay.

[1:35] Yeah.

[1:37] Okay, so can you hear me now?

[1:40] Yes.

[1:41] Okay.

[1:42] Here you are not able to see.

[1:44] You're not able to see.

[1:46] You'll have two audio connections in the room, I believe.

[1:48] Dave?

[1:49] Yeah, I apologize.

[1:50] Give us one second.

[1:51] Give us one second.

[1:52] Okay.

[2:00] Okay.

[2:01] Okay.

[2:01] Hopefully.

[2:02] Hopefully we can turn that speaker off for a minute.

[2:08] Go to speaker.

[2:09] Go to speaker.

[2:10] Go to speaker.

[2:16] We can't hear you now, David.

[2:23] Okay.

[2:24] Can you guys hear me okay now?

[2:26] There we go.

[2:27] That's much better.

[2:28] All right.

[2:29] I apologize for our technical difficulties here as we were working to get set up.

[2:34] Thank you very much Director Kelly and good afternoon.

[2:38] Thank you all for joining us today.

[2:40] If I can take just a moment of personal privilege, I'd like to say welcome to Chairman Kelly and

[2:44] Vice Chair Paschal.

[2:45] I'm looking forward to working with you on the committee.

[2:49] This is the first time in the six plus years that I've been at the district that this

[2:53] committee hasn't been chaired by Director Fuller and I'm glad he's here today to

[2:57] join us and I just want to thank him again for his service and say what a joy and

[3:02] honor it has been to work with him for so long.

[3:05] So with that, I just want to start off with a broad understanding of where we stand with

[3:09] the legislature in Austin.

[3:12] As you have likely heard in the news, more than 50 House Democrats have left the state

[3:16] to prevent a quorum of the House from considering legislation regarding congressional redistricting.

[3:23] While this is a very fluid situation, it appears that they will remain out of the

[3:27] state through this week.

[3:28] The expectation currently is that on Friday the House will convene again and the Legislature will adjourn without Democrats present and that the Governor will immediately call a second special session that will begin next week.

[3:45] The expectation is that the Democrats will return and that congressional redistricting will pass in the second special session.

[3:53] Meanwhile, there has been significant work done in both the House and the Senate in response

[3:57] to the July 4th flooding in the Hill Country.

[3:59] Several very extensive hearings have been held by a joint special committee and bills have

[4:04] advanced through the Senate that appropriate funding for recovery from that disaster as

[4:09] well as significantly strengthen the way the state, county officials and volunteer

[4:13] organizations prepare and respond.

[4:17] We expect that this legislation will pass in the second special session in very

[4:21] similar form to what we have seen moved through the Senate and House committees already.

[4:26] In the House, Natural Resources Committee Chairman Cody Harris has introduced four bills

[4:31] regarding groundwater management in response to applications for groundwater well drilling

[4:36] permits in Cherokee and Anderson counties, which are in Chairman Harris's district.

[4:42] On July 15th, the committee held a 14-hour-long hearing on these permit applications.

[4:48] These bills are not covered by the governor's special session call, and so they will not advance at this time.

[4:55] It is possible that these bills could be a part of the second special session call, but that is not currently anticipated.

[5:02] We do believe that there will be an extensive interim study done by the committee on this issue and that these bills will return in the next regular session.

[5:12] Finally, just a brief look at what is going on at the federal level.

[5:15] Congress is currently in its August district work period and will return to

[5:20] session on September 2nd. The federal water policy landscape remains active

[5:25] as reauthorization efforts continue for major programs like the clean water and

[5:30] drinking water state revolving funds and the Water Infrastructure Finance

[5:34] and Innovation Act. The Trump administration's budget proposed a 90

[5:38] percent cut to the state revolving funds of roughly 2.46 billion dollars

[5:44] reducing their combined funding from the 2025 level of approximately 2.76 billion down to just 305 million.

[5:53] It appears unlikely that Congress will agree with this cut and will likely restore the vast majority of this funding.

[6:00] Additionally, the EPA has rolled back enforceable limits on several PFOS compounds

[6:13] The administration has also revised chemical risk assessments to preempt state-level PFOS

[6:19] bans in consumer products proposing to evaluate chemical risks by each use rather than holistically.

[6:27] Finally also in the federal space, we are looking forward to hosting Congresswoman

[6:31] Julie Johnson for a tour and meeting with Jenna and others on September 5th.

