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Legislators file bill to merge water-sewer utilities

By Bill Moss, Published: March 28, 2013

Hendersonville Republican Chuck McGrady on Friday joined two Asheville legislators in filing a bill that would dramatically change the control of water and sewer service in Buncombe and parts of Henderson County.

McGrady, Reps. Tim Moffitt and Nathan Ramsey of Buncombe County have filed legislation to create the Metropolitan Water and Sewerage District, an independent authority that would merge the Metropolitan Sewerage District of Buncombe County (MSD), the Public Water Utility System managed by the City of Asheville and the Cane Creek Water and Sewer District, a utility governed by the Henderson County Board of Commissioners. Under the bill assets and liabilities of these respective systems would be transferred to the authority.
The Authority will be governed by a fifteen member Board appointed by the member governments of the City of Asheville (3), Town of Biltmore Forest(1), Town of Black Mountain(1), Town of Montreat(1), Town of Weaverville(1), Town of Woodfin(1), Woodfin Water & Sewer District(1), Buncombe County(3), and Henderson County (3).
"The consolidation of these systems will save utility customers millions of dollars annually and will allow our community to better work together to address our future challenges," the legislators said in a news release. "The legislation reflects the unique history of our community utility systems, the intent of prior local elected bodies to collaborate to achieve this vision, and is in consideration of fairness to all residents of the member local governments."
"In 1994," the news release continued, "visionary leaders of our community entered into the agreement of the Regional Water Authority of Asheville, Buncombe, and Henderson. In that agreement the Asheville Buncombe Water Authority, Asheville City Council, Buncombe County Board of Commissioners, and Henderson County Board of Commissioners agreed that they would work in good faith to achieve a consolidated, independent utility authority for our region. They recognized that this structure was needed to protect our environment, provide for the highest quality water resources and sewer services for the region, and to encourage future collaboration on other matters.
"Unfortunately, over the years the vision of these leaders has been sidetracked by regional disputes and lawsuits which have diminished our ability to work together.

Here are questions and answers the legislators submitted as part of the news release:

1. Should not local governments directly operate these utilities instead of being operated by an Authority?
The language of the 1994 Water Agreement entered into by the Asheville Buncombe Water Authority, City of Asheville, Buncombe County, and Henderson County and successive agreements specifically provided for a Regional Water Sewer Authority for the City of Asheville, Buncombe County, and Henderson County. See the language below from the 1994 Agreement. The Asheville Buncombe League of Women Voters, Asheville Citizen Times editorial board, among others have previously endorsed an independent authority to run the water system. This is not a novel or radical idea. The elected officials of our community will continue to appoint the Board members, there will be full accountability to elected officials.

2. Will not City of Asheville residents be disadvantaged by the passage of the bill and creation of an Independent Regional Authority?
The NC Treasurer's Office Local Government Commission has determined that the City of Asheville will not be negatively impacted by the transfer of the water assets and liabilities from the City of Asheville to the Authority. The City of Asheville contends their general fund will be negatively impacted by $3.5 million per year by this transfer. Of that total, approximately $1.5 million is derived from the City of Asheville taking five percent of water revenues for other uses. The remaining $2.0 million is due to indirect costs charged to other City of Asheville departments. The Public water utility managed by the City of Asheville has one of the highest leakage rates of any water system in the State of North Carolina and the highest of any large urban system. Part of the reason for the Asheville system wasting around 30 percent of the water pumped is due to the fact over the decades, over $100 million has been removed by the City of Asheville for other purposes. The sponsors believe all water revenue shall be reinvested into the water system and that our water utility systems would not be as deficient as they are today if these funds had not been removed from the public water enterprise fund. The City of Asheville taxpayers should not use water revenues to subsidize other city expenses. The City of Asheville should be able to reduce cost since the financial burdens covered by the indirect costs will be removed by the transfer of the water system to a Regional Indpendent Authority.

3. Did not the City of Asheville taxpayers pay for the water system so doesn't this transfer assets paid by City of Asheville taxpayers to a Regional Independent Authority?
The City of Asheville taxpayers have seldom ever subsidized the water system, in the court case City of Asheville v. State of North Carolina, the Court found as a finding of fact that over $120 million have been taken out of the water system to benefit the City of Asheville taxpayers. Also, in this same court case, the Court found as a finding of fact that the County of Buncombe has contributed almost $30 million to the water system, much of those funds prior to 1981. The Court determined that part of the water system was owned by the City of Asheville and part of the water system was owned by the County of Buncombe, the court did not determine which government owned which assets since that was not determinative to the outcome of that case.

