On March 28, Representatives Tim Moffitt, Nathan Ramsey, Mike Hager and I filed state legislation — House Bill 488 — which would have the effect here locally of establishing an independent Metropolitan Water and Sewerage District Authority.
The bill grew out of decades of disputes over how to manage the region’s water resources. Those disputes led to two appellate court decisions and several local laws (the so-called Sullivan Acts) restricting or directing how the City of Asheville could manage the water system.
By all accounts, on the sewer side, MSD has worked well. It, too, was a legislative creation. It came about when failing sewer systems caused the legislature to create a regional sewer authority. Over time, that authority has invested in needed infrastructure, and the French Broad River is no longer an open sewer from municipal sewer systems discharges.
Remembering the disastrous experience with an earlier effort to create a regional water authority, Henderson County residents may wonder why it is good for Henderson County to now join this State-created authority. First, and most importantly, Henderson County will have a real voice in deciding water issues by being part of the the new authority. The City of Asheville acquired water rights in Henderson County in the mid-1990’s, but when the first authority was dissolved Henderson County ended up with nothing—no role in water issues in the region. Second, by combining Henderson County’s sewer system with Buncombe County’s system, Henderson County residents will see an immediate drop in their sewer rates—probably in the $10.00 a month range although exact savings will depend on usage.
In the long run, the big benefit for Henderson County is that it will not have to consider investing in a new sewerage treatment plant. The Henderson County Commissioners are considering constructing a new plant somewhere in north Henderson County. The cost of that plant would be borne by Henderson County residents, and it seems clear that the lowest cost solution to an expected need for expanded sewer services is to become part of the regional authority. MSD has the capacity to handle Henderson County’s needs without the cost of significant new infrastructure.
In Henderson County, the most commonly asked question is how is this any different that the ill-fated authority that Henderson County joined in the mid-1990’s. It is very different.
The earlier authority only dealt with water, and it was simply a contract between Asheville, Buncombe County, and Henderson County. Contracts can be broken or terminated, and that contract was both broken and then terminated. Henderson County gave up its water rights and ended up not being part of any regional water or sewer authority. The new authority is being created under state law; it isn’t simply a contract.
Henderson County residents are also interested in knowing whether the county will really be fairly represented on the new authority’s board. Henderson County will have three seats on the new authority’s board—the same as both Buncombe County and Asheville. The board will have 15 members with the remaining members coming from some of the small municipalities surrounding Asheville. These municipalities originally contributed their sewer systems to form MSD.
This legislation is forward-thinking in order to best contemplate the needs of our state and the unique challenges that our public enterprise utility systems in North Carolina face. This legislation creates an orderly blueprint for consolidation of multiple public enterprises and protects the interests of all North Carolina’s citizens and utility ratepayers. This is particularly true when these public enterprises reach a certain size (where true economies of scale can be realized), and those savings can be passed on to the public enterprise ratepayers, in this case water customers.
The new authority will be composed of 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. All assets and liabilities of these respective systems will 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 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.
Frequently asked questions
1. Shouldn’t 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 from the 1994 Agreement at the end of this post). The Asheville Buncombe League of Women Voters, the Asheville Citizen-Times editorial board, and the Asheville Area Chamber of Commerce (among other groups) 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. Won’t City of Asheville residents be disadvantaged by the passage of the bill and creation of an Independent Regional Authority?
The North Carolina 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, much of which are unrelated to the water system.
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 that over the decades, over $100 million has been removed by the City of Asheville for other purposes. The bill’s sponsors (Representatives Ramsey, Moffitt, and McGrady) believe that all water revenues should 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 should not use water revenues to subsidize other city expenses. Ratepayers should see a reduction in overall costs since the financial burdens caused by the City of Asheville diverting dollars to pay for other municipal functions will be removed by the transfer of the water system to a regional independent authority.
3. If the City of Asheville taxpayers paid for the water system, doesn’t this require the taxpayers to be reimbursed?
The City of Asheville taxpayers have seldom ever subsidized the water system. In the court case City of Asheville v. State of North Carolina and Buncombe County, the Court of Appeals found as a finding of fact that over $120 million has 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 General Assembly found 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, action by the General Assembly would not be required — but unfortunately over the past 20 years, our local community has not been able to resolve these matters. Just recently, the City of Asheville and Buncombe County taxpayers spent over $500,000.00 on legal fees due to litigation challenging the 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. Doesn’t 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. Doesn’t 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 in 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 allow 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 the North Carolina 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 North Carolina 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 (see the March 20, 2013 “Impact Study on MSD Rate Payers of Proposed Consolidation/Merger” Final Report as prepared by ARCADIS G&M of North Carolina and submitted to the Metropolitan Sewerage District Buncombe County)
12. Why is Henderson County’s Cane Creek Sewerage System being made part of the Regional Independent Authority?
Sewerage 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 referred to multiple committees. After receiving a full hearing in these various committees, the legislation will be sent to the House floor. Once the legislation passes the North Carolina House of Representatives, the bill will be sent to the North Carolina Senate. After completion of the legislative process — and passage by both chambers of the General Assembly — House Bill 488 will become effective when and if the bill becomes law.
For more information, please see the April 19, 2012 report of the Metropolitan Sewerage/Water System Committee to the North Carolina General Assembly.
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.