by KIM HILSENBECK
Though residents of the Indian Paintbrush and Amberwood neighborhoods voiced strong opposition, the Kyle City Council agreed Tuesday night to a settlement with Monarch Utilities, a private water utility that serves about 900 residents in northeast Kyle.
The Buda City Council also approved the settlement, which would substantially reduce the proposed Monarch rate increase from the initial 62 percent to approximately 14 percent. It would also save the cities legal fees and ensure the rate increase would not be retroactive to the date of filing by Monarch.
However, Kyle Mayor Lucy Johnson, City Manager Lanny Lambert and most council members made it clear they favored the settlement only because the alternative would be to take the fight to the Texas Commission on Environmental Quality, where few felt the city would win.
To some, taking the settlement seemed the lesser of two evils, and several council members openly voiced their personal distaste for voting in favor of the settlement.
Jim Boyle, a lawyer representing Kyle, Buda and several other municipalities in the Monarch settlement case, said the probability of success was low if the city did not accept the settlement and went to TCEQ instead.
“We’ll likely end up in a worse situation and be doing it alone,” Boyle said. “I don’t like the rate increases, but that’s where we are.”
Council member Diane Hervol asked Boyle if Monarch justified the rate increase, aside from their answer that it was necessary for infrastructure upgrades.
“In some parts they did, in some they didn’t,” Boyle said.
“I understand the desire to stand on principle and fight Monarch,” Johnson said. “But I don’t feel any reasonable chance we’ll come off with a better deal. The goal of council should be to rid the city of Monarch.”
Lambert told the council he contacted Monarch Vice President Charles Profilet earlier Tuesday to discuss the option of purchasing the firm’s water system but said the firm’s top executive would not agree to a meeting.
According to Lambert, Profilet said, “We’re in the business of acquiring more customers and water systems. We’re not interested in selling.”
Lambert said Monarch is not a friend to the city of Kyle.
“They are an impediment to economic development; they are harmful to us.”
He told council members that Monarch’s base rate and gallon charges are 44 percent higher than Kyle’s water rates, even with the most recent increase.
During the public comment portion of the meeting, several residents from the affected communities said the real solution is to change state laws through the legislative process. Several council members agreed.
Another solution presented was to pursue dual certification – essentially, laying separate water lines next to the existing system and offering customers another option.
Lambert said he would like the city to explore that option.
“We should give customers a choice between them or us,” Lambert said.
Following the meeting, Kyle spokesman Jerry Hendrix said he wants to be clear the city does not want Monarch in Kyle.
“We want them to know it and their investors to know it,” Hendrix said.
Buda City Council members were less scathing in their assessment of Monarch, which serves fewer customers in Buda than in Kyle. But council member Ron Fletcher said he expects Monarch to try to raise rates again when the moratorium on additional rate increases expires in 2014.
“It’s a good deal for now, but there’s a tsunami arriving on Jan. 1, 2014,” he said.
Editor Wes Ferguson contributed to this report.
