Second lawsuit filed against City of El Paso over franchise fee

EL PASO, Texas (KVIA) -- ABC-7 has confirmed a former El Paso representative at the city and state level has filed a lawsuit against the City of El Paso over what he's called an "unlawful tax."

Former state rep. Joe Pickett told ABC-7 he learned about a second franchise fee on the El Paso Water bill while fighting a lawsuit against the city regarding another franchise fee. A district judge ruled in Pickett's favor in Aug. 2024, calling the $6.00 monthly fee "unconstitutional."

Both fees are located on the water utility bill; one is on the side that lists the fees for El Paso Water, the other is on the side that lists the fees for the City of El Paso's Environmental Services Department.

According to this second suit, the City created the "El Paso Water Franchise Fee" ten years ago. And together, both fees have garnered $20 million for the City each year since 2014.

Included in the lawsuit is a letter dated Aug. 22, 2014 from the Public Service Board, which oversees El Paso Water, to the City of El Paso.

The letter is titled, "Probable illegality of 'franchise fee' for El Paso Water Utilities resulting from City Council Budget Resolution." 

In the letter, the chair of the water utility called the fee an "unconstitutional tax," and added, "...imposing an arbitrary 'franchise fee' of $3.55 million is not only subject to constitutional challenge but additionally may violate city bond covenants."

The Public Service Board then asked Mayor Oscar Leeser to veto the city council budget proposal from Aug. 19, 2014. This was during Leeser's first term as mayor.

Pickett said that letter is evidence that the city was "forewarned" that it was "on dangerous grounds."

"The city has just charged themselves," Pickett said. "And it may not seem like a lot of money. ...the $6 (franchise fee), and this one's like $1.77 ... the two fees collectively raised $20 million that the city has just found a way to charge to help balance their budget. They've been doing this now for almost 10 years," he added. "I mean, just be honest about what you're doing."

ABC-7 reached out to Mayor Leeser, but was told he had not seen the lawsuit, but cannot comment on ongoing litigation.