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Here's the city's complete response on water system

City of Hendersonville
Official Response to Proposed Henderson County Board of Commissioners Actions Effecting Hendersonville Water and Sewer

It has come to the attention of the City of Hendersonville that at their regular meeting on Wednesday, March 15, 2017, the Henderson County Board of Commissioners will consider a resolution requesting the City to turn over its utility to a regional authority or become a regulated utility under the oversight of the North Carolina Public Utilities Commission. Furthermore, it is the City’s understanding that this initiative directly stems from Commissioner Bill Lapsley’s belief that the public interest is not protected under the City’s ownership of the utility system.
Commissioner Lapsley has recently met with Henderson County municipalities and other political leaders to discuss his proposal. During these meetings he has discussed his concerns regarding the following topics:
• Long Range Planning
• Inside /Outside Rate Differentials
• Water and Sewer Expansion Policies
• 2000 Mud Creek Settlement Agreement
• Financial Management
• Customer Service/Disenfranchisement
The City of Hendersonville contends that Commissioner Lapsley’s opinions are misconstrued, taken out of context or simply inaccurate. The City seeks to provide data and facts refuting each of the concerns listed above, and the following are examples of proactive initiatives or improvements made by Hendersonville Water and Sewer over the last four years:
Long Range Planning
Stakeholder Meetings and Technical Advisory Committee
In 2015 the Hendersonville City Council directed staff to interview City water and sewer system stakeholders to determine what we are doing well and where improvements can be made. A third party consultant, Warren Miller with FountainWorks, was hired to speak to a wide range of stakeholders. The following stakeholders were interviewed:

• Town of Fletcher
• Town of Laurel Park
• Henderson County Commissioners
• Henderson County Staff
• Town of Mills River
• Village of Flat Rock
• Henderson County Partnership for Economic Development (HCPED)
• Agriculture Henderson County
• Senator Tom Apodaca
• Representative McGrady

The information generated from these interviews is currently being used to “operate a great utility for our customers” (Mission Statement). These interviews led to the formation of the Water and Sewer Technical Advisory Committee. This Committee is made up of professional staff from Henderson County and local municipalities, Henderson County Partnership for Economic Development and Agriculture Henderson County. We have just recently added representatives from the Henderson County Board of Realtors and Henderson/Transylvania Homebuilders Association. The purpose of the Committee is to provide input regarding areas of concern and future water and sewer needs in Henderson County.

Partnerships Henderson County Fire Department
In 2016 Hendersonville Water and Sewer partnered with the Henderson County Fire Chiefs’ Association to create a hydraulic model of the entire water system. This model and its data have been provided to each fire department to give them up to date information regarding fire flow data and pressure data in their individual fire districts. The completion of the model has dramatically reduced the time each fire department must dedicate to flowing water at fire hydrants to determine fire flows required for maintaining ISO ratings.

In addition, Hendersonville Water and Sewer representative met with Jay Alley, Gerton Fire Chief, following the Grand Highlands Clubhouse structure fire to discuss water supply on the top of Bearwallow Mountain. A similar meeting is scheduled for March 23 to discuss the recent structure fire in Kenmure with Chief Ray of the Blue Ridge Fire and Rescue Department. It is our intention to hold these meetings following major structure fires.

Information gathered during the creation of the water system hydraulic model has been utilized to develop a Water System Master Plan. A draft copy is attached or can be found at the following link HVL Water Master Plan . The master plan was developed utilizing NCDOT TAZ (Transportation Area Zones) and input from Henderson County staff, HCPED and other stakeholders. A formal presentation for all stakeholders will be made on April 11, 2017 at 4:00pm. This master plan provides a blueprint for water system growth over the next twenty-three years. However, the City recognizes that the master plan is a living document and will change as circumstances change in Henderson County. A similar plan is being developed for sanitary sewer. We anticipate this plan being complete in early 2018. However, in the meantime, the City has requested that our consultant (Black & Veatch) work with Henderson County staff in providing sewer to Edneyville Elementary School.

Specific Project Examples:
Etowah Water System Improvements
Eastside Water Line Extension – Edneyville/Dana
Northside Water System Improvements – Fletcher
Kenmure/Old Distillery Water Line Extension – Flat Rock

Inside/Outside Rate Differentials
Traditionally, the City of Hendersonville, like most municipal utility systems, has charged outside customers more than inside customers. The justification being that Hendersonville residents have historically taken the risk to build and maintain the system and the higher rates served as an incentive for customers to come into the corporate limits. Hendersonville’s rate differential has fluctuated through the years and prior to 2016 was approximately 166 percent. According to the UNC School of Government the median rate differential for all N.C. municipal utilities is 194 percent. Following our stakeholder interviews in 2015, the Hendersonville City Council established a policy that the rate differential should not exceed 150 percent. The current average rate differential is 148 percent. The City of Hendersonville will be performing a comprehensive rate study in 2017. One of the components of this study will be to evaluate how to create a uniform rate structure that can be implemented over a reasonable period of time.

