Water torture

Mere months before the many-headed Hydra that is the Regional Water Agreement is scheduled to expire, the central questions remain: Will Asheville and Buncombe County negotiate a settlement tying up all the loose ends? Will their lawyers wind up duking it out in court? Or will the General Assembly, like some legislative deus ex machina, intervene on the county’s behalf and induce the city to transfer its water infrastructure to an autonomous regional authority?

For the moment, all bets are off.

When Asheville City Council members gave notice last May of their intention to pull out of the Water Agreement, they did it confidently (the vote was unanimous), seemingly believing they had placed the ball cleanly in Buncombe County’s court. Announcing their resolve to take back control of both the rate structure and the water infrastructure from the Regional Water Authority of Asheville, Buncombe and Henderson, Council members had apparently decided that, on balance, they could live with the various and sweeping consequences of the agreement’s demise. But despite having given the county no warning about the move, the city was hoping for an amicable separation. The announcement “gives us a one-year time frame for negotiations,” Mayor Charles Worley said at the time, “and an option down the road if negotiations aren’t successful.”

And given the rigid deadline (the agreement is set to expire June 30 — the end of this fiscal year), many observers thought the county would soon come to the table ready to compromise.

They thought wrong. Although there were some largely fruitless staff-level talks early on, the Buncombe County commissioners — distracted for much of late 2004 by flood relief and elections — didn’t formulate a response until Feb. 4. And what they offered proved to be quite the opposite of what Asheville had said it wanted.

Holding a hard line against rate differentials and city control over water-line extensions, the commissioners proposed establishing a fully independent regional authority to which Asheville would transfer the water infrastructure (a setup that Buncombe and Henderson counties had long been pushing for). They also proposed establishing a separate parks-and-recreation commission to which both the city and the county would cede many of their recreational facilities (including, in the city’s case, the seriously decrepit Civic Center). Asheville, though apparently receiving no compensation for these assets, would benefit by avoiding the expense of administering and renovating them, the commissioners explained.

The county also temporarily redesigned the home page of its Web site, giving prominent play to what it called “The Whole Story on the Water Agreement Controversy.” The document lays out the county’s take on local water history and summarizes Buncombe’s proposal, warning that if no settlement is reached, “Asheville water customers who live outside the city limits could see their water rates double or triple” (bolding theirs). “New development,” it continues, “could be forced to accept annexation in order to be hooked to a water supply.” (See sidebar, “Postcards to the Edge.”)

Jockeying for position

To some on City Council, the commissioners seemed more interested in playing to their own constituents’ fears than in negotiating in good faith with the city. Vice Mayor Carl Mumpower described the county’s proposal as lacking “substance” and reflecting a strategy of “negotiation through manipulation.” Council member Brownie Newman sounded a more charitable note, calling the proposal “a trial balloon.” Unlike some of his Council colleagues, Newman has said he is open, in principle, to the idea of a regional authority. Nonetheless, he maintains that there really isn’t any point in negotiating unless the county accepts “a meaningful rate differential.”

On Feb. 23, Mayor Worley sent a three-page letter to the Board of Commissioners that spelled out Asheville’s motivations for pulling out of the agreement. He particularly stressed the need for fairness in the rate structure and the city’s desire to guide the growth around it.

Water rates for Asheville residents, who include “the largest concentration of poor and minority Buncombe citizens,” are inordinately high, the letter noted. The commissioners, charged Worley, “believe that city residents should continue to pay nearly twice the state average water rate … so that county residents outside the city can pay a comparatively standard rate.” But Worley also said the city had “never suggested a scenario where the customers outside the city limits would have to pay double or triple their current water bill.”

Water rates aren’t the only key issue, however. “Asheville is the largest city in North Carolina located in a county that does not have comprehensive land-use planning,” the letter continued a few paragraphs later. “By controlling the availability of water, the city of Asheville can positively affect the growth pattern around its borders.”

But Worley also indicated that the city is open to considering concessions in several areas, including “a cap on outside-the-city rates,” as well as provisions “that assure that water needs for economic growth in the county will not be arbitrarily denied” and “that limit transfers from the water fund to the city’s general fund.” In addition, the city expressed a willingness “to discuss placing the Mills River Water Treatment Plant into a regional water authority with a commitment to provide water at wholesale rates to other government entities engaged in distributing water.” (And recent comments by officials from Asheville, Hendersonville and Henderson County suggest that those three governments are in fact making substantial headway in negotiations on creating such a regional authority.) In any case, the city would have full control over the older plants at the North Fork and Bee Tree reservoirs, which are much less expensive to operate.

