The calm before the storm?

“Why should I pay a quarter, say, for my shower, when the Grove Park Inn pays only a dime for someone staying in a $200-a-night room?”

– Water Authority member Brian Peterson

“Why should I pay a quarter, say, for my shower when the Grove Park Inn pays only a dime for someone staying in a $200-a-night room?” asked Brian Peterson at the Feb. 9 meeting of the Water Authority’s Budget Committee.

After several months of uncharacteristic harmony — during which the Regional Water Authority of Asheville, Buncombe and Henderson confronted the need to repair the crumbling water infrastructure by drafting and unanimously adopting an Asset Management Action Plan — discord seems poised to make a comeback. Despite general agreement that a variety of measures will have to be adopted to raise the substantial sums needed to repair and refurbish the decrepit water infrastructure, and that the pain will have to be shared, cracks in the consensus also began to emerge.

The proposal by Peterson, an Asheville appointee, to bring the rates charged commercial water users more in line with residential rates (and thus with state averages) is sure to rankle business groups.

Meanwhile, two of the Authority’s most business-friendly members — Asheville City Council Member Joe Dunn and Vice Chairman Bill Stanley of the Buncombe County Board of Commissioners — suggested logging the old-growth forests of the North Fork and Bee Tree watersheds. “It’s going to take political guts,” said Dunn, “but it’s time.” That proposal immediately drew snickers of derision from Peterson, who noted that the members of the Woodfin Water Board who’d proposed logging its watershed last year had all promptly lost their re-election bids in November.

Back to the future

Controversy is nothing new to the Water Authority. For years, the three participating governments (not to mention the city staff that administers the system, and the business and activist groups with strong views on water policy) have appeared to be unable to agree on much of anything.

Just last May, for instance, the Buncombe County Board of Commissioners unanimously voted to scuttle the Authority’s proposed 2003-04 budget because it included a new “capital improvements fee” based on meter size, aimed at generating revenue to fund desperately needed system repairs. This year, in stark contrast, the Asset Management Action Plan gained the unanimous support of a Water Authority that now includes several people who opposed the meter fee last year, either as Authority members (Ed Metz and Winston Pulliam, both of whom also belong to the Council of Independent Business Owners) or as Buncombe County commissioners (Stanley and Patsy Keever).

Credit for the change appears largely due to the efforts of consultants Richard Stahr and Richard Carrier of the environmental-engineering firm Brown and Caldwell. In the course of developing the plan (which they define as “a structured approach to optimize the life-cycle cost of asset ownership” — emphasis theirs) and guiding the Authority toward adopting it, Stahr and Carrier have helped foster consensus on several key points. They include: first, that the city’s Water Resources Department has gotten its management act together (or at least is well on the way to doing so); second, that radical measures (such as mothballing both the Mills River and the Bee Tree water-treatment plants) must be considered; and third, that repairing the crumbling water infrastructure will require — in addition to a continued search for ways to cut costs — more revenue, perhaps generated by some combination of new fees and rate hikes. According to the consultants, an additional $5 million to $6 million annually is required right away, and that amount is likely to increase in years to come as more and more pieces of the infrastructure reach the end of their usable lives. Over the next several decades, Stahr and Carrier foresee a need for hundreds of millions of dollars’ worth of investment.

The Water Authority first hired Brown and Caldwell in August 2002 to help bring the North Fork and Bee Tree water-treatment plants into compliance with new turbidity standards decreed by the U.S. Environmental Protection Agency. According to David Hanks, the seemingly permanent interim director of the Asheville Water Resources Department, the firm’s principal recommendation — using alums instead of polymers to treat the water — has enabled the Authority to avoid having to plunk down $7 million to replace the entire filtration system. What’s more, in conjunction with some other suggested changes, the switch is expected to produce additional savings of $300,000 to $500,000 annually.

But the consultants also noted that a thorough examination of the entire water system could yield still more savings. And the need for a comprehensive review became even clearer after the Buncombe County Commissioners blocked the proposed budget last May.

Initial opposition to the meter fee came from the Council of Independent Business Owners. This was hardly surprising, given that the group consistently opposes new taxes and fees of whatever sort on Buncombe County businesses. But when the commissioners questioned Hanks after hearing from CIBO, they homed in on what they saw as a general lack of direction in the Authority and, more specifically, in the Water Resource Department’s approach to system maintenance. “They were suggesting we didn’t really have a good handle on the maintenance situation,” Hanks recalls, “and they were right — we didn’t.”

The department did have a critical-needs list cataloging an alarming number of pipes and other infrastructure components that were in poor shape, but it lacked a comprehensive schedule for making and funding repairs — or, for that matter, even a full map of the system’s lines.

At a CIBO informational breakfast at the Corner Stone Restaurant on Feb. 6, Hanks drew attention to the department’s difficulties by gesturing out toward Tunnel Road and explaining that whereas city staff had long thought four water lines run underneath it, they’d recently discovered that there are at least eight.

Much of the problem is rooted in a long and tangled history. The current water system — the fruit of a string of complex and sometimes ambiguous agreements involving Asheville, Buncombe County and, more recently, Henderson County — was cobbled together by combining the city’s original infrastructure with several smaller outlying systems that were never fully mapped. The total line length here, Hanks observes, is more typical of a system producing 10 times as much water, and the jumble of cross connections makes repairs especially difficult, since it’s hard to know which valves control the water flow for a given section of line.

