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COMMISSIONERS ENDORSE STATE CONTROL OF CITY WATER SYSTEM

The stage is set for an epic battle in the state Legislature between the city of Hendersonville and the Henderson County Board of Commissioners.

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Bill Lapsley, the Henderson County commissioner and civil engineer who came to Hendersonville 40 years ago for a job with the city water department, began a presentation at 12:30 Wednesday afternoon on the future of that city water system. Almost two hours later, on a motion by Commissioner Grady Hawkins, the board voted 3-1 to endorse a proposed bill that would put the Hendersonville city water system under the control of the North Carolina Utilities Commission. The vote came after commissioners devoted an hour and a half to Lapsley's proposal to force the city to agree to a countywide authority and, barring that, subject the water system to control of the agency that controls rates for electric utilities, water systems and railroads across the state.

Tommy Thompson voted no, saying he wanted more time to study the question. Voting yes were Lapsley, Grady Hawkins and Chairman Michael Edney. Commissioner Charlie Messer left the meeting room before the vote.

A handful of people remained at 12:30 p.m., three and a half hours after the meeting started, when Lapsley began what amounted to a public prosecution of his case for forcing the city to cede control of the water and sewer system to a countywide authority.

There are 37 public water systems operating in Henderson County serving 31,000 customers and a population of 70,000. Hendersonville's system has 27,400 accounts serving 60,000 people, a little more than half the total population. With a few exceptions, small systems are under the authority of the N.C. Utilities Commission. City and county systems are exempt, under the philosophy that the governing body is accountable to ratepayers through elections. But beause 75 percent of Hendersonville water customers are outside the city limits, Lapsley argues, those ratepayers have no ability to retain or fire council members at the ballot box.

"This imbalance of the customer base has created a situation where the governing body is not answerable to the vast majority of the system's customers," Lapsley said. "There is no means for the customers located outside of the corporate limits to hold the governing body accountable for its actions."

Of 296 municipal water systems, just 10 have more than 50 percent of customers outside their city limits. Hendersonville has the second highest percentage in the state. Hendersonville's rate for outside users is 50 percent higher than the inside city rate.

"I would submit to you that this differential represents a discrimination of one class of customers against another class of customers," Lapsley said. “They are not accountable in any form of fashion to the outside city customer. Only the city voters will get their attention.”

The solution, Lapsley said, is to put the city water system under the authority of a new governing body made up of appointees from Laurel Park, Flat Rock, Fletcher, Mills River, Hendersonville and unincorporated Henderson County or to change state law to force Hendersonville's system under the regulatory control of the Utilities Commission. Lapsley said he had talked with Rep. Chuck McGrady about a bill that would put under the state Public Utilities Commission authority local government water systems with more than 50 percent of their customers outside their city boundaries. McGrady said in an interview Tuesday that he's receptive to the idea. One reason is the bill could be structured to apply to the city of Asheville water system, which the Legislature tried to transform into an independent utility authority in a law that the state Supreme Court ultimately was struck down.

Lapsley concluded his 45-minute presentation by saying that the city had refused over a span of 40 years to submit to a joint governance arrangement and had refused one last time, 10 days ago. "The city council informed us about a week ago that they had discussed it and they had declined our request" and had chosen to retain control of the water system, he said. Thus, he called for his fellow commissioners to support a statewide bill that would shift control of the city water system from the City Council to the state regulators. There was some urgency because Legislators face a March 30 deadline for filing bills that change state law.

Thompson, Edney and Messer all said they hoped the city and county could resolve their differences before a bill is adopted and Lapsley said even if the bill becomes law the city could later reverse course and agree to the countywide authority.

"I think we need to sit down with them, maybe in a joint meeting before the deadline passes and come up with an agreement that would work for all the people of Henderson County," Messer said.

"Monopoly has been a problem for the last decade that i've been on the board," Hawkins said. "We discussed when I was chairman a decade ago developing some kind of master plan and that never happened. I do not think the city of Hendersonville ought to be planning water extensions or sewer extensions for the simple reason that those two items control growth in the county and I think that's a county function versus a city function."

Some major investments like a $20-plus million plant upgrade and meter readers that are read remotely have been questionable, Hawkins said.

"The thing that gets passed on to the county water customer is all those costs," he said. "We have tried to deal with municipalities, Asheville and Hendersonville both, over the last decade and it ends up being a flawed agreement and I think one of the overarching reasons is because the county is not in the water business so we come to the table with nothing but an expectation of fairness on the rates and accountability ... I don't know what other information you need but I think we need to get on board with our representatives in Raleigh and get this issue addressed so that the basic issue of fairness will prevail in our county."