[6:36] Congresswoman Johnson replaced Colin Allred in Congress and she represents portions

[6:41] of Mesquite, Garland, and Richardson in our service area.

[6:46] So with that, Chairman Kelly, that is all I have for opening comments.

[6:51] Okay. Thank you, David. And just for the record, we do have a quorum.

[6:56] And at this time, Jenna, any comments you'd like to add?

[6:59] I think David covered it very well. I have nothing to add. Thank you.

[7:02] Okay. Thank you. We're going to move on to our action items.

[7:05] We have one action item here today, and that's considering the approval of our legislative committee meeting minutes from the meeting on December 4th, 2024.

[7:17] So do I have a motion?

[7:22] This other one.

[7:23] Thank you.

[7:24] Roland would second.

[7:26] And second?

[7:28] Roland.

[7:28] Roland, thank you.

[7:30] Any discussion before we vote?

[7:33] No discussion.

[7:34] All those in favor, please say aye.

[7:36] Aye.

[7:37] And all opposed say nay that motion passes. We're going to move on to our discussion items.

[7:46] We have four discussion items here today. We're going to begin with the 89th Texas Legislative

[7:53] Regular and Special Sessions Review. And David Kelly will present. David?

[7:59] David.

[8:00] Okay.

[8:00] Thank you, Chairman.

[8:02] I'll say up front that I am joined here today in our Austin Legislative Consultants Office.

[8:10] I have with me Shae Pearson and Eddie Solis, who are part of our team from Hillco and

[8:16] I'm grateful to have them.

[8:19] I'd like to begin by refreshing your understanding of what the legislature did in the 88th

[8:24] session on water infrastructure funding and the Texas Water Fund to set the stage for

[8:31] the changes that occurred this session.

[8:33] In 2023, the legislature created two new funds, the Texas Water Fund and the New Water

[8:40] Supply for Texas Fund and provided $1 billion to start these funds in a constitutional amendment

[8:45] that was approved by voters with over 77 percent support.

[8:49] That funding was split 75-25 between the Texas Water Fund and the New Water

[8:54] Supply Fund. The TWF is a broad umbrella fund that provides the board with

[9:00] significant flexibility to allocate funding for the majority of the programs

[9:05] administered by the board including the New Water Supply Fund, which you can

[9:09] see in this graphic. The programs in the blue boxes were included in the

[9:14] original TWF and the orange boxes were added to the fund by the

[9:18] legislature this session. Most significant on this list is the addition of the Flood Infrastructure

[9:24] Fund, which will require significant funding, particularly following the floods last month

[9:30] in the Hill Country. Next slide.

[9:36] With that foundation, we'll begin with the major water

[9:38] funding legislation that was passed this year. House Joint Resolution 7 is a constitutional

[9:43] amendment that provides dedicated revenue of $1 billion annually for 20 years beginning

[9:49] in 2027 coming from the existing state sales and use tax. This begins after the first 46.5

[9:57] billion is received from the tax. There's no split of those funds in the constitutional amendment,

[10:03] but Senate Bill 7 directs 50% of the funding to the New Water Supply for Texas Fund or the

[10:10] State Water Implementation Fund for Texas or SWIFT at the discretion of the Board and

[10:15] specifically for water infrastructure funding.

[10:18] The other half will go to the Texas Water Fund and remain flexible there.

[10:23] This was a very positive development as we have consistently advocated for maximum flexibility

[10:28] for the board as well as for increasing funding for SWIFT.

[10:33] As mentioned, this is a constitutional amendment so it must be approved by voters this November

[10:38] and we will discuss that in more detail in a moment.

[10:40] Additionally, while the funds are dedicated, the legislature still has to authorize the

[10:45] spending each session, and they will have the ability to suspend and redirect the funding

[10:50] in the event of a declared disaster, but the bill expressed the legislature's intent

[10:55] that the funding be replaced as soon as possible following that.

[10:59] Next slide.

[11:03] Moving on to the next major water funding bill, Senate Bill 7 expands what these funds

[11:07] can be used for by adding water reuse projects to the new water supply fund as well as acquisition

[11:14] of water rights from outside the state. It also adds shovel ready reservoirs as an eligible uses

[11:21] of these funds and defines that as having acquired all of the required land and having obtained

[11:27] both a state water right permit and a federal 404 permit. SB 7 also broadens the Texas water

[11:34] Fund to include the Flood Infrastructure Fund, the Agricultural Water Conservation Fund, and

[11:39] the Economically Distressed Areas Fund.