4. Why is the North Carolina General Assembly becoming involved in a matter that should be a local matter?
The North Carolina General Assembly has enacted legislation regarding our community's utility systems since the 1920s. The water districts in Buncombe County were created in the 1920s pursuant to state law. The Metropolitan Sewage District of Buncombe County was created pursuant to state law. In 2005, the NC General Assembly found that that our community's water system was unique and deserving of state action. If local elected bodies were able to come to an agreement and meet the spirit of the 1994 Regional Water Agreement, NC General Assembly would not be required. Unfortunately, our local community has not been able to resolve these matters over almost the past 20 years. Just recently, the City of Asheville and Buncombe County taxpayers spent over $500,000 on legal fees due to litigation over Sullivan Acts II and III. We believe in these difficult times, government must avoid wasting hard earned tax dollars and pursuing less than efficient means of delivering services.

5. Does not the creation of a Regional Independent Authority remove from local governments the ability to do land use planning and control growth and development in their jurisdiction?
No, the legislation provides that local governments must approve any water or sewer extensions in their respective jurisdiction so all land use planning decisions will remain in control of local government bodies.

6. Does not the creation of a Regional Independent Authority place the pristine watersheds for reservoirs in environmental jeopardy?
No, the legislation actually provides for additional protections for the watersheds and all of these areas are covered by binding conservation easements that restrict the use except for the purpose of providing the highest quality water to the customers.

7. Can the creation of the Authority result is water and sewer services being privatized and taken out of the responsibility of publicly elected bodies?
No. The legislation specifically prohibits the privatization of these services since this is a critical public enterprise which should be fully and forever accountable to the citizens of our community. The legislation does allow for the Authority to contract for certain administrative and other services to not prohibit current business practices of our current water and sewer providers.

8. Why does the legislation not consolidate the other public water systems in Buncombe County like the Town of Black Mountain and Town of Weaverville water systems?
The water systems for the Towns of Biltmore Forest, Black Mountain, Weaverville, and other water systems in Buncombe County have a much different history than the history of the Public water utility managed by the City of Asheville. Additionally the Public water utility managed by the City of Asheville according to NC appellate Court findings is owned in part by Buncombe County and is not entirely owned by the City of Asheville. That is not the case of the other water systems in Buncombe County. Additionally, these other systems do not have the history of litigation and contention like the Asheville system.

9. Why was the Woodfin Water District not included in this legislation?
The Woodfin Water District is a creation of state statute. At a future date, after the current consolidation legislation has been completed, the NC General Assembly will review the current state law to see if any modifications are needed.

10. Is the Metropolitan Sewerage District of Buncombe County capable of completing this consolidation in an effective and efficient manner?
The MSD of Buncombe County has a proven track record of effective and efficient service and according to their own professional studies, their administrative capability is fully prepared to complete this process in a manner that will benefit all of the member local governments.

11. Will this legislation cause my water or sewer rates to increase?
No. This legislation actually will save water and sewer customers millions of dollars annually and this legislation will enable additional repairs to our water and sewer systems under the current rate structure because of these savings.
12. Why is Henderson County's Cane Creek Sewerage System being made part of the Regional Independent Authority?

Sewage from the Cane Creek Sewerage System is already treated at the MSD plant. Since MSD has excess capacity, it makes no sense for Henderson County to pursue the construction of its own sewerage treatment plant. By being a part of the Regional Independent Authority, the Henderson County customers of MSD will almost immediately get a reduction in the rates they pay for sewerage treatment.

13. Why will Henderson County have the same number of seats on the Regional Independent Authority board as Asheville or Buncombe County?

Under current law, if Henderson County's Cane Creek Sewer System were merged with MSD, Henderson County would get two board seats. The additional seat simply reflects the reality that Henderson County's and Mill River's land development above the water plant in Mills River is restricted by the watershed protection rules. Just as Woodfin got a seat on MSD board because the sewerage treatment plant impacted Woodfin, those persons whose land use are impacted by the water plant on the Mills and French Broad rivers will be represented.

14. When will this legislation become law?

This legislation, House Bill 488, will be read on the House floor on Tuesday, April 2, and then will be referred to multiple committees. After receiving a full hearing in various committees, the legislation will be sent to the House floor. Once the legislation passes the NC House, the bill will be sent to the NC Senate. After completion of the legislative process and passage by both chambers of the General Assembly, House Bill 488 will become effective when the bill becomes law.

FROM THE 1995 RESTATED WATER AGREEMENT SIGNED BY THE CITY OF ASHEVILLE, BUNCOMBE COUNTY, HENDERSON COUNTY, AND THE REGIONAL WATER AUTHORITY -

SECTION XXI: REGIONAL WATER AND/OR SEWER AUTHORITY
21.0 It is the intention of the parties to this Agreement to establish herein the basis for the formation of a Regional Water and/or Sewer Authority, which would, at a minimum, include as members Henderson and Buncombe Counties, the Authority, and Asheville. Pursuant to that intent, the parties herein shall work in good faith work towards the creation of a regional authority and the promotion of said authority to other units of local government in the western part of North Carolina. At the time a Regional Authority is created, all assets and improvements accumulated pursuant to this Agreement shall be transferred to such Regional Authority upon such terms and conditions as are therein mutually acceptable.