Water and Sewer Expansion Policies
Commissioner Lapsley has stated that Hendersonville’s unwillingness to expand its water and sewer system has hurt Henderson County residents. The City will concede that prior to the early 2000’s there was little willingness to expand the water and sewer system. However, since Mud Creek Settlement Agreement in the early 2000’s, the water and sewer system has grown tremendously. From 2003 to 2008 most of the system’s growth, as with most utility systems was driven by development, and in our case, this development occurred outside of the corporate limits. However, since 2008 the City of Hendersonville has taken a much more proactive role in system expansion. The City has completed one larger water system expansion project (Eastside, Phase 1 – booster pump station and 1.5-MG water storage tank that has stabilized supply on the eastern side of Henderson County and are currently designing phase 2 and 3 of this project), one smaller water project that was in response to an area that was experiencing contaminated individual drinking water wells (20-wells exceeded the groundwater standard for deldrin and many others that were very close to this limit) in the Dana area (Academy Rd. water system project), extension of water along Schoolhouse Road in Mills River by City forces in response to the growth of agri-business in that area (Bold Rock and Tri-Hishtil) and three large sewer projects (Jackson Park, Atkinson and Wolfpen) that improved sewer service availability along the edges of Hendersonville and into the rural areas of Henderson County. City staff is also actively participating in Henderson County’s Technical Review Committee to assist with providing utilities into growing areas of Henderson County identified as part of the Urban Services Area and the Urban-Rural Transitional Area, as described in the County’s comprehensive plan.

Etowah Sewer Company
Commissioner Lapsley alleges that the customers of Etowah Sewer Company had no say so in the purchase of the system by the City of Hendersonville. First, it is the City’s understanding that Henderson County was offered the right to purchase the system and Henderson County refused. Secondly, the system is in dire need of repairs and the private company does not have the funds to make the repairs. Therefore, the existing customers and Henderson County are at risk if the system was not transferred to a larger utility entity. Etowah Sewer Company is a regulated utility and therefore the sale of the utility had to go through a public process with the North Carolina Utilities Commission (NCUC) which included notification of the impending sale to all customers on that system. The City and the Etowah Sewer Company received only two comments during the required public comment period. Due to the limited number of comments, the NCUC did not require a public hearing and approved the sale. Each Etowah Sewer Company customer received two notices of the sale and were given significant time to submit comments to the NCUC.
Specific Project Examples
Atkinson Elementary School Sewer Improvement (Joint Project with Henderson County to provide public sewer to elementary school with failing septic system)
Jackson Park Interceptor Sewer (Large project which had benefit of removing a large pump station from Jackson Park and providing gravity sewer service availability to other areas of the park)
Academy Road Water Extension (Public Health Emergency - Dana)
Schoolhouse Road Water Extension (Agri-Business Economic Development – Mills River)
Etowah Sewer Company Purchase

2000 Mud Creek Settlement Agreement
The 2000 Mud Creek Sewer District Purchase Agreement was executed prior to the hiring of current City and County management teams. The Advisory Council appointed with this agreement has not met since approximately 2003. It should also be noted that City staff has been in constant contact with Henderson County staff regarding water and sewer expansion plans over the last several years and no questions were ever raised regarding these projects. In fact, at least two of the City’s most recent sewer extension projects were discussed by the Board of Commissioners and directly benefited Henderson County (Jackson Park and Atkinson). The sewer system expansions have been well reported in the news media and no comments were received from Henderson County. To my knowledge, there has never been a prepared Annual Report and much of this information is available on our website, within the North Carolina Department of Environmental Quality (NCDEQ, formally known as the NC Department of Environment and Natural Resources or NCDENR) Annual Reports or upon request. Specifically, as it relates to the purchase of Etowah Sewer Company, John Connet, the City Manager, inquired on two different occasions if additional approvals were needed from Henderson County and he was told that no additional approvals were required at this time.
Financial Management
In addition to the aforementioned rate study, the City is taking steps to ensure that the water and sewer system remains is in very good financial condition. Our reserves are strong and contrary to public perception, we are not using utility funds to subsidize the General Fund. The Water and Sewer Enterprise Fund does support its portion of internal services (fleet maintenance, legal, administration, engineering and financial management), but only on a proportionate share of expenditures basis. The City Council has instructed staff to reinvest our capital reserves into operations and system improvements.

Specific Project Examples:

Leak Detection Program has reduced water losses from 34% down to 20% over the last 1-1/2 years.
Inflow and Infiltration Reduction Program has eliminated approximately 500,000-gallons per day of potable water entering the sewer collection system over the past 1-1/2 years.

Customer Service / Disenfranchisement
Commissioner Lapsley believes that water and sewer customers who live outside the city limits are “disenfranchised” or receive less customer service than City residents. It is the standard practice of the f Hendersonville City Council and staff to respond to any customer inquiry or concern regardless of the customer’s “inside” or “outside” status. The City Council is very responsive to any customer concern or issue. The Hendersonville Customer Service Team responds to over 800 calls a week and they never ask whether a customer resides inside or outside the city. All rate increases are look reviewed from an “entire customer base perspective”.
Specific Examples
Haywood Veterinary Clinic
Old Distillery Road
Academy Road Water Project

In conclusion, the City of Hendersonville believes any action to force the City into a Water and Sewer Authority or under the oversight of the NCUC is overreaching and unjustified. The City is troubled by the fact that Commissioner Lapsley’s concerns have not been brought to us directly prior to this proposed action. Several of the topics were discussed during the stakeholder interviews, and as illustrated above, the City has been open to comments, suggestions and improvements by its customers and surrounding communities. If Hendersonville Water and Sewer customers had truly been negatively impacted over the years by the items Mr. Lapsley is now stating; surely the most logical step would have been to have honest and constructive discussions with City elected officials and staff at the time. Therefore, we believe this action is simply politically motivated and not in the best interest of the Hendersonville Water and Sewer customers.

For more information regarding this response, please contact John Connet, City Manager, at (828) 233-3201