[11:42] Finally, it charges the Board with development of standards and coordination for water transportation

[11:47] projects across the state so that projects constructed with these funds can be interoperable

[11:52] and benefit multiple regions of the state simultaneously.

[11:57] Next slide.

[12:00] In addition to the dedicated revenue, the legislature also provided one-time funding

[12:04] through House Bill 500, the Supplemental Appropriations Act.

[12:08] It is a total of $2.5 billion to the Texas Water Development Board with over $1 billion

[12:14] of that for water infrastructure and supply projects.

[12:17] There's also a reallocation of $880 million in funding appropriated last session from

[12:23] the Texas Water Fund to the Water Development Board generally.

[12:26] There was also $550 million in unspent funds, over $581 million in unspent funds for specific

[12:36] projects that the board awarded but was unable to fully process before the state budget process.

[12:43] Timelines required that funding be returned to the General Revenue Fund.

[12:48] Finally, there was over $130 million provided to pay the non-federal matching requirements

[12:53] funds for the clean water and drinking water state revolving funds.

[12:57] Next slide.

[13:01] Moving on to legislation that we worked on heavily this session and we've provided several

[13:06] updates to the Board on these bills as session progressed.

[13:10] HB 5659 by J. Dean changes the enabling legislation of the Northeast Texas Municipal Water District

[13:18] for inter-basin transfers requiring a majority vote of five of their seven member cities,

[13:24] councils before their board can approve a new contract or permit application for

[13:30] moving water into or out of the Cyprus River Basin. This bill was modified from

[13:35] its original form, which initially required a majority vote of all seven

[13:40] member cities. Additionally, there was an amendment to SB1, the budget that would

[13:45] have prohibited TCEQ from processing an interbasin transfer permit in the

[13:50] Cypress River Basin, but this amendment was declared an unconstitutional creation of general

[13:55] law by Governor Abbott and will not be enforced.

[13:59] Finally, we've discussed HB 2109 by Gary Van Dever at length, as this bill would have

[14:05] removed the Marvin Nichols Reservoir from the state water plan.

[14:08] This bill passed through the House committee but was never placed on the calendar for

[14:12] the full House.

[14:13] There was an attempt to amend a different piece of legislation with similar language,

[14:17] But that failed on the House floor, and we were very pleased to see our entire legislative delegation vote against that amendment, as well as having several of them speak against it and fight to protect water supply options for our region.

[14:31] Next slide.

[14:34] Moving on to other impactful water legislation, these first two bills were represented in our legislative agenda, and we formally supported both of them.

[14:42] HB 517 is a conservation bill that prevents HOAs from finding residents for discolored

[14:49] lawns during watering restrictions and for 60 days after.

[14:55] SB 1261 extends repayment terms for very large

[15:00] Water projects up to 40 years for TWDB funded bonds and 50 years for open market bonds. Our

[15:09] enabling legislation already provides us with 40-year bonding authority, but we will benefit

[15:14] from the open market term increase if we need that ability in the future. This bill applies

[15:19] to projects of 750 million or more and requires an engineer to certify the asset's lifespan

[15:25] matches the bond term. And then SB740 clarifies that PUC wholesale rate

[15:32] jurisdiction does not apply when one municipality sells wholesale water to

[15:37] another as several of our member and customer cities do, essentially sending

[15:42] these disputes straight to district court rather than the PUC. It also expands

[15:48] the expedited process for sales transfers and mergers of municipal

[15:53] systems.

[15:55] Next slide.

[15:57] Moving on to other significant legislation that will impact our city's growth, development,

[16:03] and indirectly water demands that we will need to plan for.

[16:07] Senate Bill 15 places a broad range of limits on the ability of cities over 150,000 residents

[16:13] to regulate development density, including minimum lot sizes, the maximum number of

[16:19] dwellings per lot, and related requirements.

[16:21] This will allow for significantly increased densities and higher growth projections for our region in the future.

[16:29] Senate Bill 840 addresses mixed use and multifamily conversions,

[16:34] preventing cities from imposing impact fees on buildings converted from commercial to residential use

[16:40] unless those fees already applied before a building permit was issued.

[16:45] This also applies to cities with populations over 150,000.

[16:51] And then House Bill 2559 by Jared Patterson changes the process for cities to impose a

[16:58] moratorium on new development.

[17:00] It does not limit their ability to do so, but does require two public hearings at least

[17:04] 30 days apart and a three-fourths vote of council for approval each time the moratorium

[17:10] is put in place or extended.

