Water-rate roulette

For the year 2000, it’s not a question of whether we’ll see a water-rate increase — it’s “how high will it go?”

The answer depends on which financial scenario the Regional Water Authority of Asheville, Buncombe and Henderson opts for, come budget-adoption time this summer, members of the board’s Budget Committee learned during a Jan. 6 meeting.

None of the scenarios presented by staff appeared painless, with the lowest foreseeable increase pegged at about 6 to 7 percent, Committee Chair Daniel Lewis observed.

And that’s if Authority members shelve a promise to pump $800,000 into much-needed water-line repairs and manage to trim operating costs by at least 1 percent, he noted.

“I don’t see how we can do that,” lamented committee member Vonna Cloninger. In the past few years, Water Resources management has already aggressively cut jobs and costs throughout the department.

Add to that the good news/bad news that water use is down, due to particularly effective drought-conservation measures, as well as the loss of one major industrial water user last year. Authority member Jack Tate summed up the consequences: “Revenues have gone flat on us.”

As if that weren’t enough, one local industrial user has dug its own wells, hoping to satisfy half its water needs.

Worse yet, extra costs to relocate water lines, in connection with N.C. Department of Transportation projects in the area, will add about $1 million to an already tight budget in the coming fiscal year, Water Resources Director Tom Frederick noted — not to mention upcoming state-mandated (but unfunded) repairs at the Bee Tree Reservoir.

To cover those costs, Frederick has recommended that the Authority ask the city to issue at least $11.6 million in revenue bonds this year, on its behalf.

To float the bonds, tackle the $800,000 in repairs, and create a reserve fund of $400,000 — all items on the Authority’s fiscal-year 2000 wish list — water rates would have to be raised by at least 11 percent, Administrative Services Manager Rebecca Guggenheim spelled out for committee members.

No one said a word in support of that notion.

Lewis asked whether the Authority could postpone the repairs, drop the reserve-fund proposal, cut its proposed operating budget by 1 percent — and still issue the bonds. After all, he noted, the Authority just received a $3 million state grant to address some of the most critical water-system repairs and improvements; and Frederick had mentioned that, in the coming fiscal year, staff would probably have their hands full with the grant-funded projects, anyway.

Frederick plugged the appropriate figures into a spreadsheet displayed on-screen for committee members. The bottom line: These belt-tightening measures shaved about 1 percent off staff’s “best-case” scenario, which had projected a 7.5 percent rate increase.

But Asheville Finance Director Bill Schaefer — who earlier in the meeting had spent more than 30 minutes walking committee members through a series of budget- and revenue-projection charts — cautioned against dropping the $800,000 for repairs, since requirements attached to bonds issued in the past few years mandate that the Authority maintain the water-supply system.

Lewis suggested that the repair funding could gradually be reinstated in future years.

While Schaefer and Frederick agreed that this plan might meet the requirements of the Authority’s existing bond funding, Cloninger brought up one more bugaboo: If another major industrial user goes out of business, leaves the area, or cuts it water use during the coming fiscal year — all events that happened last year — revenues will drop another 3 percent, which could require an 11 percent water-rate increase, across the board.

“That’s evidence of how business affects people,” commented Tate.

“I wish that [information] would be publicized, so people would [stop asking] industry to pay more,” Cloninger remarked.

Committee member Ted Patton then pointed out what Authority members have heard repeatedly from residents and critics of the board: Low-volume users in the Asheville area (residents, primarily) pay more for water than anyone else in the state — up to four times as much. But what many folks don’t know, Patton added, is that industrial, high-volume users pay the fourth-highest rates in the state. “That surprised me,” said Patton, who has been an active member of Citizens for Safe Drinking Water, a local water-conservation organization.

Committee members digested all the math — but came to no conclusions. The Authority won’t finalize its budget or set rates until midsummer.