Carte blanche

After the Buncombe commissioners’ vote last May, Hanks pushed the Authority to extend Brown and Caldwell’s contract to cover measures aimed at gaining more comprehensive knowledge about the system and its future needs, including an asset-management evaluation, a drought-management study, and a detailed examination of water usage and billing.

But rather than directing the consultants to gear their findings toward any particular perspective, Hanks stresses that he gave them “carte blanche” to make whatever recommendations they saw fit.

Many of Brown and Caldwell’s findings have challenged accepted wisdom. For instance, although it was long thought that the 30 percent of treated water that’s never billed for is mostly lost to leaks, a random sampling of commercial meters found that most of them were substantially underregistering consumption. For a few months, it looked as though the meters might account for most of the missing water — welcome news for both the cash-strapped Authority and the Metropolitan Sewerage District, which bases its charges on water consumption.

Later samplings, however, revealed a much lower rate of meter failure, and Hanks and the consultants are now back to thinking that leaks are indeed the primary culprit. They still plan to check all the major commercial meters and replace any malfunctioning ones, but Hanks says questions remain about the cost-effectiveness of testing and replacing the residential meters, which generally performed much better in the random sample.

For Hanks, though, the missing water is also a major public-relations headache: “People say, ‘Why don’t you fix all the leaks before you start talking about new fees or raising the rates?’” Yet two staffers are already working full time on tracking down leaks, he explains, and the consultants estimate that, due to the gravity-fed system’s high pressure, at least 12 percent of production would be lost to leaks even if every inch of pipe were replaced.

The consultants’ recommendation to consider “seasonal operation” at the Mills River and Bee Tree plants also provides fodder for controversy. Under this scenario, which was presented at the Authority’s January board meeting, the North Fork plant would produce most of the system’s water, with Bee Tree serving as the main backup (once repairs are completed). Ironically, the much newer Mills River plant, completed in 1999 at a cost of $36 million, uses an ozonation process that makes it very expensive to operate, so it would be held in reserve and brought on line only a few weeks each year to ensure that it’s still in good working order — unless, that is, a drought or other unusual circumstance created a need for the additional production. Hazel Fobes, who chairs Citizens for Safe Drinking Water and Air, noted during a public-comment session that shutting down the Mills River Plant, the fruit of prolonged negotiations and a substantial investment, would lay the board open to criticism.

Red herring?

That such a plan would even be considered highlights the excess water capacity that Asheville now enjoys — a rarity among North Carolina cities. To CIBO, this surplus means the Authority should both disband its water-conservation program (since the agency now needs to sell rather than conserve water) and keep its rates low (to attract major water users that would tap that capacity while bringing in well-paying industrial jobs). These points (along with calls to log the watersheds) were made repeatedly at the CIBO breakfast where Hanks was a featured speaker.

Many environmentalists, however, reject these arguments. In fact, French Broad Riverkeeper Phillip Gibson of RiverLink isn’t convinced that the region even has a water surplus. Gibson, whose bailiwick is the entire French Broad River basin (rather than the Water Authority’s substantially smaller service area), argues that there are too many unknowns about water consumption in the watershed as a whole; before beating the drum to attract large users, the governments represented on the Water Authority should team up with other public and private entities in both North Carolina and Tennessee to fund a thorough, basinwide survey of current water usage.

Others question whether lower rates would really attract major water users. Professor Richard Maas, co-director of UNCA’s Environmental Quality Institute, calls the linkage of jobs and water rates “a red herring.” “Typically, water is only about one-tenth of 1 percent of a business’s costs,” reports Maas, who has served on the boards of both the Water Authority and the Metropolitan Sewerage District, and it “doesn’t get on the radar screen” when companies make decisions about when to leave or where to locate.

The Authority’s own experience seems to support Maas’ argument. Early last year, in response to lobbying by the Asheville Area Chamber of Commerce, the Authority agreed to let major water users that pay above-average wages negotiate for lower water rates if they located in the area. But according to Hanks, not a single manufacturer has approached the Authority under the program.

Both Gibson and Maas, meanwhile, say the Water Authority could raise much of the money it needs simply by leveling the rate structure and charging commercial customers more. At present, smaller residential users pay among the highest rates in the state, whereas larger commercial users pay among the lowest. The key reason for this discrepancy is the drop in commercial rates from $2.77 to $1.24 per 100 cubic feet once consumption exceeds 1,000 cubic feet per billing period.

Maas maintains that the rate structure should reflect the true cost of service. And because water distribution to large consumers typically entails only relatively minor economies of scale, he believes they should enjoy discounts of only about 20 to 25 percent.

Meanwhile, at the Authority’s Budget Committee meeting, Peterson suggested maintaining lower rates for manufacturers but increasing the rates for other commercial users such as restaurants and hotels, which he said would stay in Asheville regardless, “because this is where the tourists are.” Maas, however, characterized Peterson’s proposal as a compromise that is “neither necessary nor just,” arguing that the fairest rate structure would be one that makes no distinctions between different types of users and offers only modest rewards for increased levels of consumption.

[Jonathan Barnard is a freelance translator and writer who lives in West Asheville.]

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