[17:13] Next slide.

[17:14] There

[17:17] were several bills passed this session regarding city imposition of impact fees on developers for water and wastewater infrastructure.

[17:25] SB 1253 would require cities to give impact fee credits for water conservation projects installed by developers.

[17:33] This bill was vetoed because of an amendment on the House floor addressing a specific impact fee issue in Harris County,

[17:39] but is on the special session call and will likely be on the next one as well so that

[17:44] they can pass the bill cleanly.

[17:48] SB 1883 tightens impact fee rules by requiring a two-thirds vote of a city council to impose

[17:55] them and barring increases more than once every three years.

[18:00] Finally, SB 1173 raises the competitive procurement threshold from $50,000 to $100,000

[18:08] dollars for cities but this legislation does not impact us as our limit of 25,000 is found

[18:15] in our enabling legislation.

[18:17] Next slide.

[18:21] Every session there are bills that make changes to how political subdivisions like the district

[18:26] conduct business in areas like procurement, cybersecurity and the public information

[18:31] act.

[18:32] There are several more bills here that I can highlight but our staff is aware of

[18:37] of all of them and working to implement any legislation that impacts our operations.

[18:43] As has been mentioned to the Board, HB 1522 now requires public meeting notices to be

[18:49] posted three business days in advance as opposed to 72 hours previously, as well as

[18:55] posting a copy of the budget if it's on the agenda.

[18:59] SB 1964 relates to how political subdivisions use artificial intelligence and requires

[19:06] local governments to review certain AI systems and provide that review to the

[19:11] Department of Information Resources on request. Additionally, we will be required

[19:16] to conduct annual training on AI for those employees who regularly use

[19:21] computers. HB 1584 directs the PUC and electric utilities to maintain a

[19:28] priority facilities list that automatically includes hospitals, police, fire,

[19:36] and

[19:36] This is something we worked on extensively with the electric utilities that supply our

[19:40] facilities in the wake of winter storm Yuri.

[19:43] Generally we haven't had any problems with these utilities, but we're happy to see this

[19:47] codified in law.

[19:49] Next slide.

[19:52] With that, I'll move on to the ongoing special session.

[19:56] I've already covered the majority of this slide in my comments at the beginning of

[20:00] the meeting, but in addition to congressional redistricting and flood recovery legislation,

[20:05] The governor included a broad array of topics that do not impact water on the special session call.

[20:11] One additional item that could impact us is a prohibition on political subdivisions hiring legislative consultants to represent them in Boston.

[20:21] This has been a recurring issue over the course of several sessions and has never passed.

[20:26] During the regular session this year, the Senate passed the bill, but the House did not.

[20:31] It does not appear that there is any change to those positions going into the second special

[20:36] session and it's not clear that anything will move forward in that regard.

[20:42] So with that, I think that is a full review of the important legislation from this session

[20:47] and all I have, Mr. Chairman, I will just ask briefly if Eddie or Shea have anything

[20:54] to add that I didn't cover.

[20:56] That was extensive.

[20:58] Comprehensive.

[20:59] Comprehensive, yes.

[21:00] All right. So a lot of legislation. Yeah, a lot going on for sure.

[21:07] Okay. Any any questions from any committee members, other

[21:16] directors, any questions?

[21:18] Do

[21:23] you have something to say, my friend? Yeah, I got just one clarification for everybody on the committee's benefit.

[21:32] that while we're addressing these issues appropriately, do we need to have any kind

[21:39] of action from this committee or going to the board as a whole that these positions

[21:45] be adopted as the official positions of the district?

[21:52] Yes, sir.

[21:53] We have a formal legislative position statement that is considered by the committee and

[21:59] the board prior to the legislative session, and that is what staff works on and directs

[22:06] lobbyists to work on during session. Following session, I don't think there's any action

[22:14] to take on that, and we revisit that position statement before every session.

[22:20] I thought I had recalled something several months back to that regard, but I just wanted

[22:25] to be sure, and anything else that comes up in the special session would be covered

[22:29] by what we've already got here in the positions paper.

[22:32] Okay, thank you.

[22:33] I just wanted to be sure we were all on board.

[22:35] Okay.

[22:36] Okay. Any other directors?

[22:40] Oh, this is Thompson.

[22:42] Go ahead, Director Thompson.

[22:43] SB 1173 will then increase the trigger for competitive procurements.

