A clash of interests

To a large degree, the local water wars have revolved around exceptions. Is it fair that Asheville is the only North Carolina city that’s not allowed to charge more for water beyond the city limits? Does Asheville’s unique history warrant such special treatment by the General Assembly? And for that matter, is any city justified in charging more for water-and-sewer service beyond the city line, when other public utilities (electric, telephone, cable television and so forth) don’t do this? The arguments go on and on.

But this focus on the exceptional may obscure what’s more typical — basic tensions about money, power and development that often characterize the relationships between American cities and their suburbs. And with the Water Agreement due to expire on June 30 as Xpress went to press, it seemed an appropriate time to consider those tensions.

When their interests conflict, suburbs tend to view the nearest city as the region’s 800-pound gorilla: rapacious, overly powerful, mired in problems of its own clumsy making, and only too happy to foul the pristine nests of its neighbors — in short, in need of restraint. Cities, in turn, often see suburbs as parasites positioned to feed off the urban economy and enjoy city services and amenities without bearing their fair share of the costs and burdens — despite the greater per capita wealth suburbs often enjoy. Observers of the Asheville/Buncombe brouhaha may recognize these archetypal patterns.

In the political arena, city residents are more likely to vote for Democratic candidates. (Kerry, for instance, topped Bush by a 2-1 ratio in Asheville last year, despite losing in the county as a whole.)

Local differences heighten this typical urban/suburban split. There is, for instance, the complex sociocultural divide separating natives and transplants. But perhaps the most important local difference is the stark divergence in land-use policies and attitudes toward development. Whereas Asheville has incorporated “smart growth” perspectives emphasizing infill development in its planning-and-development regulations, Buncombe County remains the most populous county in the state that has no zoning whatsoever.

These demographic and philosophical disparities — and their political implications — have strongly colored the whole water debate.

Whose side are you on?

In a sense, the Buncombe County commissioners have aligned themselves with the political interests of the suburbs: both those of current residents (who don’t want to pay higher rates for their water) and those of suburban developers (who want access to city water when they build new subdivisions but don’t want to be forced to accept annexation, or to tailor their developments to Asheville’s ideas about smart growth, in order to get it).

But suburban is not the same thing as rural. In fact, it could be argued that Buncombe’s truly rural residents — those living in the unincorporated areas of the county and getting their water from a well — are the ones who most unequivocally stood to gain when Asheville announced its intention to pull out of the Water Agreement.

That’s because the 1981 document was essentially a trade-off, and rural residents didn’t benefit from either end of the deal. Under the agreement, the city consented not to challenge the Sullivan Act (the 1933 state law that has barred Asheville from charging non-city residents more for water) and ceded control over water policy and line extensions to the Water Authority. In return, however, Asheville received certain “tax equity” benefits. The county took over the cost of administering and maintaining various city-owned recreational facilities, and it agreed to reimburse municipalities for Sheriff’s Department “patrol and investigation” services that city residents pay for in their county taxes but don’t use. (Taken together, these have been costing Buncombe County $2 million to $3 million per year.)

But the trade at the heart of the Water Agreement has affected four basic groups of county residents differently. City residents have been paying more for water than they would have with rate differentials — but the tax-equity benefits the city has enjoyed under the deal have helped fund city services, perhaps resulting in lower city taxes.

The residents of Asheville’s satellite municipalities have benefited doubly from the agreement — first from the tax-equity reimbursements, and second from having county representation on the Water Authority, which sets the wholesale rates for the water that the Asheville system sells to the independent water systems of Biltmore Forest, Woodfin and Black Mountain.

Suburban residents in unincorporated areas of the county that were hooked up to city water, meanwhile, have enjoyed lower water bills (because of the ban on rate differentials) but a portion of their property taxes has been earmarked for helping fund the county’s maintenance responsibilities and reimbursements to municipalities. Again, this may have meant higher taxes overall — or a lower level of services.

Still, the Water Agreement has given all three groups at least some benefits. For rural residents, however, it’s been pretty much a loss. The protection from rate differentials hasn’t helped them, since they don’t use city water to begin with. Yet they’ve still had to help pay for the tax-equity transfers to the city via their county taxes. Consequently, these folks have always stood to benefit from the agreement’s demise, insofar as it canceled the tax-equity payments (which would presumably result in either lower county taxes or better-funded county services).

That leaves one other group — developers in unincorporated areas of the county who want city water for their new subdivisions. Higher water rates for non-city residents would make the houses these developers are building more expensive to live in (and thus, perhaps, somewhat less desirable). A greater concern may be that Asheville, like many other cities, might demand annexation in exchange for water hookups. The city, meanwhile, is probably casting a hungry eye on the potential tax revenues from upper-income suburban developments.

