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Watchdog warns Laurel Park on water fund

LAUREL PARK — The Laurel Park Town Board adopted a plan to make up a shortfall in its water system revenue after the state’s local government watchdog warned the town that its water fund was running a deficit.

In a special called meeting last week, the board heard from Town Manager Alison Melnikova and Public Works Director Andrew Griffin about the water system leaks that have caused thousands of dollars in lost revenue for at least two years.
In a letter to the town on Nov. 6, Sharon Edmundson, director of the fiscal management section for the state Local Government Commission, said an analysis of the town’s 2014-15 audit showed that the town was not collecting enough revenue to cover water system expenses.
“These losses indicate that the amounts being charged to customers are not sufficient to cover the costs of providing water services,” Edmundson wrote. She recommended the board evaluate the rate structure to make sure charges are “sufficient to provide adequate operating funds going forward.”
Much of the problem stems from leaks that have caused the waste of more than 25 percent of the water the town buys from Hendersonville.
“If you’re purchasing water you want to be under 15 percent,” Melnikova told the Town Board.
The town has already made changes to address the $15,500 gap between operating expenses and revenue. It has stepped up its leak detection and repair, aiming for a water loss of no more than 17.6 percent, the break-even point. The Town Board last spring increased a monthly flat rate charge all users pay from $15 to $19 a month, generating $38,800 a year. In June 2015, it launched a program to replace 10 percent of all customer meters a year. It also made changes that cut the town’s health insurance costs and trimmed water department software costs and consulting engineering fees.
The water loss for the fiscal year ending last June 30 was 27.4 percent. That was caused by several large leaks, including a six-inch water main in Timber Creek that was estimated to have leaked 6 million gallons a year since 2013, or $16,000 in direct costs in fiscal year 2015 alone. From July through October, the town has reduced the water loss to 20.2 percent, and half that period occurred before the large Timber Creek leak was plugged.
“The valves that were installed were the cheapest valves production-wise,” Griffin told the board. “The handles weren’t able to hold up to soil conditions. They just fall to pieces.”
“I think we ought to say that we’ve found 12 leaks in the last six months through these efforts and we’ll continue to be diligent,” Mayor Carey O’Cain said.
“We finally identified the major leak in September,” he said after the meeting. “It impacted the profitability of the system in 2015. We’re essentially sending the Local Government Commission a letter saying that we’re detecting leaks and we’re also ensuring that we have a rate that covers the operating costs.”
In the letter, Melnikova also told the Local Government Commission that the town council was aware of the water system leaks and had discussed the issues in August and October and on Nov. 10 and 24.