News

Laurel Park may sell water system to Hendersonville

By Natasha Townsend, Published: June 21, 2017

LAUREL PARK — The Laurel Park Town Council is moving ahead with the idea of selling its water system to the city of Hendersonville, which a report said would save Laurel Park ratepayers money.

During a work session last week and again on Tuesday, town council members discussed a report by William Nicholas and Thomas Vollmar of Hulsey McCormick & Wallace that evaluated the pros and cons of a water system merger.
The consultants recommend the merger. In addition to the lower monthly rates for Laurel Park customers, the town would have more money for other projects. With more customers, Hendersonville would see more revenue, which could help pay for capital improvements.
Commissioner George Banta praised the merger as “one of the biggest financial events that could occur in Laurel Park” but recommended the town take its time and use caution in negotiating the sale.
“As representatives of the town people, we owe that to them,” he said.
Laurel Park’s water system serves 819 citizens and includes 23 miles of water lines. Over the years since construction of the water system, upgrades have been made to serve increasing customer rates. Laurel Park buys water wholesale from the city of Hendersonville.
There are two estimates for the water system’s value. The first, which includes the replacement cost of the total system minus depreciation, is estimated to be $4,833,000. The second value came from subtracting the depreciation value of each component in the system from the actual cost. This value estimated at $1,844,000.
The first option is to merge the Laurel Park Water utility and the City of Hendersonville Water System. With the merger, Laurel Park customers would pay less each month for water because the city has lower rates than Laurel Park, the report said. Capital improvements on future rates of Laurel Park’s monthly water bill are estimated to increase for Laurel Park and Hendersonville.
The 20-year capital improvement plan includes the replacement of three of the oldest water tanks, and 25 percent of the oldest water lines at a total cost of $1.85 million.
If the plan was put into motion, Laurel Park would sell the water system to the city of Hendersonville and customers would be billed directly by Hendersonville. The city would be responsible for capital improvements, maintenance, operational costs and administrative costs. Laurel Park would create a System Boundary Area, where new water system users could petition the Town for their annexation.
A second option was for Laurel Park to maintain ownership of the water utility while paying the city of Hendersonville for water as it does now. The town would need to control water rate increases necessary in order to fund capital improvements and the increasing costs for maintaining and operating the current water system as it ages. The total cost of replacement is estimated to be $8,332,000, which would mean increased monthly water rates for current customers. If Laurel Park retains control of the system, water rates would continue to increase, the report said.