Mexico's Jalisco water authority Siapa faces dissolution following its alleged misuse of a 1.2bn-peso (US$101mn) loan from IDB, paper El Informador reported.
Local mayor and Siapa chairman Héctor Vielma will present a motion at the utility's next board meeting calling to dissolve the company and create a new autonomous body to replace it.
The alternative proposal is a complete restructuring of Siapa's workforce, including the removal of senior employees.
Vielma's proposal has met with mixed reviews from local mayors, while Jalisco state governor Emilio González is said to support any measure which cleans up Siapa's finances.
Guadalajara mayor Jorge Aristóteles has opposed the move, saying that the creation of a new organization would cause "paralysis" in the provision of water, Milenio reported.