The Buncombe commissioners quickly dug in their heels, sending a letter in response to Worley’s just two days later. “It is clear … that the city is fixed on only one solution — to use water as a tool to force annexation on our citizens,” the letter charged, making no reference to the four topics the city had proposed for discussion. Nor did it offer any sort of payments for infrastructure that might make a regional authority more attractive to Asheville. Instead, the letter continued, “A system where the City exercises complete control over who outside the City may receive water and in which the city can charge whatever rate for water to non-City residents it chooses, is not fair and is not something we will accept.”

What a long, strained trip it’s been

Ultimately, the Water Agreement is the strange fruit of the Sullivan Act, a piece of state legislation passed in 1933 that bars Asheville from charging higher rates to specified residents outside the city. Indeed, it had been taken as a truism in the water wars for decades that unless Asheville could get the law repealed it could never hope to emulate most other North Carolina cities in charging outside users more for water. After reassessing the Sullivan Act’s applicability to the current situation in the wake of decades of annexation and line repairs, however, the city apparently began to feel more comfortable with the prospect of annulling the Water Agreement.

The tangled legal situation traces back to the 1920s, when several water districts surrounding Asheville issued bonds to pay for installing a system of water mains to distribute water purchased from the city. When those districts defaulted on their bonds, the county stepped in as trustee, taking over both the debt and the water-line maintenance (which were financed by special taxes assessed within the respective districts). Asheville had been charging the residents of those areas twice as much for their water as city residents, but after the county assumed responsibility for the lines, it appealed to the state legislature to prohibit rate differentials, protesting that the city had neither built nor maintained those lines. In 1933, the legislature passed the Sullivan Act, which forbids Asheville “to charge, exact or collect from any resident of Buncombe County, whose property is now connected or may hereafter be connected with the main of any water district which has paid or issued bonds for the payment of the expense of laying such main, a rate for water consumed higher than that charged by the City of Asheville to persons residing within the corporate limits.”

At the same time, the Sullivan Act gave Asheville the right to “discontinue the supply … at any time … Asheville may deem that the city has use for all of its water supply.” The law also noted that it was the county’s duty “to maintain the water lines in proper repair.”

In the 1955, the city challenged the law’s constitutionality by passing an ordinance charging outside residents more for water. But county residents connected to those old water-district mains — and the county itself in its role as trustee — sued. In “Candler v. City of Asheville,” Buncombe County Superior Court Judge J. Campbell ruled in Asheville’s favor, but the state Supreme Court overturned the decision on appeal.

Municipalities, the high court declared, “are creatures of the Legislature,” which has the right to “prescribe reasonable rates at which charges may be made by the public utilities for their services to the public.” But it noted that the Sullivan Act was binding only “insofar as it pertains to the right to sell water to persons, firms, and corporations who obtain water through mains constructed and maintained at the expense of the taxpayers in these water and sewer districts.” Back then, most (if not all) of the system’s customers outside of Asheville would have fit that description.

Exactly how many do now, however, is subject to dispute — providing grist for another lawsuit if the city adopts differential rates once the Water Agreement expires. The county, citing the geographic boundaries of the old water districts, argues that Sullivan still applies to most water-system customers outside the city. But David Hanks, Asheville’s interim water-resources director, maintains that the law now covers only a small percentage of the system’s customer base: those still hooked up to the actual, original pipes paid for by those water-district bonds.

In any case, after the Supreme Court ruling, the situation remained unchanged until 1981, when Asheville and Buncombe County signed the original Water Agreement (it was amended in 1987 and 1996). As part of the deal, the county turned over its water lines to the city. In exchange, Buncombe County took over the expense of maintaining various city-owned facilities (such as McCormick Field and the municipal golf course) that are used by all county residents. In addition, the county agreed to reimburse Asheville and other municipalities that have their own police forces for Sheriff’s Department services that residents of those areas pay for but don’t use (the reimbursements to Asheville now total about $1.9 million a year).

But Asheville also agreed not to charge non-city residents higher rates. And though the city retained ownership of the water infrastructure and city staff continued to administer the system, a new entity — the Asheville/Buncombe Water Authority — was created to draw up the annual budget (subject to city and county approval) and make decisions about water policy and line extensions.

Another clause in the agreement allocates 5 percent of water revenues to Asheville (for its unrestricted use) and 2.5 percent to Buncombe County (to fund economic-development efforts exclusively). This has become controversial in recent years as the Water Authority has faced a crisis in funding system maintenance.

