El Paso City Council Work Session | December 15, 2025

The El Paso City Council convened on December 15, 2025, for a work session to review the proposed budget and rates for the El Paso Water Utility for the 2026-27 fiscal year, discuss a Memorandum of Understanding (MOU) with Concanaco Servitur Mexico, and receive a fourth-quarter financial report for FY 2024-25. The session featured extensive deliberation on infrastructure investments, rate increase justifications, and the governance structure of the Public Service Board.

Consent Calendar

• No routine approvals or unanimous actions were listed on the consent calendar for this session.

Public Comments & Testimony

• Mary Woodruff (Sembrando Esperanzas): Expressed strong opposition to the proposed utility rate increases, arguing they disproportionately burden single parents, the elderly, disabled residents, and those on fixed incomes. She advocated for the termination of a contract with a proposed Meta data center, stating it would guarantee higher utility costs for working families. She urged the council to reject further utility increases and reconsider community engagement processes.
• Patricia Osmond: Challenged the utility's claim that a Meta data center would not impact the budget, arguing that a facility consuming 400,000 to 550,000 gallons daily represents a significant increase (approximately 35-50%) of the city's daily water production. She criticized the community engagement survey (500 respondents) as insufficient for the city's population. During Item 4, she raised concerns regarding transparency in Neighborhood Associations (NIP), alleging they lack true representation and that funds are being misaligned without community awareness.

Discussion Items

El Paso Water Proposed Budget and Rates (Fiscal Year 2026-27)

• Jeff Tepsick (El Paso Water President/CFO): Presenting a proposed budget of $1.2 billion for Water and Wastewater and $95 million for Stormwater. He stated that a 12% overall rate increase is necessary to address a $300 million Pure Water Center project, a $1.2 billion Bustamante Plant expansion, unfunded mandates (SB3 requiring $150M in generators), and anticipated growth on 4,000 acres north of Montana. He positioned the utility as non-profit with no shareholders, where all funds go to system maintenance and investment to avoid consent decrees like those seen in Houston.
• Representative Chavez: Expressed concern regarding the 12% rate increase, noting it is a heavy burden on constituents despite necessary infrastructure work. She clarified that the increase funds a combination of current and future projects, not past projects. She noted that data centers have no direct impact on the current proposed budget.
• Representative Nino: Questioned the affordability of current rates compared to other cities. He asked about the lack of income-based affordability programs, noting the city has been unsuccessful in securing state legislative authority for such programs. He requested data on late payments and future debt service coverage.
• Representative Chavez (Governance): Voiced strong disagreement with the Public Service Board's (PSB) stance on accountability, arguing that stating the board is not accountable to voters is offensive to constituents. She criticized the timing and location of public meetings, suggesting the utility operates more like a private entity than a public utility regarding outreach.
• Representative Canales: Defended the independence of the PSB, explaining it was created in 1952 to remove water governance from the political process to ensure reliability and prevent the raiding of funds. He argued that failing to invest in infrastructure leads to deferred costs that are far more expensive in the long run. He acknowledged that impact fees have not adequately covered growth costs, contributing to the rate increase.
• Representative Fierro: Queried the impact of impact fees on rates, noting that a previous 28% increase (vs. a recommended 1,000% on the East side) shifts the burden to existing residents. He highlighted that the city council's failure to adjust impact fees annually perpetuates a cycle of subsidization.
• Representative Rocha: Inquired about the specific impacts of SB3 and land sales funding. He noted that land sales provide 5% back to the city and that the $150M investment in generators for SB3 was an unforeseen unfunded mandate. He asked about the cost of the new headquarters building, confirming it is funded by ratepayers.
• Representative Trejo: Challenged the utility's communication timeline and the lack of a tiered rate increase approach. He asked for specific dollar amounts regarding the consequences of not passing the budget, which the presentation team stated would be catastrophic but not quantified.

Memorandum of Understanding with Concanaco Servitur

• Israel & Adriana (Economic Development): Presented an MOU connecting El Paso with Concanaco Servitur, Mexico's largest network of chambers of commerce. They stated the agreement aligns with the city's international policy agenda and imposes no financial obligation. They noted stakeholder support and that it facilitates trade, investment, and entrepreneurship.
• Representative Chavez: Offered cautious support, reiterating the need to ensure the partnership brings tangible business benefits back to El Paso rather than serving as a consultant for Mexico. She emphasized the fiduciary duty to taxpayers.
• Representative Limon: Expressed strong support, praising the team for overcoming setbacks and commended the potential for a win-win binational economic ecosystem.
• Council Action: The council approved unanimously (6-2) the resolution authorizing the City Manager to sign the MOU.

FY 2024-25 Fourth Quarter Financial Report

• Robert (Finance Director): Reported that revenues finished 0.1% under budget, while expenses exceeded the budget by 1.1% (approx $6.4 million). He stated that the use of fund balance (rainy day fund) was $6.9 million, reducing the number of operating days from 83 to 73 days. He explained that the decrease in unrestricted fund balance is due to the requirement to transfer funds into the restricted category to meet the city charter's 5% reserve requirement.
• Representative Nino: Questioned the accuracy of franchise fee and sales tax projections, noting the difficulty in forecasting revenues 18 months out.
• Representative Chavez: Asked about the outlook for the upcoming FY 2026 budget and the impact of utility rate increases on city operations. She expressed concern about the decline in operating days and the need to avoid using one-time revenue for ongoing costs.
• Representative Trejo: Inquired about the 18% decrease in licenses and permits revenue, which staff attributed to a slowdown in residential building permits. He discussed the challenges of salary compression and utility cost increases.
• Representative Rocha: Asked for specific data on deferred maintenance years and whether future maintenance costs are built into long-term forecasting. Staff explained that most maintenance is reactive, though they are working to improve facility inventory systems. Staff identified available revenue as the greatest challenge due to legislative limits.

Key Outcomes

• Item 2 (MOU): The City Council approved unanimously the resolution to authorize the City Manager to sign the MOU with Concanaco Servitur Mexico.
• Item 3 (Financial Report): Council reviewed the fourth-quarter financials; no vote required as this was an informational update. The report highlighted a reduction in financial reserves (operating days dropped from 83 to 73).
• Executive Session Actions:
  • EX1 (Villegas vs. City): Council voted 6-2 (with one abstention) to authorize the City Attorney to reject a settlement offer and participate in mediation regarding the case Anaí Chavez Villegas versus City of El Paso.
  • EX2 & EX3: No action was taken regarding rate applications for El Paso Electric and Texas Gas Service Company.
• Work Session Adjournment: The work session was adjourned at 2:24 PM.
• Upcoming Events: The Public Service Board is scheduled to vote on the El Paso Water budget proposal on January 14, 2026, with new rates effective March 1, 2026.

Note: Public comment regarding the NIP project transparency led to a recess of the council meeting. The agenda item was returned to after a one-hour recess.