On guard

Rate differentials and annexation aside, there’s also the city’s stated desire to use water-line extensions and hookups to steer development toward Asheville’s smart-growth objectives. Last winter’s battle over meters for The Ramble is a case in point.

The developer, Biltmore Farms, wanted individual meters for the homes in The Ramble, a gated community going up between Biltmore Forest and Biltmore Park. The city, meanwhile, said it had encountered difficulties servicing individual meters in gated communities and had philosophical issues with “public utilities on private streets” (according to Planning and Development Director Scott Shuford). Instead, the city offered the developers a choice: open up the community and get individual meters, or else have a master meter at the community’s edge. Per gallon, the water from a master meter would be cheaper (since it would be billed at multifamily, high-consumption rates), but the development would have to deal with all the maintenance expenses and billing hassles on its own. Some informed observers have seen this as a cost-saving move for Asheville.

Biltmore Farms, however, didn’t like the choices. Its lawyer, appearing before the Water Authority last November, presented several arguments: that the company had been informed of the need for a master meter only late in the process; that a guard would be stationed at one of the gates around the clock, allowing for 24-hour access; and that another gated community, The Cliffs at Walnut Cove, had been given individual meters.

The developer’s request was routed to the Policies and Priorities Committee, which in December voted unanimously in favor of both individual meters for The Ramble and a general policy of supplying individual meters to gated communities made up of single-family homes. According to Interim Water Resources Director David Hanks, the Water Authority accepted the committee’s decision on the meters but did not enact a policy change concerning gated communities. City staff, he said, will consider future requests on a case-by-case basis.

Asheville, on the other hand, opposed both these positions. Hanks explained to the committee that Asheville hadn’t asked for a master meter for Walnut Cove because at first, the city hadn’t realized it was a gated community (developments outside the city’s extraterritorial jurisdiction aren’t required to give city planners much information). Hanks also noted that having asked other cities about their policies, he’d found that most require master meters for gated communities. And several cities, noted Hanks, also mentioned that they were trying to discourage gated communities, preferring developments providing housing for a wider range of income levels.

The fallout from sprawl

The very idea of a gated community is antithetical to the city’s smart-growth planning strategies. Among the hallmarks of this design philosophy are connectivity and a preference for the prewar model of the street grid over the postwar model of the cul-de-sac. Street grids are believed to relieve traffic pressures on arterial roads and provide greater ease of movement for pedestrians and bicyclists.

And for those who don’t live in them, gated communities function like one huge cul-de-sac. If The Ramble opened up its gates, for example, a cyclist could follow low-traffic roads through Biltmore Forest and The Ramble all the way from Biltmore Village (which is slated eventually to have a greenway along the Swannanoa River) to Lake Julian. But with the gates closed, riders will be forced to navigate the heavy traffic on Hendersonville Road.

Of course, smart growth also emphasizes density and reining in the economic inefficiencies of sprawl. That puts it very much in the mainstream of the American environmental movement, which opposes sprawl both for its destruction of habitat and its land-use patterns that result in greater per capita energy consumption.

But in one way or another, the problems of sprawl feature prominently in the city’s arguments in favor of both rate differentials and city control of the water system. Higher rates for outside residents are justified, argues Asheville, because the higher density of city customers per mile of line means that it costs less to serve them. The city also holds that the lack of differentials is especially unfair, since there’s a higher proportion of poor people — and particularly poor African-Americans — within the city limits. And while the county maintains that there’s a long local tradition of not imposing rate differentials, Asheville Mayor Charles Worley counters that the same argument could have been made in opposition to the Emancipation Proclamation, Brown v. Board of Education, and the civil rights acts of the 1960s.

The most extensive national study to date on the relationship between density and the cost of providing water-and-sewer service is “Another Cost of Sprawl,” sponsored by the Natural Resources Defense Council in 1998. The conclusions reached by the study, which looked at systems in Cleveland and Chicago, closely mirror many of the arguments Asheville has put forward in favor of higher rates for outside residents.

“The study found that the unit costs associated with the lowest service densities studied are significantly higher — in some cases more than twice as high — as those associated with the highest service densities,” the report’s executive summary explains.

“In effect, the costs of sprawl are being subsidized by ratepayers in non-sprawling locations. Further, because lower income residents often live in these non-sprawling, higher density locations, such subsidies may frequently be paid by those who least can afford them.”