Two hours after the meeting, Councilman Jeff Miller struck a more moderate tone about the county board's action and said the next battle is in Raleigh.

“No, it didn’t surprise me a bit,” he said of the outcome. "They already had this worked out. ...We’ll go forward and see what happens as it goes through. … Some of the things Lapsley said I thought were all uncalled for, like if a person (outside the city) had a complaint the city doesn’t care. That’s not true. They can’t say one thing they’ve asked us to do that we haven’t done.

"I don’t want to be totally negative about what Lapsley’s doing," he added. "I think he really figures he should take care of this. … We’ll just see how it shakes out. I just think it’s a solution to a problem that doesn’t exist at this time and it could do real damage.”

Does the threat of a state takeover would motivate him to come to the table on an independent authority? “No," he said. "Not one bit. No, we weren’t ready to just turn around and just give it away"

Lapsley asked and answered a series of questions he's heard since news broke of his ideas on the largest public water system in the county.

Why has there been no uprising against the city regarding their operation of the water system? The answer is, because it does not matter. The outside customers know they have no means of redress. It’s a worthless cause to say anything. In fact if they do complain they run the risk of the city taking punitive action against them. This same situation exists with all of the other municipalities in Henderson County. They are afraid to bring up water operations issues for fear of hurting their relationship with the city of Hendersonville and any probably repercussions.

“Will this legislation force the city of Hendersonville to give up ownership and control of their water system? No. Absolutely not. The ownership stays with the city of Hendersonville and stays under the governance of the city council. The only change will be in the operation of the water system there will be no possibility of discrimination allowed for any class of customers, particularly those located outside the corporate limits. The North Carolina Utilities Commission under this scenario will oversee the operations and protect the interests of all the customers. Henderson County would have no authority whatsoever.”

“I think we have a problem," Thompson said. "I think something definitely needs to be done and I would hope that the city of Hendersonville as well as our group can manage to work together for some kind of final solution.”

Chairman Michael Edney said the city and county have built a good relationship that he hoped is not damaged by the dispute over the city water system.

"My understanding is Rep. McGrady will file a bill, directed more at Asheville than at us," he said. "Given that Asheville is at 44 percent (outside customers) and we're at 75 percent we'll be caught up in that regardless. It will be a statewide bill. It's not going to be a local bill."

"We've got a very good relationship with the people in Hendersonville right now," Edney added. "I think we all work very well together. It's more of a principal ... . Something needs to be addressed to make sure that the folks receiving the service have a method of redress. I think we as a county need to have some ability to get waterlines for industry outside the city if need be. We can ask but they can say no. I think we all need to sit down and work it out together and quite frankly I think we're going to have to. Given that Asheville is at 44 percent and we're at 75 percent we'll be caught up in that no matter what."

Lapsley said after the meeting that he would be open to renewed talks with the city about forming a countywide authority.

"If this goes through does that forever say permanently the city and the county can't get together? No," he said. "That option, does that come off the table because of this? No. That'll always be there. The question is whether the city of Hendersonville wants to entertain it.

"I think their obligation under the act is to make sure all customers are treated the same, that there's no discrimination of one class of customer against the other," he said. "The first thing I believe they would do is notify Hendersonville and say, 'You will set a uniform rate.'"

 

In a response it issued Tuesday ahead of Lapsley's presentation. The city said that "Lapsley’s facts are misconstrued, taken out of context or simply wrong,” the city said in the news release, issued by the city manager. “The following are examples of proactive initiatives or improvements made by Hendersonville Water and Sewer over the last four years:

• Development of water system master plan and hydraulic model that will guide system growth and improvements until 2040.
• Water and sewer rates that are lower than Henderson County's Cane Creek Sewer District and most water and sewer utilities in the region.
• Proactive water and sewer extensions at no cost to customers that have resolved public health issues in the Dana community and promoted economic development in Mills River.
• City staff have made presentations to the Henderson County Board of Commissioners and municipal governing boards regarding the water and sewer system and meets regularly with Henderson County staff and other stakeholders to discuss utility issues and concerns.
• The Hendersonville City Council has adopted strong financial policies the require reinvestment of cash reserves into the system.
• There has been no public outcry from customers requesting a change in the governance of the utility system. The City of Hendersonville has a strong customer service focus and all customers are treated fairly regardless of whether they live inside or outside the City of Hendersonville.

“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 Public Utilities Commission is overreaching and unjustified. Henderson County has never made any significant efforts to build a countywide water system and has indicated that they would like to get out of the sewer business. The City of Hendersonville believes this action is politically motivated and not in the best interest of the Hendersonville Water and Sewer customers."