Tyler council approves interlocal agreement with East Texas MUD to resolve overlapping water service areas

The Tyler City Council approved a resolution and interlocal agreement with East Texas Municipal Utility District (East Texas MUD) to settle who will legally provide water service in an area the staff described as "dually certificated," where both the city and the district previously claimed service authority.

Joe Freeland, water legal counsel with Matthews & Freeland, told the council that East Texas MUD had provided water service outside its certificate of convenience and necessity (CCN) and within the city’s CCN, and that the agreement is intended to clarify service rights and a process for future annexation consents. "They were providing outside of where their CCN allowed them to provide, and inside of the city's CCN," Freeland said during his presentation.

The staff presentation and counsel said the interlocal agreement includes (1) identification of the dually certificated area, (2) a process by which East Texas MUD will seek the city's consent for past and future annexations into the district with one exception (a small tract near the city's northeast edge that East Texas MUD will remove from its district), and (3) timelines governing when property owners may request service from Tyler or the MUD. Freeland said the agreement arose after about 18–20 months of negotiations.

Council members asked about the role of the Texas Public Utility Commission (PUC) and consequences if the PUC does not approve relevant actions; counsel said that, if the PUC does not approve, Tyler would retain its CCN and East Texas MUD would not be lawfully allowed to serve in that area. Council members also sought clarification about the distinction between a district "annexing" territory into its boundary versus municipal annexation into the city; counsel and staff explained the difference and the financial powers of a municipal utility district, including ad valorem taxing authority.

Councilmember Curtis moved approval with a second by Councilmember McKellar; the motion carried on a voice vote with no recorded opposition. Staff noted that the city's sewer CCN does not extend to the area in question and that immediate wastewater extension would be cost-prohibitive, though city leaders said they want to preserve the option for future sewer projects if financially viable.