MSD impact study offers snapshot of moving merger target

In a proposed merger of the Asheville water system and the Metropolitan Sewerage District of Buncombe County, the already-complicated factors have multiplied. This month, state legislators have proposed a bill that would limit how the city uses a portion of water revenues, and the North Fork Dam needs about $35 million in repairs.

These issues surfaced just as consultants finalized the Impact Study on MSD Rate Payers of Proposed Consolidation/Merger, presented at the agency’s March 20 board meeting. The hefty study was undertaken in the wake of 2012 legislative action recommending that the city water system be turned over to MSD — a proposal neither entity had requested.

The study outlines multiple potential scenarios for incorporating water delivery into the independent authority’s mandate, including system reviews, condition of assets and management and regulatory analysis. It estimates that a merger could produce overall savings to water ratepayers of $1.1 to $2.2 million per year over the next nine years. (In contrast, the city's study cites a potential cost to Asheville taxpayers that could approach $4 million per year.)

Three other county municipalities asked to be included in the study. Projected savings varied, but included $200,000 for Biltmore Forest, and up to $675,000 for Weaverville (depending on the type of merger implemented). The estimated impact for Montreat was “negligible.”

Meanwhile, Reps. Tim Moffitt, Nathan Ramsey and Chuck McGrady introduced House Bill 252 in early March. If passed, the bill would repeal a 2009 law allowing Asheville to use up to 5 percent of water revenues for street and sidewalk improvements. The change would roughly equal — and thus negate — the identified savings for one of the three scenarios detailed in the merger impact report, according to MSD General Manager Tom Hartye. The other two scenarios “would still yield significant savings to the ratepayers,” he said.

Newly identified repair costs at the city system’s North Fork Dam further complicate the financial scenario, however. “This will significantly affect the city’s Capital Improvement Program,” Hartye said, adding that Asheville’s ongoing inspection of transmission lines could yield another major capital expense.

Moving forward, whoever manages the system will have to pay for the repairs. Hartye adds, “It would affect rates, but would do so equally.”

The final impact report by Malcolm Pirnie/Arcadis is available online at www.msdbc.org. For more information and other reports on this issue, go mountainx.com/msd or mountainx.com/water.

— Contributing editor Nelda Holder can be reached at nholder@mountainx.com.

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