In both areas examined, “The density of development was the primary indicator of unit O&M [operation-and-maintenance] costs for conveyance,” the study found. Cleveland had an “average inside-City service density of about 504 service units per mile of pipe,” compared to “271 service units per mile of pipe” in its suburbs. For that reason, the study estimated the true cost of service in the Cleveland area to be about 85 percent higher outside the city limits. (The cost-of-service differential was specifically estimated for sewer service, for which the study had more extensive data, but the authors note that the same cost factors would apply to water service.) And while Cleveland has a little less than twice the service density per mile of pipe as its suburbs, in Asheville the disparity is much higher (“Inside the city limits, there are 634 water customers per square mile. … In unincorporated areas of Buncombe County, there are 107 customers per square mile,” the city’s Web site reports.)

Agreeing to disagree?

These arguments, however, have failed to sway either the county or its supporters. And ever since Asheville announced last year that it was pulling out of the Water Agreement, the county has stood its ground in opposing rate differentials and supporting an autonomous water authority that would own or lease the city’s water infrastructure, set policy and hire staff. Citing the example of the Metropolitan Sewerage District, the county and its allies have argued that such entities operate more smoothly and efficiently (and with far less acrimony) — in part by avoiding the “nonbetterment costs” incurred by the current, nonautonomous Water Authority in connection with state road projects — and thus are more able to fund infrastructure maintenance and repairs. The county has estimated that eliminating the nonbetterment costs would save an average of $1 million or more per year.

Local developers and business groups (such as the Asheville Area Chamber of Commerce and the Council of Independent Business Owners), meanwhile, have generally sided with the county. A glance at the local real-estate listings (or even a cursory reading of billboards) clearly indicates market demand for pricey, low-density, gated communities near Asheville. And if these communities can avoid paying city taxes while their golf courses get water at the same rate as city residents, so much the better.

Perhaps more surprisingly, some prominent local environmentalists have also taken the county’s side. At an April public forum sponsored by several local newspapers and the Coalition of Asheville Neighborhoods, Hazel Fobes, chair of Citizens for Clean Water and Air, blamed the city for the lack of progress in reaching an agreement.

And Rick Maas, co-director of UNCA’s Environmental Quality Institute, shares the county’s view that differentials aren’t fair, given the region’s unique history. Maas, who has served on the boards of both the Water Authority and the Metropolitan Sewerage District, blames the stalled negotiations on the city’s insistence on rate differentials. Asheville, he argues, did little water-system maintenance for decades before the Water Authority was formed. As a result, says Maas, most of the recent repairs have been to city lines, rather than the generally newer — and mostly developer-donated — county lines.

He also disputes the city’s claim that its watershed is worth billions. (A look at the numbers reveals that a total value of $2 billion, the 22,000 acres of the watershed would have an average value of $90,000 per acre, even though most of the land is far too steep to build on. Some might argue, however, that in a time of increasingly scarce water resources, pristine watersheds cannot be treated as merely so much undeveloped real estate.)

And then there’s the question of autonomy, the lack of which has hampered the Water Authority’s efforts to repair a crumbling infrastructure it doesn’t own using a budget that must be approved by the city and county. Maas and other proponents of forming a true authority often point to MSD, a true regional authority that has title to the sewer infrastructure and employs its own staff.

For months, the city and county have appeared hopelessly divided on these and other issues and seemed headed for a costly court fight with an uncertain outcome. But on June 23, with just a week to go before the agreement would expire, the Buncombe County commissioners sent a letter to Mayor Worley declaring that “in the spirit of compromise and cooperation, and to avoid years of litigation and hundreds of thousands of dollars in legal expense,” they were willing to back away from demanding a true authority and accept an arrangement proposed by Council member Joe Dunn on June 10 (but without much apparent support from his fellow Council members). This marked the first time in the protracted negotiations that either the city or the county had agreed to a proposal made by a member of the opposing side.

Ironically, under Dunn’s plan (at least as restated by the county), neither side would get what it had said it wanted most. Without a true Authority, there would be no millions in nonbetterment savings. Instead, the water infrastructure would remain a city asset and would be run by city staff.

On the other hand, the city would not be able to use differentials or water hookups to guide development or annexation. “Water service will be provided to anyone who requests it and receipt of service will not be contingent on forcing the user to annex into Asheville,” the county’s letter states.

What’s more, the deal would probably leave the city in worse financial shape, since according to the letter, “the County would not make any payments to the City for tax equity or any other purpose.” And whereas the system has largely relied on developers to extend service farther out in the county, Asheville would now bear at least some of that financial burden: “The City will build water lines in unincorporated areas where most growth is occurring,” the commissioners’ letter states.

The expiring Water Authority has often been described as “an Authority with no authority.” But if the city chose to adopt this plan as proposed, it might gain control of the water infrastructure without gaining any advantage from the move. (At press time, City Council had not responded to the county letter.) And in any case, it would hardly represent the first time that Asheville and Buncombe had reached an agreement on water that neither side was truly happy with.

[Jonathan Barnard covers water issues for Xpress.]

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