[22:49] Is there any appetite from the district to change ours from 25 to 50

[22:54] or something like that, or do we think 25k is the right number to uh.

[23:00] Yeah I can speak to that one. So the specific requirement within our enabling legislation

[23:06] is related to construction contracts and so there is some flexibility on our part to

[23:14] increase that threshold for things that aren't considered construction contracts.

[23:18] We've historically aligned our policy with that of cities and the code required to be

[23:27] followed by city, even though it's not directly applicable to us.

[23:33] So as we kind of look to potentially refine our finance policy manual, that's something

[23:39] that we can talk about internally.

[23:41] There's not really an intent at this point to suggest a modification of our enabling

[23:46] legislation to increase that threshold related to construction contracts.

[23:54] But if there was a time at which we were initiating consideration to changes to our enabling legislation,

[24:03] that's something that would be on our list for consideration.

[24:06] Okay, thank you.

[24:08] Sure.

[24:10] Okay.

[24:12] Anyone else before we move on to our next discussion item?

[24:15] Okay. If there's no one, we're going to move on to discussion item B with constitutional election awareness campaign. David.

[24:26] Yes, sir.

[24:30] So, excuse me one second. I'd like to, sorry, let me get to the right spot in my notes.

[24:45] So, as I've discussed previously we are going to have a constitutional election for the dedicated revenue of water infrastructure.

[24:53] As we did in 2023, we are planning to conduct an awareness campaign in our service area in the days before the election, and I'd like to walk you through that campaign proposal now.

[25:05] As a political subdivision, NTMWD cannot advocate for or against the proposition, but we can provide educational information, encourage voter participation, and point people to nonpartisan voting resources, which is what the campaign does.

[25:21] Election Day is November 4th, 2025, and early voting begins October 20th.

[25:28] We expect to begin the campaign about two weeks prior to the start of early voting.

[25:34] The ballot language reads, the constitutional amendment to dedicate a portion of the revenue

[25:39] derived from state sales and use taxes to the Texas Water Fund and to provide for the allocation and use of that revenue.

[25:47] This language is fairly vague and leaves a question in the voter's mind about the potential

[25:52] for increasing taxes.

[25:54] So that is one thing we will focus on in our messaging since the proposal does not increase

[26:00] the sales tax but only directs a portion of it to this specific use.

[26:05] The design of the campaign is extremely similar to that which we used in 2023 and much

[26:11] of the messaging is also unchanged.

[26:13] The following slides are listed as drafts because the design and messaging may still change somewhat, but we do not anticipate significant changes.

[26:23] Lauren Kalashek has reviewed the campaign to ensure that we are staying within the requirements of the law for educational and non-advocacy purposes.

[26:32] And our communications team is working with our new media contractor to finalize the design of the campaign before we move forward.

[26:40] Next slide.

[26:44] This slide shows what is called a carousel ad that will run on social media.

[26:49] And you would click through the five images here to read what the proposition does and

[26:54] does not do. And then there are links to additional information. This would be posted

[27:00] to our social media channels, and then we would pay to boost the post and push it

[27:05] towards targeted audiences. So you can see here four main facts, including that it does

[27:13] not raise taxes on Texans.

[27:17] Next slide.

[27:21] This slide shows a banner ad and two margin ads

[27:25] that would run on web pages of local newspaper websites in our service area. The banner

[27:33] ad will likely lead to a fact sheet on the proposition provided by the Texas Water

[27:38] Development Board, which is also not an advocacy piece. This is what we pointed to when we did

[27:44] this in 2023, and while the Board hasn't yet posted an updated fact sheet for this election,

[27:50] we expect that they will shortly. The two margin ads will point to votetexas.gov,

[27:57] which provides information on registering to vote and how to vote.

[28:02] Next slide. This slide just shows screenshots of what the campaign looked like in 2023 on mobile devices with additional updated slides for the dates for this election.

[28:19] Next slide.

[28:23] And similarly this slide is what the campaign looked like two years ago on the websites of local newspapers.

[28:29] In addition to our member and customer city's specific newspapers,

[28:35] we will also be purchasing ads in the community impact newspaper,

[28:39] the Dallas Morning News, as well as the North Texas E-News, which covers Fannin County.

[28:47] In 2023, we spent $10,000 on this campaign.

[28:51] Due to the turnover in our communications firm, we have unspent funds in our budget for this year.

[28:58] And we are proposing to increase the budget for this campaign to $15,000.

