The San Antonio Water System is pushing back against a charter amendment petition in a legal matter related to the utility’s bonds.

The SAWS Accountability Act threatens the “financial viability and security” of more than $3 billion in SAWS bonds by conflicting with the authority of the SAWS board, which has “full power and authority to regulate the system” under City ordinances. That’s what SAWS lawyers claimed in a filing this month in 345th District Court in Travis County.

The utility isn’t suing the anti-SAWS coalition of San Antonio environmentalists, conservative tax watchdogs, and rural organizers opposed to SAWS’ Vista Ridge pipeline. In February, the group launched a petition drive that would cap the SAWS CEO’s pay at 10 times that of the lowest-paid SAWS employee, ban lobbying by SAWS, and enforce existing term limits for SAWS board members. Petitioners are seeking 20,000 signatures to put the measures on the May 2021 ballot.

Instead, on Dec. 10, SAWS’ lawyers filed a petition under Chapter 1205 of the Texas Government Code, also known as the “Expedited Declaratory Judgments Act.” Public entities often use the law as a “tool to address a wide range of challenges to all aspects of public securities,” according to one Austin-based law firm’s report on the statute. Lawyers with the local office of Norton Rose Fulbright, a London-based international business law firm, and San Antonio public finance firm McCall, Parkhurst, and Horton are serving as SAWS’ outside counsel.

In an emailed statement to the San Antonio Report on Tuesday, SAWS officials said “the judicial proceeding is not seeking judgment on the charter amendment,” but instead “simply utilizing a well-established legal process to validate that the bond contracts mean what they say.”

SAWS officials addressed the charter amendment briefly in their statement, saying that “it impacts ordinances authorizing SAWS to issue debt and SAWS’ borrowing ability.”  However, SAWS’ lawyers discuss it more extensively in the 26-page legal filing, which includes the phrase “charter petition” 24 times.

“The City and the [SAWS board] are obligated to the holders of the public securities through each covenant, warranty, and representation contained in the ordinances,” the filing states. “But the charter petition contests the validity of the ordinances, the covenants therein, and by extension, the public securities themselves.”

By “public securities,” SAWS is referring to 39 different revenue bonds and commercial paper notes, financial instruments that allow municipal government entities such as SAWS to borrow money. Together, they add up to more than $3.2 billion in obligations.

“In exchange for loaning SAWS money at low rates, bondholders need assurance that SAWS’ debt is not exposed inappropriately to ambiguity or unfounded or illegitimate risk,” SAWS officials said in the Tuesday email.

Petitioners say SAWS leadership is to blame for any risk to the utility’s bondholders.

In an email Tuesday, Fernando Centeno, a San Antonio community economic development consultant and member of the SAWS Accountability Act group, said the main risk to SAWS bondholders are “not petitioners who are trying to find better solutions.” Centeno cited instead the $2.8 billion that SAWS must pay over the next 30 years for water from Vista Ridge, as well as “ratepayer inability to pay due to reduced household incomes and rising monthly water bills.”

A hearing on the issue is set for 10 a.m. on Jan. 4.

Brendan Gibbons

Brendan Gibbons

Brendan Gibbons is the San Antonio Report's environment and energy reporter.