The city of Magnolia in Texas has agreed to a settlement with three churches in the area following a lawsuit over the higher rate in its water system that they were being charged compared to other local businesses. The three churches -Magnolia Bible Church, Magnolia's First Baptist Church, and Believers Fellowship- agreed to drop their lawsuit as part of the settlement.
According to the Christian Post, the Magnolia government had agreed to modify its water rate system that previously charged the churches a higher rate compared to other businesses in the area. City officials agreed that houses of worship should be charged equally for their water consumption, causing the three congregations to drop the lawsuit. The three churches were represented by First Liberty Institute of Plano, Texas and the international law firm Baker Botts.
"Our clients are thrilled that, because of this agreement, they can turn to what they do best: care for their community in partnership with the city," First Liberty Institute's Jeremy Dys said in a statement released on Thursday.
The three churches filed a lawsuit back in May 2019, claiming that a local ordinance for tax-exempt entities had increased water use fees by changing their status from "commercial" to "institutional."
The Texas ordinance was adopted in 2018 and was geared towards helping close a financial gap between the increasing cost of providing water with revenues that were not improving fast enough. The lawsuit argued, "This new 'Institutional Water Rate' marked a dramatic shift in the status quo. Under the city's old water rate, 'institutional' users such as churches paid the same rate as commercial users."
However, the city forced religious institutions to pay a significantly higher rate than commercial businesses under the new policy. The city responded by threatening the churches with contempt of court regarding an earlier decision, to which the church filed for a new trial over the city's water use ordinance.
A district court granted a request for a new trial, which was then upheld by the Texas Court of Appeals, Third District as stated in a per curiam opinion released in December 2020. Chief Justice Jeff Rose, in a concurring opinion to the Appeals decision, wrote that "Invalid service prevents a party from participating in a trial on the merits, and the remedy for that denial of due process is a new trial."
According to The Texan, the new water rate system impacted the Magnolia Independent School District's budget when it was implemented, increasing the district's annual water costs from $180,000 up to four times, to $720,000. City officials claimed that they system was meant to help tax-exempt organizations share the costs.
In addition, the Texas Senate Committee on Water and Rural Affairs previously considered a measure that would have required cities to charge non-profits and businesses the same rate for utilities. This measure passed the Senate but stalled in the House.