In 1995, Asheville and Buncombe signed the Regional Water Supply Agreement with Henderson County (allowing them to build the Mills River water-treatment plant). The following year, the Water Agreement was amended to allow Henderson County two seats on the Water Authority. Nonetheless, the Authority remained a creature of the restated Water Agreement (which is signed only by Asheville and Buncombe County).

Down the drain

If the agreement expires, this whole complex web will unravel — raising some interesting legal questions. For instance, if the city has replaced formerly county-owned water mains since 1981, then whose lines are they now? (Is it still Abe Lincoln’s ax if the handle has been replaced four times and the head twice?) And should the county be reimbursed for the money it spent rebuilding McCormick Field in 1992?

But the negotiating tack the county has taken suggests that it’s less interested in sorting out these issues with the city than it is in preventing Asheville from pulling the plug on the Water Agreement. Or, at the very least, in staving off high rate differentials and the use of water hookups as an annexation tool. And while Buncombe may be making little headway in bringing Asheville City Council members around to its point of view, the county is apparently having more success with another group of elected officials: the local legislative delegation.

Sen. Tom Apodaca (representing Henderson County) told the Hendersonville Times-News that the whole mountain delegation to Raleigh opposes Asheville’s withdrawal from the Water Agreement and the Water Authority. And in late February, Rep. Wilma Sherrill (who represents portions of Asheville and southern Buncombe County) and Sen. Martin Nesbitt (Buncombe County) introduced a bill that so far has only a title: “Asheville Water Authority.” Such blank bills give state legislators a slot in the legislative docket in case they want to craft a bill later in the session.

Children, behave

A recent e-mail exchange involving various elected officials shows Sherrill poised to step in and Asheville concerned about the prospect. It began with a March 2 e-mail from Mumpower to Worley (copied to City Council members, the Buncombe County commissioners, state representatives and others), in which the vice mayor argued against Asheville’s hiring a lobbyist to make its case to legislators. Urging face-to-face discussions instead, Mumpower argued that “the artificial buffer and comfort provided by a lobbyist” would represent a waste of money and reflect badly on the city.

Council member Jan Davis responded that although he agreed with Mumpower “from a philosophical standpoint,” he suspected that “retaining a lobbyist may be very cost-effective at the end of the day.” He also touched on some of his own concerns: “I will hope legislators will be open to real facts and not just the emotion and politics of the matter. I am always fearful they will consider Asheville with the same jaundiced eye that has sometimes been manifest in the past.”

Reading Davis’ comments, Sherrill wrote (all ellipses are hers): “I live in the City by choice and care a great deal about my City and its government … I also care about the folks who live in Buncombe County, and since I am elected to [represent] everyone … I have every intention of trying to do this in a fair and equitable way. I continue to hope that the City and County leaders will have the good sense to compromise and come to an equitable agreement that will be fair to everyone … not just in the best interest of either … [and] not using water (which is necessary to survive) as a tool to get their way … [If] not then it is my belief that we have no choice but to step in.”

Davis responded to Sherrill as follows: “I do think that our delegation, in times past, have cast a jaundiced eye at Asheville. In my limited experience, I recall several times when the legislators were treated by past councils with something akin to arrogance. I think we all remember times that communication could have prevented some ill feelings. Again, I value our relationship and apologize for any stepping on feelings. My sincere hope is that we get to a good place with the Commissioners and I appreciate any help you can do to that end.”

Finally, Mumpower wrote to Davis: “To imply that it is appropriate to ‘step in’ with legislative action (per the open ended bill that has been submitted) implies that the City and County are governed by children and that parental discipline may be in order if we misbehave. This is not the system of government we have, and such actions would represent an abuse of powers that poorly supports the long term viability of that system and the people we represent.”

But Rep. Susan Fisher (who represents parts of Asheville as well as northern and western Buncombe County) takes issue with the idea that the entire mountain delegation is out to get the city and is dead set on interfering. After Asheville gave notice of its intention to dissolve the agreement last year, Fisher explains, both Chairman Nathan Ramsey of the Buncombe County Board of Commissioners and Mayor Worley approached legislators about the potential need for legislative action (the city was considering lobbying the legislature to repeal the Sullivan Act). That’s why the blank bill was made available, she says.

For her own part, Fisher says she’s “not taking a stand” on the city’s move and hopes Asheville and Buncombe can work things out for themselves. But what if the two governments can’t cut a deal by the June 30 deadline? Will the General Assembly get involved? “It’s too early to answer that question,” says Fisher. “But I don’t anticipate that being necessary.”

More to come…

For continuing coverage of the evolving water story, check out the April 6 issue of Xpress.

[Jonathan Barnard covers water issues for Xpress.]