[29:04] And that will enable us to do more on social media using some what's called wheels,

[29:14] kind of like small video ads that just run through the carousel as well as place ads in the Dallas Morning News.

[29:20] So that's what I have on the proposed awareness campaign for the constitutional election and I'm happy to take your questions, Mr. Chairman.

[29:30] Okay. Thank you, David. David, as we discussed the other day, voter turnout is so low on these type of elections.

[29:38] And part of the problem is the ballot language. So really commend you for this.

[29:44] Because I have one question though.

[29:46] Our policy organizations in Texas, a lot of them are going to weigh in on these constitutional

[29:52] amendments.

[29:53] I actually saw one the other day and I didn't bring my phone in.

[29:57] I was going to give you the name.

[29:59] Thank you.

[30:00] You probably have already seen it. But do we reach out, and they were against one of our water amendments, but do we reach out to any of these policy organizations just to make sure they fully understand what it is that we're voting on?

[30:18] Yes, sir. No, we don't engage with those policy organizations. The ones who oppose constitutional

[30:29] amendments like this are generally very small government associations, generally very conservative,

[30:36] and they are going to take those positions absent of anything we could say about it.

[30:42] I will say that we do engage with a number of other entities that are supporting the

[30:52] proposition.

[30:54] There will be large statewide efforts.

[30:57] Last time we participated in an effort with the Texas Oil and Gas Association and the

[31:04] other water associations that we are involved in engage with those groups.

[31:10] groups.

[31:11] So this is limited just to our service area and communicating with those who take our

[31:17] water through our members and customers.

[31:21] And in general, we don't engage with those in opposition to the proposition.

[31:28] Okay.

[31:29] Thank you, David.

[31:31] Any comments or questions from committee members?

[31:37] Director Crowley has a – oh, I'm sorry, I'm not a committee member.

[31:40] That's alright. Hey, I'll tell you what, you're so special, Director Crowley, we'll let you go ahead.

[31:48] Thank you, sir. David, when you put the slides up on the screen a few minutes ago, were those in fact the slides that will be used on social media and in our advertisements?

[32:10] Yes, sir. Pending potential small adjustments, we expect that that will be exactly what is – what goes forward.

[32:21] As I said, we do have a new communications firm on board that this is actually the first project they're working on.

[32:27] There may be design changes, but I don't anticipate verbiage changes.

[32:33] I may just not see it, but what I was wondering, and these people are much better at this certainly

[32:42] than I am in terms of how to do these things, but I was just hoping to see a slide that

[32:51] above all else quickly says no tax increase, but the potential to add water, and that

[32:59] And it doesn't just pop out at me, maybe it shouldn't, maybe this is a better way to approach it.

[33:06] But I just wanted to bring that up and I'll let you guys do with it whatever you think is best.

[33:12] Okay. Thank you. And I will communicate that with our communications team and we'll continue to work on this.

[33:21] Okay. Any other directors? Questions?

[33:29] If not, we'll move on to our next discussion item.

[33:33] And just, David, again, this is, I think, very valuable what you're going to be doing here,

[33:39] getting the word out. But discussion item C, legislative consultant contracts review. David?

[33:47] Okay. So I would like to take a moment to just review where we stand currently with the various contracts

[33:53] that we have with legislative consultants.

[33:56] I'll start by reviewing the contracts we have currently

[33:59] and then discuss where we are planning to go with this

[34:02] as we move forward.

[34:04] Currently, as the committee is aware,

[34:06] I am sitting in the offices of Hillco Partners in Austin.

[34:10] They are the only legislative consulting firm

[34:13] we currently employ in Austin,

[34:15] and we hired them in January of 2024.

[34:18] We previously had longstanding relationships

[34:20] with two firms in Austin and made the decision to move forward with Hillco

[34:25] after an RFP-like process that involved multiple rounds of interviews with several firms,

[34:32] including both of those who had previously represented us.

[34:36] I have to take a moment now to say how happy I am and the district is

[34:40] with the services Hillco provided to us this session.

[34:44] As you all know well, this was a particularly difficult and busy session

[34:49] with many broad water related issues and issues specific to the district and our water supplies.

[34:55] Hillco was excellent in representing us and extremely responsive whenever we needed them.

[35:01] Jay Howard is the lead for Hillco and unfortunately he's not with us today because he's in Italy with his family,

[35:07] but Shay Pearson is also on the team as well as Eddie Solis.

