It's in the Water (1998)

A hidden well of gay-lesbian culture comes bubbling to the surface of a small Western town in this independent comedy/drama. In the Texas town of Azalea Springs, life for the most part still seems stuck in the 1950s; the women have big hair, they join the Junior League, and they don't buck the status quo. Also, homosexuality is something that just isn't talked about, so many of the townspeople are shocked when Hope House, a hospice for AIDS patients, opens in their little town. Alexandra "Alex" Stratton (Keri Jo Chapman), who is stuck in an unhappy marriage with her boorish husband Robert (Matthew S. Thompkins) and has an overbearing and prejudiced mom, Lily Talbot (Barbara Lasater), decides to volunteer at the hospice, which scandalizes most of the other ladies of the League. Alex soon discovers that her best friend from high school, Grace Miller (Teresa Garrett), is working there as a nurse; Grace recently went through a difficult divorce when her husband discovered that Grace was having an affair with one of her co-workers...who happened to be female. Alex soon finds herself looking at Grace in a new way, and friendship gives way to something much deeper. Meanwhile, Spencer (John Hallum), a very out-of-the-closet friend of Alex's, begins joking with people that homosexuality is being spread by something in the town's water supply. With Alex and Grace's affair the hot item in the town's gossip mill and newspaperman Mark (Derrick Sanders) falling in love with artist Thomas (Timothy Vahle), this witticism finds its way to many gullible ears, and fire and brimstone preacher Brother Daniel (John Addington) forms "Homo-No-Mo," a support group for gay men who want to return to the straight and narrow, so to speak. The supporting cast features Jerry Haynes, best known as "Mr. Peppermint," the host of a syndicated children's television series; he's also the father of Gibby Haynes, sometimes film actor and lead singer for the alternative rock band The Butthole Surfers.