Missouri City considers limited sale of groundwater over‑conversion credits; GRP recommends cap of 5 billion gallons

Missouri City council discussed authorizing staff to seek potential buyers and negotiate the sale of a portion of the city’s groundwater over‑conversion credits during its Aug. 18 special meeting.

Assistant Utilities Director Nicholas Cook explained the credits are part of the Fort Bend Groundwater Reduction Plan (GRP) compliance program. "Currently, the GRP owns 19,000,000,000 gallons of over conversion credits, and they were purchased at a rate of 2¢ per thousand gallons," Cook said, describing the purchase as an insurance policy that protects the city from higher disincentive fees if groundwater pumping exceeds permitted limits. Cook said the disincentive fee currently is $6.50 per thousand gallons.

Cook said the GRP oversight committee recommended council allow staff to pursue sales of up to 5,000,000,000 gallons at no less than $3.50 per thousand gallons. The immediate market interest the city has identified so far is for 20,000,000 gallons. At a sale price of $3.50 per thousand gallons, a 20,000,000‑gallon sale would yield about $70,000; at $4.50 per thousand gallons it would yield about $90,000, Cook said.

Shashi Kumar, who spoke for the GRP oversight committee, described the committee’s approach as conservative and said the city’s banked credits provide multi‑year insurance. "We have banked enough credits, 19,000,000,000 gallons, which can supply even without anything for 3 plus years of water," Kumar said, adding that selling a portion of the credits could help stabilize future water rates by adding revenue to the GRP fund.

Council members pressed staff on risk and timing. Cook said the city uses roughly 5,000,000,000 gallons per year (combined groundwater and surface water) and that if the 2027 regulatory threshold were in effect today the city’s credits would cover conversion needs for roughly 27 years. He said the GRP recommendation to cap sales at 5,000,000,000 gallons preserves a large reserve (roughly 14,000,000,000 gallons remaining after a maximum sale) while allowing the city to monetize excess credits conservatively.

The GRP oversight committee membership was described in the meeting: a city representative (Shashi Kumar), a converting member (Coral Bulls, representing Sienna Regional MUD) and a non‑converting member (Morris Mitchell, representing Thunderbird). Cook and other staff noted that Fort Bend Water Authority and several GRPs in the county also hold credits; the Fort Bend Water Authority has sold credits in the past.

At the end of the item a motion to authorize staff to seek and negotiate sales was made by Council Member Boney and seconded by Council Member Riley; the transcript records the motion and the request to vote but does not record the outcome of that final vote.

Cook outlined next steps if council approves: staff would solicit and negotiate offers, finalize sales and deposit proceeds into the GRP fund to support water projects and rate stability. Council members asked staff to remain conservative and not sell so many credits as to jeopardize the city’s long‑term insurance against higher disincentive fees.