Local governments often operate without great transparency or oversight, but “invisible governments” tend to take advantage of that to run amuck. Case in point: the North Texas Municipal Water District (NTMWD).

The NTMWD contracts with 13 “member cities” in the Dallas-Fort Worth Metroplex (“the Metroplex”) to provide water and wastewater services to residents. The contract includes a severely outdated clause called “take-or-pay” that requires member cities “to pay for the maximum amount of water it’s ever used in a year” while disregarding actual consumption rates.

Four member cities spoke up about the inefficiencies in the contract and how some contractual terms are causing extreme financial burden.

For example, the city of Plano had a peak water usage year in 2001 when residents were able to siphon water freely every day of the week. That freedom came to an end in 2015 when the NTMWD implemented twice-a-week water limitations in order to conserve resources. This restriction dramatically cut the city’s total water use, but not its minimum requirement.

In fact, according to the Plano city manager, residents of Garland, Richardson, Plano, and Mesquite have now paid $275 million for billions of gallons of excess water.

Now, the city of Rowlett, the largest customer city of the NTMWD, is speaking out in support of these four member cities. In a letter to the Public Utility Commission (PUC), Rowlett Mayor Tammy Dana-Bashian noted that the fundamentally flawed “take-or-pay” structure caused Rowlett to pay nearly $20 million for over 10 billion gallons of excess water.

But the NTMWD claims it has a good reason for inflated water rates: they help subsidize the expensive price-tag of building water infrastructure. In fact, the District is currently constructing a $1.5 billion reservoir, the first new major reservoir in Texas in the last 30 years. However, overly-expensive water rates and reservoir construction costs unfairly disadvantage residents in larger cities and are inherently inefficient at conserving water.

With water rates increasing at 5 to 10% per year, residents are frustrated with exorbitant water bills and want to rewrite the contract so that they only pay for water actually used. However, amending the contract’s terms requires consent from all 13 member cities.

Growing cities, such as Frisco or McKinney, favor the structure because it keeps their costs down, but cities whose population growth is stagnating, like Plano, are paying the price. Unfortunately, this means that there is little possibility of getting all 13 members to agree.

The contract’s “take-or-pay” structure and requirement of unanimous consent for amendments are fundamental problems causing financial burden and headache to cities that are being overcharged and taken advantage of.

This “invisible government” needs scrutiny, constant oversight, and a lot more transparency in order to provide North Texans with reasonable water rates and the services they need. With the possibility that the PUC will soon hold a hearing to change this unfair “take-or-pay” structure, there is hope for change to these types of contracts that are unfair to its members and customer cities and all Texans.