City releases water merger report, finds local agreement best option

The city of Asheville has released a report and a financial analysis by the Raftellis consulting firm on a possible merger with the Metropolitan Sewerage District. The report claims that an agreement between the two would have the greatest benefit while avoiding the cost of a merger.

” Significant financial benefits have already been achieved by providing regional water and wastewater treatment in Asheville and Buncombe County through the City of Asheville and the Metropolitan Sewerage District,” the report reads. “Achieving additional financial benefits may best be realized by avoiding the high costs of a complete merger of the two systems and seeking additional efficiencies through a shared services or functional consolidation model. This could be implemented without changing the current governance structure, and with low cost and minimal organizational disruption.”

Council will discuss the report Dec. 11 during a work session before its meeting. The report found that both MSD and the city’s system are well-run and financially sound.

“In terms of governance, the study found no discernible difference in utility performance between municipal/county and authority [like MSD] structures, though municipal/county structures are more common in North Carolina,” the report continues.

On the other hand, MSD taking over the city system will, according to the report, cost the city around $3.75 million a year, as it loses access to water revenues for infrastructure and related services.

“A consolidated utility under MSD does not produce economic benefits to all stakeholders,” the report finds. “This model could produce savings for sewer ratepayers while resulting in cost increases for city taxpayers and water ratepayers.”

MSD’s own report found savings over the long-term if the agency took over the city’s system.

The report analyzes four governance models, including MSD taking over over the water system, the city taking over MSD, the status quo of separate systems and a “functional consolidation” under an inter-local agreement.

Since a state legislative study committee led by Rep. Tim Moffitt delivered their demand that the city system come under the control of the Metropolitan Sewerage District, the city has worked on its own report as part of an effort at “good faith negotiations” with MSD. The proposal remains highly contentious. Opponents, including some Asheville City Council members, are organizing a “Defend Our Water” protest tomorrow evening.

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