How could a business possibly raise its prices, sell the same number of widgets, and yet collect less money for them?
It doesn’t take a certified public accountant to know that something’s amiss at the Metropolitan Sewerage District of Buncombe County.
Even though the district raised its residential sewer rates by a total of 7.5 percent over the past four years, the income from those users rose only 2.7 percent.
And in the past three years, total revenue from residential customers has fallen from $14.4 million to $13.5 million — a 6 percent drop.
“Water flow seems to be the same as it has been,” mused new MSD chair Larry Casper, who heads Lustar Dyeing and Finishing. “The rates went up, and the number of customers went up.
“We seem to have a problem there,” Casper said. “Without explanation, we don’t know where it is.”
“We’re going back to check the actual cash deposits on a monthly basis over a four-year period” to figure out what’s wrong, MSD General Manager Bill Mull told Mountain Xpress. “We’re doing a lot of looking at that right now. … It’s going to be a lot of number crunching.”
Individual sewer bills are based on the amount of water sold to households by their local town or city — currently, $2.54 per 100 cubic feet of water drawn from the city’s water lines. Revenues collected in most communities spiked in fiscal year 1994-95, when fees were increased by 4 percent.
Since then, however, documented revenue has dropped in most communities — even after a second, 3.4 percent rate increase. In Asheville, total residential sewer-fee revenues fell from $12.16 million in 1994-95 to $11.31 million in 1996-97, a 7 percent drop.
Although documented revenue also decreased in Biltmore Forest and Weaverville, the system recorded more money from smaller communities like Christmount, Montreat and Ridgecrest. In Woodfin, total recorded payments increased by almost 15 percent over four years.
Water-conservation efforts may account for a slight decrease in water usage, but nothing this drastic, Mull said. Overall, the total gallons of water consumed “did not appear to have dropped.”
In the most recent year alone, documented collections are down by $432,519 from the previous year, and down $868,886 from 1994-95. These figures are based on MSD’s audited financial statements.
Meanwhile, payments from industrial users also are going down, partly because of more efficient production technology and partly because Gerber Products is phasing out its local operation. In fiscal year 1996-97, the system’s top-10 industrial water users paid $341,491 less than they had the previous year — almost a 10 percent drop.
But it’s the residential rates that prove most troubling. Part of the problem is that these numbers reflect what the district has deposited, but not who owes money and how much, said Casper, calling for “more internal control” during the Dec. 17 MSD board meeting.
Mull said part of the confusion may be from the accrual accounting system, which reflects the amount of money billed, whether it has been collected or not. “When you do an accrual basis [account], you’ve got estimates,” he said. “It’s more difficult to find out what’s the real number.”
(Accrual accounting is designed to help larger businesses and governments keep better track of the cost of their operations, and includes payables and receivables, even though these amounts have yet to be paid our or received.)
From now on, MSD will compile quarterly reports showing the district’s finances in both cash- and accrual-based accounting, Mull said.
Leaking sewage, leaking money
This fiscal confusion comes at a time when MSD doesn’t have enough money to replace the decrepit sewer lines criss-crossing Asheville. Most of Asheville’s sanitary sewer lines were installed in the 1920s and ’30s, Mull explained, adding, “They’re ancient out there. They’re full of leaks.”
Pro-development groups favor a policy of letting municipalities and other entities run new sewer lines to new areas and then deed those lines to MSD, which would maintain them. But the MSD board and management are committed to fixing the old, leaking lines first, before taking on any new ones, according to Mull. “We have our hands full fixing up what’s out there right now.”
In the current fiscal year alone, the district has budgeted $20.5 million for capital improvements. Over the next five years, it expects to spend $97.9 million on improvements; about half the work is to be funded with borrowed money.
The confusion also comes at a time when about 40 percent of the work has been completed on a new $2.7 million maintenance building near the sewage-treatment plant on Riverside Drive in Woodfin.
MSD has tried to consolidate its operations since 1991, when about a dozen different local governments decided that the Metropolitan Sewerage District should take control of their sewer lines, Mull said. The maintenance building, scheduled to be finished next July, will house crews and equipment now based in a building in Biltmore.
Architects and contractors have been working on the new maintenance building for two years now. But board member Bob Selby, who chairs MSD’s Capital Improvement Projects Committee, said he does not recall giving final approval on the latest $1.185 million committed to the project.
The committee originally approved $1.5 million, which later increased to $1.6 million, Selby said. However, when the total reserved for the project was pumped up to $2.8 million, the committee wanted the full board to vote, he recalls.
“I just don’t remember [giving final authorization for] that appropriation,” Selby said. “I specifically remember wanting to vote on that separately.
“We’re pretty far down the path” on the new maintenance building, conceded Selby. But he argued that the board should study the project more before it decides to “pull the trigger” and approve the rest of the spending.
“The board agreed to do these things,” protested board member Joe Joyner, arguing that the MSD can’t renege on construction contracts to which it has already committed.
But where is that extra cash to come from?
“Technically, we don’t have any money for this building,” board member Mike Sobol pointed out.
Normally, it costs residents of a small house $600 to get a new sewer-line hookup. Now, however, if the house is funded through an affordable-housing program, the hookup costs just $300.
Normal hookup fees are based on the amount of space inside the house: $750 for a medium-sized house, and $900 for a large one.
Outgoing board Chair Pete Post and Vice Chair Ben Slosman have reached the ends of their terms. Their fellow board members replaced them with Casper and new Vice Chair Glenn Kelly, the mayor of Biltmore Forest.
Other current board members include Jackie Bryson, Mike Holcombe, Ben Pace and Elizabeth Graham. Asheville City Council member Barbara Field will replace Slosman in February.
The board members are paid $100 for each board and committee meeting, up to $300 a month.
The board considered a proposal that would have prevented individual board members from collecting paychecks from both the MSD and the local governments they represent. Holcombe collects a full-time salary from the city of Asheville, and Post works for the town of Montreat. City Council members also receive city compensation.
Graham argued that it isn’t the MSD’s place to decide whether its board members get paid twice. Local governments could choose to deduct the MSD compensation from board members’ regular salaries, she said.
The board decided not to prohibit the double compensation.
The next Metropolitan Sewerage District board meeting is scheduled for 2 p.m. Jan. 21 in the administration building at 2225 Riverside Drive, north of the sewage-treatment plant in Woodfin. The meetings are open to the public.