[35:11] Shae focuses on environmental issues and TCEQ and Eddie focuses on economic development

[35:19] issues and was very helpful to us with the Governor's Office's session.

[35:25] In addition to Hillco, we are part of the Texas Water Supply Partners, which is a group

[35:30] of two other wholesale water suppliers, the Opportunity Regional Water District and

[35:35] the San Jacinto River Authority, as well as the Texas Business Leadership Council,

[35:40] which is an association of large company CEOs

[35:43] with a presence in Texas.

[35:45] This group comes together to split the costs

[35:47] of a consultant who is Heather Harward.

[35:50] This has also been a longstanding partnership

[35:53] that we are very happy with.

[35:55] In Oklahoma, we have contracts with two firms

[35:58] that we hired in 2022 to help us

[36:01] with the Red River Boundary Commission issue

[36:03] and our Lake Texoma pump station.

[36:06] These contracts were particularly for that issue

[36:08] And, of course, we were ultimately successful in completing that process in Oklahoma.

[36:14] As we look at the political landscape in Oklahoma and based on our experience there

[36:18] over the course of almost a decade in working on the boundary issue, we assess that the

[36:24] conversation about purchasing water from Oklahoma is extremely sensitive and does

[36:29] not appear favorable towards selling water to entities in Texas in the near future.

[36:35] There are multiple laws in Oklahoma that prohibit the export of water outside of the state,

[36:40] and we would have a very long and uphill battle to repeal those laws.

[36:45] As such, we feel it is best to move on from these contracts.

[36:49] We are deeply grateful for the work provided by Greg Payett and Sidney Hill and Brian

[36:55] Freed at Amber Integrated.

[36:57] They did an awesome job for us, and we made a great decision in hiring them.

[37:02] We also recognize that it's important for us to keep our ear to the ground in Oklahoma in case the situation there becomes more favorable in presenting an opportunity for pursuing water supplies there.

[37:15] Staff maintain several touch points in the state including membership in the Red River Valley Association, which includes representation from all of the states bordering the Red River.

[37:25] We also will be sending SAF to the Oklahoma Governor's Water Conference in December.

[37:31] Finally, we are engaged with the Red River Compact Commission and its work managing the

[37:36] water rights that each party state has in Lake Texoma and the Red River.

[37:41] So there are multiple ways that we can continue to remain engaged in Oklahoma without full-time representation.

[37:49] We also think that this may be the right time to refocus on federal opportunities for

[37:54] water supply that may have more potential than Oklahoma.

[37:58] For a long time until 2019, the district did have representation in Washington, D.C.

[38:03] with several issues at play.

[38:05] These included work with the Corps of Engineers and Congress on our 404 permit for Bodark

[38:10] Lake as well as the federal issues surrounding the Lake Texoma Pump Station and the exemption

[38:16] to the Lacey Act.

[38:17] That work decreased significantly after those problems were solved and we have not had a consultant there since 2019.

[38:25] We believe that there may be opportunities with the Corps of Engineers.

[38:29] For example, reallocation of flood pool to water supply in reservoirs like Wright-Patman and with Congress through the Water Resources Development Act reauthorization, which occurs every two years.

[38:42] We also believe it is important to have a regular presence there with our delegations so that if there are future needs, we have ongoing relationships rather than trying to scramble at the last minute.

[38:53] Finally, we know that the regulatory and rulemaking landscape is shifting very quickly under the current administration, and we want to be well positioned to respond or take advantage of opportunities when they present themselves.

[39:06] We have begun to conduct a process similar to that which we undertook in 2023 to hire

[39:12] Hillco.

[39:13] I have met with several potential firms and we have narrowed them to four finalists.

[39:18] Jenna, Billy and I will be traveling to Washington, D.C. in mid-October to meet with members

[39:24] and staff from our legislative delegation as well as with these firms.

[39:29] Two of them are larger firms that have broad-based relationships with members

[39:33] of our delegation as well as committees, the committees of jurisdiction on water infrastructure issues.

[39:40] The remaining two are particularly focused on water supply work with the Corps of Engineers,

[39:45] and both worked on relevant committees in the House and Senate respectively.

[39:50] So that's the direction we're heading in at this time, and we will keep the committee updated as we move forward.

[39:57] I'm happy to take your questions.

[40:02] Okay. Any committee members? Questions for David?

[40:09] Pascal has one comment. I'd like David to clarify for all of our benefit.

[40:14] As I recall, most of the various funds that have been allocated by the state go through Texas Water Development Board or similar agencies that basically loan that money out to the local utility providers.

