Projected IT costs for MSD/water system merger examined

A due-diligence document posted July 31 in a comment to the Mountain Xpress website (see “City Will Go Forward With Referendum on Water System Transfer”), revealed potential costs of information technology in the proposed transfer of the Asheville water system to the Metropolitan Sewerage District of Buncombe County. But the $1.74 million figure quoted was somewhat misleading.

The “IT Due Diligence” study cited included an estimated range of $435,000 to $1,735,000 for the potential consolidation of city and MSD technology infrastructure. That would include outlay for computers, billing system and software. The consolidation was a legislative study committee recommendation during the past session of the N.C. General Assembly.

“This [document] is preliminary information,” explains Tom Hartye, MSD’s general manager. It was gathered in preparation for the water-sewer consolidation impact study approved at the July 18 meeting of the MSD board (see “MSD Awards Contract…,” July 19 Xpress). That fuller study will attempt gage the overall costs of a merger of the two entities. According to Hartye, the IT projection was developed by a subconsultant in order to have as much information as possible ready for the impact study itself. (See “Reluctant Partners,” August 1 Xpress.)

The IT budget for a merger, adds Hartye, could be “easily offset by the costs the water department is paying right now.” The annual budget for technology expenses by the water department is $550,000, he says, and is paid to the city of Asheville.

Up to this point, MSD has not projected a rate increase or decrease based on a merger of the two systems. Hartye expects the upcoming impact study’s figures for repair and replacement of the water equipment will be the driving force in any rate decisions. “When that decision gets addressed, that’s probably going to be the biggest driver of what the rates are going to be,” he says.

by Nelda Holder, contributing editor

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5 thoughts on “Projected IT costs for MSD/water system merger examined

  1. bsummers

    “Somewhat misleading”? Excuse the heck out of me, Ms. Holder, but I’m quoting verbatim from the MSD document:

    “Estimated costs of consolidating City of Asheville WRD with Metropolitan Sewerage District technology infrastructure are approximately $1,735,000 USD.”

    And mind you, that quote is not a slip of the tongue by a private subcontractor, that came directly from the MSD’s own IT Manager, Matthew Walter. Again, sorry for trying to quote people accurately. I know that’s becoming quaint and obsolete…

    “Up to this point, MSD has not projected a rate increase or decrease based on a merger of the two systems.”

    Unless you take MSD General Manager Tom Hartye’s words, as reported by Joel Burgess earlier this year as an indication:

    “Regarding MSD taking over Asheville’s water system, Hartye said the city system was well-run. There would be a few efficiencies if MSD took over, but officials running the sewer system would likely recommend an increase in the spending on maintenance and new construction.

    “That could mean the current 125,000 city and noncity water customers would see small annual increases of the same kind sewerage customers experience, said the MSD director.”

    “Henderson, Buncombe sewer mergers eyed,” Joel Burgess, AC-T, Mar. 22, 2012

  2. bsummers

    And Good Government Nelda, whom we all know and love, wouldn’t simply transcribe Mr. Hartye’s spin on the subject. The first question out of her mouth would be, “Okay, but why does the MSD document in my hand say ‘…the estimated costs are $1.74 million’?”

    Who are you, Ms. Holder, and what have you done with Good Government Nelda?

  3. Nelda Holder

    Barry is correct that Mr. Walter’s letter uses the figure of $1,735,000. However, Page 9 of the actual “IT Due Diligence” document provides a range of estimated totals and makes the following statement:

    “The totals for this initial assessment report is (sic) intended to provide a preliminary view of IT costs associated with merging
    COA Water with MSD Sewer services. Every effort has been made to accurately estimate costs.”

    Those totals are listed as “Low Level,” $435,000; “Mid Level,” $1,145,000; and “High Level,” $1,735,000.

  4. bsummers

    Yes, I read the document also. I just thought it worth noting that there is no mention of a “range” of estimates in the cover letter/summary, and the highest estimate is flatly presented as the ‘estimated cost’. Not sure why that doesn’t peak your interest as well, given that it’s $1.3 million dollars of ratepayer monies in the difference.

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