The Asheville Citizen-Times (North Carolina)
BYLINE: By, Mark Barrett
Work on handing control over the region’s largest water system to a sewerage district that serves 51,000 customers likely would begin with a mountain of questions and few answers.
Would rates increase for users – particularly business customers who absorbed a 10 percent rate hike last year?
Would improvements to an aging water system continue?
Asheville in the past six years has spent $40 million updating the water system it manages now, replacing lines that in some cases were a century old.
A controversial draft report issued by a state legislative study committee last week calls for merging water and sewer services in Asheville and surrounding areas – but it doesn’t say how.
State Rep. Tim Moffitt, R-Buncombe, has pushed for the change and served as chairman of the Legislature’s Committee on Metropolitan Sewerage/Water System.
Moffitt said he wanted to make sure water customers living outside of Asheville wouldn’t face the possibility of being charged higher rates than city residents.
The report from his committee calls for Asheville and the Metropolitan Sewerage District to work out the details of handing control over of the city water system to the sewerage district, something city officials oppose.
That could leave water customers – based on the sewerage district’s history – facing steadily increasing rates.
And, industrial users probably would not see any rollback of a city government effort to make them pay a greater share of the cost of their water. The sewerage district is doing the same thing for sewer service rates.
The Committee on Metropolitan Sewerage/Water System report contains no legislation mandating the transfer. That could happen in 2013, but there would be no guarantee of passage in the General Assembly.
Nor does the report say how much the city should be paid for the system – or whether it should be paid at all.
Fill in the blank
The report gives local officials a chance to make many decisions about a transition, said Steve Aceto, an attorney who chairs the sewerage district board and who says he is neutral on the prospect of consolidation.
“We can write the ticket ourselves,” Aceto said. “Personally, I’m really looking forward to getting the conversation started and I desperately hope that politics won’t steal this opportunity.”
Moffitt said he is willing for local government officials to work out the terms of combining the water and sewer systems.
“Should the interested governments craft their own solution for consolidation, which achieves all the objectives of the committee, before the 2013 North Carolina General Assembly convenes, due consideration would be given to the local plan,” the report says.
“Action will not be taken if the parties are engaged in good-faith negotiations on this matter,” the report says.
Moffitt said Friday he wants to see the type of arrangement that existed with past jointly controlled water systems.
“I would really like them to reset to 1995 and work out a solution. If they don’t, it would leave us no choice in Raleigh but to consider drafting legislation to make it happen.”
Asheville city government, Buncombe County and Henderson County have tried to work out differences before only to have the General Assembly come in and impose its will in the end.
The three governments formed a regional water authority in 1995 that unraveled in 2004 when City Council voted unanimously to pull out of the agreement in a year’s time.
The General Assembly passed laws in 2005 that, underlining a decades-old law, prohibited the city from charging more for water outside the city limits than inside and kept the city from using water service as an incentive for property owners to agree to annexation.
City-county discussions to settle water issues ensued but yielded no agreement. The city challenged the new laws in court and lost.
City leaders would have more incentive to compromise this time with the threat of General Assembly action hanging over them.
In comments Friday, Moffitt praised city workers who operate the system.
“I give a lot of credit to the very professional staff in the water resources department because it is a lot of those folks who have done a very good job,” he said.
But his committee’s draft report lays virtually all of the blame for its push for consolidation at the city’s feet, saying city government has “intentionally failed to fulfill contractual obligations” and “refused to reach a reasonable agreement with Buncombe County.”
Aceto says any new local talks could include considering consolidation of other municipal water systems with Asheville’s. Buncombe County’s small towns get sewer service from the sewerage district but generally operate their own water systems, although many buy water from Asheville.
“There just wasn’t room for that conversation,” until now, Aceto said.
The MSD way
Metropolitan Sewerage District control of the water system could work well, Aceto said, but he said there has not been enough study or community conversation yet to answer questions about things like rates or expansion policies.
“We could make it work, but we’re going to have to have a conversation,” he said.
District General Manager Tom Hartye said the utility is in its 13th year of a 20-year plan to create equity between residential and industrial sewer rates.
It raises rates annually, he said, but usually by relatively small amounts each time.
A big rate increase was imposed around the time the district was given control of what had been a network of municipal and county sewer lines in 1990, Aceto said.
Those regular, predictable increases have gone over well with industrial customers, even though they are shouldering more and more of the load of supporting the system, he said.
“Water and sewer rates aren’t really a significant part of their decisions to go or stay,” he said. “They don’t want to be somewhere where people are bumping rates around.”
City Council has been more prone to approve sharper rate increases one year, then keep rates unchanged the next.
It is not simple to make an exact comparison of increases in sewerage district rates and those for city water.
But an eight-page memo by Stephen Shoaf, director of the city water system, says MSD rates have gone up much faster in recent years.
The district’s residential and commercial rates are up 41.1 percent since 2000, while its industrial rates jumped 285.9 percent, Shoaf wrote.
Residential customers of the city water system saw their rates go up 16.4 percent over the same period while larger water users saw increases amounting to 39.7 percent, he wrote.
A draft city plan scheduled for council consideration in the next few months calls for $36.7 million in improvements to the city system over the next five years.
Hartye says following the city’s plan wouldn’t require a rate increase, but MSD officials think upgrades need to be done more quickly and that would require rate hikes.
A wild card in future rate discussions is whether ratepayers would have to compensate the city of Asheville for the loss of the system that it primarily built.
City figures put the replacement value of the system – essentially, the amount it would cost to build it new – at $1.3 billion. But the actual value of the system today is $173 million, the city says.
And the amount the city would get could be less, as Buncombe County has footed the cost of constructing some of the system.
It is not realistic or fair to expect sewerage district customers to pay for the replacement cost of the system, Aceto said, but it would be possible to give the city an amount based on the system’s actual value.
“It would mean that you’re going to have to wait a little longer to fix something or you have to borrow money sooner,” he said.
Rates could go up to cover the cost, but, “No one should assume that there would be a rate increase because that’s part of the conversation,” he said.
The legislative report says consolidation would mean “economies of scale … in the areas of administration, planning and engineering.”
Sewerage district officials said they could not quantify any savings and the report offers no figures. Hartye said the vast majority of city employees working on the water system would simply transfer to work for MSD.
“Just about everybody is going to be needed,” he said.
The sewerage district is governed by a 12-member board with three members appointed by Buncombe County, three by the city of Asheville and one each by Biltmore Forest, Black Mountain, Montreat, Weaverville, Woodfin and Woodfin Sanitary Water and Sewer District.
Unlike City Council, the MSD board operates in relative obscurity, rarely drawing any media coverage.
Critics worry that that structure makes the district less responsive to the public since the board does not have to answer directly to voters.
But Aceto points out that many board members are elected officials and says the board has a history of staying away from decisions better left to politicians. “There’s just things we shouldn’t do. We’ve set some boundaries,” he said. “I have to think and hope that future MSD boards will take the cue and follow the same path.”
Staff writer Joel Burgess contributed to this report.
Asheville Water Resources Department by the numbers
City water resources is a department of the City of Asheville. It has 146 employees. The director is hired by the city manager.
· $33 million in annual revenue.
· 125,000 people served.
· Valued at $173 million
· 1,661 miles of water lines
· Two reservoirs holding 7 billion gallons of water
· 20,000 acres of protected watershed
Buncombe County MSD was created in 1962. All local governments consolidated their sewer systems under MSD in 1990.
· $30.2 million in annual revenue
· 51,000 customers
· More than 750 miles of collector sewers
· Valued at $347 million
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