[40:28] I don't recall much money that's there in the form of a grant.

[40:32] But if that's the case, the ads need to note that that's the process.

[40:38] It's loaned out to local water providers, which keeps the state from bearing anything other than the interim cost of carrying the debt.

[40:48] I don't know if that's a concern for anybody else or not.

[40:53] It's not a big concern of mine.

[40:54] I just don't want to mislead people to think that this may just get spent willy-nilly it doesn't by any means of the, you know, imagination. It's very carefully allocated.

[41:08] Yes, sir. I think that's generally an accurate understanding of the money that goes to the water development board.

[41:15] It is used by the board to back the bonds that entities take out as we apply for money from the board.

[41:28] And there is generally not earmarks, you would say, or grants as you mentioned.

[41:36] We saw some specific projects funded this year, but those, as I mentioned earlier, were already in process and had just bumped up against budget timelines.

[41:49] So in general, we're not – there are no entities pursuing earmarks in the state budget.

[41:55] And yes, the money for water infrastructure runs through the Water Development Board.

[42:01] That's good, David, and I can add a little bit more.

[42:04] So the discussion that we're having, you know, there's funding, the funding that we get through

[42:13] the Texas Water Development Board is a combination of joint funding by the federal government

[42:20] through the Clean Water State Revolving Fund or the Drinking Water State Revolving Fund

[42:25] that's funded through the EPA in the federal budget and then matched with state funds

[42:31] at the state level, so that's kind of a combination type effort in state and federal funding.

[42:37] And then all of the SWIFT program funding that we've gotten associated with Bodark Lake

[42:43] and the Leonard Water Treatment Plant is all only state funding.

[42:47] So there's a combination of things.

[42:50] We've historically not gotten significant grants.

[42:53] The benefit is on an interest rate subsidy, so that's where we get the savings that

[42:59] we get.

[42:59] is there's a subsidy related to the interest rate that we're paying that's below the market

[43:05] value.

[43:06] So that's how we're able to achieve savings.

[43:10] David showed a really informative slide as he was talking through the legislative session

[43:15] that talked about the Texas Water Fund and all the different funds that are under

[43:22] that umbrella.

[43:23] For some of those funds, there are greater grant programs, but they're not ones that

[43:28] we generally participate in, so things like the Rule Water Assistance Fund would have

[43:34] a greater degree of subsidy through grants.

[43:37] But that's really not applicable to us, but could be to some of the communities that

[43:43] we serve.

[43:48] Okay.

[43:49] Any other questions or comments?

[43:52] Any directors?

[43:53] Yeah, Dr. Kelly.

[43:54] I have one.

[43:56] Yes, sir.

[43:57] Director Mayne?

[43:58] David, the no funding for lobbyists that they're pushing for cities and

[44:04] are we affected the district being a district and not being a city or our

[44:09] county or whatever or will that affect us too? Yes sir well it depends what

[44:16] version of the bill is passed. The Senate passed legislation this session

[44:22] in the regular session that that would have included the district and would

[44:27] have limited our ability to hire contract lobbyists.

[44:30] That is the version of the bill, the most expansive version of the bill that the Senate

[44:36] has passed consistently, I believe, for the last four sessions.

[44:42] Any time this, that bill has advanced in the House, it has always excluded the district.

[44:49] And so there are various ways that it has been constrained in the past to take

[44:57] out basically all political subdivisions.

[45:00] We accept municipalities or to focus specifically on tax issues.

[45:05] We, as I said up top, we don't anticipate that the House has changed their position on this,

[45:13] that no legislation moved forward in the regular session in the House.

[45:21] We don't anticipate that it will at this time.

[45:24] But if it did, it would be likely that it would be constrained from the Senate version of the bill, which does include us, but has typically been modified to not include us.

[45:37] Thank you.

[45:40] Okay. I don't see any other hands raised. Anyone else?

[45:48] If not, we'll move on to our last discussion item.

[45:51] Item D is do we have any feedback on the meeting or requests for potential future agenda items?

[46:03] Okay.

[46:03] Okay. If there's no feedback, it is now, according to my watch, 3.46 p.m. and the committee meeting is adjourned.

[46:14] Have a good evening, everyone. Thank you.

[46:16] Take care.

[46:17] David.

[46:18] Great report.

Aug 13, 2025 Legislative Committee Meeting - North Texas Municipal Water District

Transcript