In the latest chapter of an intense controversy, locals packed a room at the Metropolitan Sewerage District’s Riverside Drive office in Woodfin yesterday, Nov. 14, to hear what consultants had to say about the agency taking over Asheville’s water system. Although the report from Arcadis focused on technical matters such as staffing and infrastructure, it did provide a possible glimpse into the future.
Led by Rep. Tim Moffitt, state lawmakers have pushed for a merger, sparking heated complaints about what some say is the Legislature’s heavy-handed approach to local affairs. In a referendum earlier this month, city voters overwhelmingly opposed selling or leasing the water system, and Asheville City Council members called the vote a rejection of the merger idea. A study committee chaired by Moffitt, a Republican, has said it won’t force the issue as long as MSD and the city are engaged in “good faith negotiations”; the Arcadis report — paid for by MSD — is part of that effort. The city will present its own merger analysis later this month, and a second Arcadis report will consider including smaller systems serving Montreat, Weaverville and Biltmore Forest.
Meanwhile, here are some key points from the dense, 200-page document.
MSD takeover could save money
One of the main arguments for consolidation is the idea that combining services such as billing and engineering expertise would generate significant savings. MSD would also avoid “nonbetterment” costs the city has to pay when water infrastructure must be changed or moved due to highway or other construction. Merging the operations would save funds in the long run, the study concludes.
The report lays out three scenarios, each representing different staffing levels. In one, a merger would actually cost more in the first year, reflecting new office space and personnel costs. However, after those one-time expenses — which are, mainly, construction costs — are finished, the consolidated system would save anywhere from $2 million to $4 million annually, the study predicts, while enabling better coordination of water and sewer projects.
City would lose revenue; system employees would make more
On average, MSD employees earn more than city water-system workers and have received more raises in recent years. In a merger, all water-system employees would come under MSD’s pay scale; the district would also hire 13 new workers.
The Sullivan Acts (state legislation governing Asheville’s water system) allow the city to use a percentage of water revenues for other infrastructure needs. A merger would end those transfers, saving money but forcing the city to seek alternative funding for other necessary infrastructure improvements.
Water rates might increase more slowly
Asheville’s system has averaged $8.6 million in annual infrastructure expenditures, the study finds, compared with $13.1 million for MSD. But in recent years, noted MSD General Manager Tom Hartye, the city has ramped up its infrastructure spending, with plans to increase it to $12.2 million annually. That means MSD wouldn’t need to raise rates more than the city projects for replacing the water lines at a fairly aggressive pace. In the first few years, the new system would raise rates at roughly the same pace as the city of Asheville plans to, the study estimates, but subsequent increases would be smaller. Both the consultants and board members, however, said these are rough projections that don’t necessarily reflect what MSD will do.
Both systems well-run
The current water and sewer systems both have solid infrastructure and responsible financial management, the report concludes.
“Things were generally in good condition,” said consultant Cathy Traynor. “We didn’t see anything out of the ordinary; [the water system] was fiscally well-run.” Arcadis did recommend that Asheville spend more on updating its infrastructure, but this is true for many municipalities, Traynor observed, “especially a city having to balance the affordability of doing that with the need to invest in their pipelines.”
Huge issues not addressed
Arcadis’ report considers only system operations, leaving out the most controversial questions: how the system would be governed, who would own the considerable assets and whether the city would be compensated for losing them.
Local activist Barry Summers, a vocal critic of the merger, asked how the report could say there would be savings without tackling those issues.
MSD board Chair Steve Aceto responded: “We’re just trying to solve a problem here. … No one should expect us to have X-ray vision” about all the complexities a merger would entail. Aceto asked Summers if he felt the report fell short as a first step in getting a handle on the issue. Summers called the report “a wonderful job” but said the whole process is flawed.
During MSD’s full board meeting later that day, Asheville Vice Mayor Esther Manheimer, who serves on the board, moved that the report be sent back to the agency’s Planning Committee and the consultants to incorporate those larger issues. The consensus was that if the Legislature forces a merger, MSD should be prepared with some suggestions regarding those concerns.
To view the entire report, click here.
(photo by Bill Rhodes)