Legal dispute ties up Bloomington water board
Feb. 11, 2018 at 8 a.m.
Updated Feb. 11, 2018 at 8:02 a.m.
Hurricane Harvey's winds and rains had no mercy for one of Victoria County's poorest communities.
In Bloomington, a rural unincorporated community of about 2,500 residents, corrugated metal roofs were ripped from dilapidated homes, and trees crashed onto trailer houses.
County Commissioner Danny Garcia, whose district includes the community, estimated 35 percent of residents were left homeless.
Garcia, however, didn't want them to get left behind. So he pleaded with the local school board to consider selling land - 4 acres that could be developed into affordable housing.
The school board considered it, but Garcia ran into a problem - something that could stop the development from moving forward.
"The problem is now becoming that the water district may be at capacity with their sewer plant because of all the growth," Garcia said. "That may cause us some issues where we can't build homes for families."
Within the past several years, dozens of apartments were built in Bloomington when transient workers flocked to the area in the midst of an oil boom.
In the years that followed, the water district struggled to keep up with new demand while also maintaining aging infrastructure.
In 2015, the district hired a consultant to study whether it was charging customers enough to cover its costs. The study said some customers weren't paying their fair share, so the district placed customers into commercial or residential categories based on their burden to water and sewer lines.
ALMS, a nonprofit that managed dozens of apartment rentals, was dubbed a commercial customer. But ALMS said the rates were unfair and started a legal fight that now has implications for the entire community's future.
"If we didn't have ALMS suing us, we could improve our water lines and we could improve our sewer lines," said Noemi Troncoso, the water board president.
But the nonprofit's attorney, Bernard Klimist, argues the district is discriminating against ALMS and its tenants.
Last spring, ALMS sued the water district, alleging it was charged significantly higher rates than other water customers. The lawsuit accused the district of overcharging ALMS via illegal meter up-sizing, improper rate classification and excessive billing rates.
The district charged ALMS up to five times more than other similar rental properties, Klimist said.
"The biggest issue with the water district is the discrimination," Klimist said.
But Klimist said there were deeper problems at the district.
He pointed to blog posts, which appear to be written using aliases, that contain unverified accusations against board members ranging fraud to misusing funds.
The author of the blog posts did not respond to requests for comment.
Klimist also accused one board member of taking advantage of water rates, saying family members of Lucy Morales, who serves on the water board, were charged cheaper rates at their rental properties than ALMS was.
"If you verify that No. 1, they are sitting and elected on the board, No. 2, they have family members who own, develop and benefit from their decisions about the rates, you don't even have to get anywhere else," Klimist said. "The next question is: Why isn't anybody looking at that?"
Morales would not comment. But Mike Gershon, an attorney representing the Bloomington water district, said ALMS fought to have Morales removed from the board in 2014, saying one of her relatives was a property developer.
But after looking into rules surrounding the issues, the attorney found that Morales' relative, who owns a mobile home park, didn't fit the Texas Water Code's definition of a developer, he said.
According to that code, a developer is someone who owns land and has divided the land to build a subdivision, lots or properties intended for public use.
About three years later, Gershon is now fighting ALMS in a different legal battle that centers on what the nonprofit will pay for water.
Before the new commercial rates took effect, all customers paid the same rates for water, Gershon said. But in 2015, the consultant hired by the district analyzed operation costs and customers' data and said ALMS should be charged commercial rates.
In general, customers can appeal the rates with the Public Utility Commission of Texas, which is in charge of deciding if rates are fair, said Gershon. But ALMS didn't do that and instead sued the district.
"ALMS never appealed the rates," Gershon said. "We never faced a challenge to how these rates were set up."
Troncoso, the water board president, said the district tried to be as fair as possible when setting the rates, which is why the board hired a consultant. ALMS still owes the district about $40,000, she said.
"They don't pay," Troncoso said. "But then their tenants, they better pay or they get thrown out."
After months of negotiation meetings, the district and ALMS haven't reached an agreement. Troncoso said she recognizes how the lawsuit is hurting the district at a time when Bloomington needs housing more than ever. Garcia knows that all too well.
The county commissioner was hoping the land owned by the Bloomington school district could be developed into 16 to 20 homes - homes for families in desperate need.
Now, he's trying to figure out a way to make it work - even if the odds are against him.
"That's going to cause us some issues," Garcia said. "We don't know yet."
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