CORPUS CHRISTI, Tx — Corpus Christi residents will pay higher water rates regardless of whether the city's controversial $1.189 billion Inner Harbor desalination project moves forward—but canceling it could leave them paying for nothing while facing potential water shortages.
Documents obtained by 6 Investigates reveal that residential customers inside city limits using an average of 6,000 gallons a month face an $8.04 monthly rate increase for 10 years if the project is canceled, compared to an anticipated monthly increase of $11.38 if it continues—a difference of $3.34. Meanwhile, large industries and wholesale customers outside city limits would pay nothing if the project is canceled due to Public Utility Commission rate methodology.
This information comes as conflicting information from the Texas Commission on Environmental Quality (TCEQ) has created confusion about whether the project even has valid permits to proceed.
TCEQ's Mixed Messages Create Permit Confusion
Email exchanges obtained by 6 Investigates show a TCEQ employee repeatedly told a resident between March and July that the Inner Harbor project's discharge permit was "not authorized" and "has not yet been issued."
In a July 31 email, the TCEQ employee wrote: "Although it indicates 'active' the permit is not authorized due to the pending rehearing requests. This situation with this permit is very uncommon and our databases may not have a good description."
However, when pressed by 6 Investigates to explain these contradictory statements, a TCEQ spokesperson wrote, "The Commission issued the permit on March 18, 2025. There are no pending motions for rehearing. All motions for rehearing were denied by operation of law on May 12, 2025, at which time the Commission's decision to issue the permit became final and appealable."
Corpus Christi Water COO Drew Molly confirmed the city's position on the permit status. "The permit was issued on March 18th," Molly said. "We have the ability to start construction immediately."
When confusion arose about conflicting information from TCEQ, Molly said the city reached out directly to agency leadership. "We reached out to the leadership team of TCEQ, so the director," Molly said. "Their acknowledgment from the TCEQ leadership team is that you have an active permit that has been issued and you can start construction as soon as you would like to."
The city received written confirmation from Cari-Michel La Caille, director of TCEQ's Office of Water. "She sent us an email that basically said, hey, you know, your permit is active and it's been issued," Molly said.
Regarding the contradictory information provided by a TCEQ staff member, Molly acknowledged the confusion: "Clearly there was something that was said to somebody that was not accurate and I think that ultimately, you know, the reality is, is that we've got a director of TCEQ telling us and actually putting it in writing that we've got a permit that was issued."
In June, Hillcrest Residents Association appealed the commission's decision in Travis County District Court and that litigation is pending. 6 Investigates was directed to the Attorney General for further questions.
KRIS 6 News has reached out to the Office of the Attorney General but has not yet received a response.
TCEQ has not explained why its employee provided differing information to the public, nor why the agency updated the permit status in its system just hours after being contacted by 6 Investigates.
Ratepayers Stuck With Bill Either Way
The city has already sold $222 million in bonds that must be repaid over the next decade regardless of the project's fate, according to an internal city memo.
"If Council decides to cancel the Inner Harbor Project, the city would be left without a fully permitted alternative," Molly wrote in an August 1 memo. "None of the current potential projects being considered have the required permits needed to move forward."
The memo noted, "Permitting processes are outside of the City's control, and therefore timelines are unpredictable. The Inner Harbor Project's permits took five years to obtain."
Contractor Warns of "Far-Reaching Consequences"
Kiewit Infrastructure South Co., the project's design-builder, warned in an August 1 letter that the 30-day suspension ordered by City Council on July 29 could trigger massive delays and cost overruns.
The contractor cited potential loss of critical equipment, including high-voltage transformers from Siemens that have been in production for months. If the city loses its place in line, Kiewit warned of delays exceeding 13 months.
"Schedule will certainly slide right," warned Aquatech, a key supplier, adding that pauses would lead to "loss of interest from vendors."
The company employs more than 100 managers and engineers on the project who may be reassigned to other work if the suspension continues.
"To mitigate the costs of suspension, Kiewit's management and engineering staff will necessarily need to be re-assigned to other Kiewit work. With a booming construction market and a current backlog of over $6B of work in Texas alone, we anticipate this will happen quickly," Kiewit Project Executive Tony Joyce wrote in a letter to the city.
Alternative Projects and Moving Forward
While council members have called for exploring alternatives, none have the necessary permits:
• Nueces River Groundwater Wells: $15.2 million spent, awaiting permits
• South Texas Water Authority partnership: No firm costs or timeline established
• Evangeline Groundwater Project: Still in negotiations
• CC Polymers Desalination Plant: Recently proposed, no permits
Molly emphasized the importance of having multiple water solutions. "I think really for our city and for our region, we need to have multiple solutions. We need to have a seawater solution, but we need to have others as well," he said. "I think groundwater is something that we need to have a groundwater supply."
He also stressed the critical need for a second water treatment facility: "Our city needs a second water treatment plant that's standalone from the one and only plant that we have today. We have all of our water comes through one single point of production, and that is a huge potential risk for the entire region."
Regarding cost management during the project pause, Molly said: "We are doing everything we possibly can to keep these costs as low as we possibly can. The project is going to cost the ratepayer and we're gonna drive these costs down as much as we possibly can. We still have opportunities to drive costs down. I will say this pause doesn't help us a whole lot, but I still think we have an opportunity to continue to drive the cost down."
Council Faces August 28 Deadline
The suspension expires August 28. Even if work resumes immediately, Kiewit warned the one-month suspension will likely cause at least a three-month delay to the overall schedule.
"This suspension could have far-reaching consequences beyond this project if it negatively impacts the market's perception and/or interest in bidding future City projects," Joyce warned.
According to city documents, if the project is canceled:
• Residential customers (inside city limits): $8.04/month increase for 10 years • Commercial customers (inside city limits): $146.06/month increase based on average usage • Large industries (outside city limits): $0 • Wholesale customers (outside city limits): $0
If the project continues:
• All customers: $11.38/month increase for residential users
The burden of cancellation falls entirely on Corpus Christi residents and businesses, while major industrial water users and other cities served by Corpus Christi's wholesale contracts would pay nothing toward the abandoned project's debt.
When asked about what residents should know about the financial implications, Molly said, "What's really important is that big projects like these takes time to get from the starting blocks to the finish line and we are doing everything we possibly can to keep these costs as low as we possibly can."
