Breaking bread and bad news

Back in the days of the Regional Water Authority, the Council of Independent Business Owners was very much a power player in local water politics. Asheville Water Resources Director David Hanks found that out the hard way in 2003, when Buncombe County killed a proposed meter fee to fund long-overdue system maintenance after CIBO came out against it. Ever since, Hanks has taken extra pains to make frequent presentations to the group, a history he made light of at a CIBO “power lunch” on Aug. 31, when he joked that his attendance record merited “an honorary membership.”

The city’s interest in consulting with the business group on water matters might have been expected to wane after Asheville pulled out of the Water Agreement with the county in the summer of 2005 — disbanding the Water Authority and taking back full control over the water infrastructure. After all, CIBO members no longer help authorize line extensions or set system policy as Buncombe County appointees to the Authority, and Buncombe County can no longer veto water-system budgets at the last minute on CIBO’s recommendation.

Moreover, the group’s political influence with the Asheville City Council — though never close to CIBO’s clout with the Buncombe County Board of Commissioners — might have been expected to weaken after the 2005 Council election, when Charles Worley (a moderate Democrat) and Joe Dunn (a conservative Republican) were replaced by progressives Bryan Freeborn and Robin Cape. Progressive Council candidates get few votes or campaign contributions from CIBO members or the political action committees they form.

Yet by some measures, Asheville seems to have grown more solicitous toward CIBO, at least on water matters. Group members who served on the old Water Authority frequently clashed with then City Manager Jim Westbrook over water policy and the city’s administration of the system; the tension between them was palpable. Perhaps as a consequence, Westbrook rarely, if ever, attended the group’s meetings on water issues.

No undue burden

Unencumbered by that history, and encouraged by Council to keep the lines of communication open, current City Manager Gary Jackson has made a point of attending CIBO meetings. At the recent luncheon, he joined Hanks in making a speech — as did Asheville Mayor Terry Bellamy and Council member Brownie Newman. Vice Mayor Holly Jones and Council member Jan Davis sat in the audience, breaking Asheville Country Club bread with CIBO members.

Focusing on the city’s recent implementation of a capital-improvements fee to fund water-system repairs and on the likely adoption of a flat-rate structure, the speakers went over ground that Council had covered in its Aug. 15 work session. But because the fee (which is based on meter size) was intentionally designed to hit businesses harder than small residential customers, and because a flat-rate structure would likewise shift a larger share of the overall burden onto commercial users by ending discounts for high consumption, city officials were making their case to the very people least likely to buy it.

About five years ago, Hanks explained, staff had started looking into ways to fund the maintenance and improvements needed to address the system’s old pipes and high pressure. With manufacturers departing, a fairly conservation-conscious populace, water-frugal plumbing installed in new construction, and a growing number of part-time residents, local water consumption has been on the decline. That, he argued, means consumption-based revenues won’t reliably provide the needed funding.

After studying other water utilities around the Southeast and determining that almost all of them have some kind of meter-based revenue stream, city staff had decided to go with the CIP fee, said Hanks. And since “the current [rate] setup favors commercial,” the charge was designed to place “no undue burden on residential users,” he explained. For a five-eighths-inch meter (typical of residential customers), the meter charge is only $3.50 a month, but it rises steeply: It’s $80 for a 1.5-inch meter and tops out at $1,430 for a 10-inch meter. But Hanks also noted that staff is looking for ways to “tweak the fee for residential customers that have larger meters” and would “bring up different scenarios for the mayor and Council to consider.”

The city manager backed up Hanks’ points about the need to adequately fund the system, emphasizing that consultants Brown and Caldwell have pegged the cost of capital improvements and repairs needed over the next seven years at $57 million. Jackson also noted that a group of other water-utility directors who recently examined Asheville’s situation had said obtaining this funding is the system’s No. 1 priority. (The city manager later told Xpress that City Council will be discussing water rates at its Sept. 19 meeting and water-based planning incentives in October.)

Newman, an Asheville appointee to the Metropolitan Sewerage District board, noted that MSD already has a uniform rate structure for all residential and commercial customers and is phasing in a similar approach for industrial customers.

Newman also said he favors a permanently lower water rate for manufacturers. And if a uniform rate is adopted, he added, Council unanimously supports phasing it in over several years.

Some commercial customers that use little water have complained that the new fee dwarfs their actual water-consumption charge. One way to rectify this imbalance, Newman suggested, would be to narrow the gap between the low-end and high-end meter fees.

That potential solution, Newman explained, was one of the reasons he and his City Hall colleagues were there: They wanted to deter water customers from spending a lot of money changing to smaller meters only to find that a flattened fee structure had made the switch unnecessary.

And noting that water charges are only one of many expenses that affect a business’s bottom line, Newman pointed out that the city had reduced its property-tax rate more than any other municipality in Buncombe County in the wake of the recent revaluation.

Hold us accountable

“Day to day, [the system] is being run by competent people,” Mayor Bellamy affirmed when it was her turn at the lectern. But when it comes to policy, “We, as elected representatives, want direct accountability: Hold us accountable.” That, she suggested, is precisely what was lacking under the old Water Authority. Asheville’s overall goal is to fix the system, she said, “but we’ve got to have the money to do that.”

Although local residential customers pay among the highest water rates in the state, Bellamy maintained that because of the enormity of the system’s needs, rates shouldn’t be lowered for anyone. And even so, she asserted, the city still won’t be able to make all the needed repairs using pay-as-you-go funding; bonds will have to be part of the mix. “These are tough issues that haven’t been addressed before,” the mayor declared. “We’re going to wrestle out this rate issue, but eventually we’re going to get it right.”

As often happens when Asheville officials speak at CIBO functions, some audience members’ questions veered off-topic, focusing on other perceived failures of city government.

Robert Jolly, a local developer and property manager, ripped into the city for spending $1.6 million on engineering fees for the proposed Grove Arcade parking lot project before having acquired all the needed property. He also remarked that in his experience, it’s easier to build a 200-room hotel in other cities than it is to put in a bathroom on College Street. (In response, the mayor said one developer had told her that building affordable housing is easier here than in Charlotte.)

Several audience members, including attorney Albert Sneed, urged the city to use cheap commercial water to attract industry. A frequent critic of Asheville at CIBO meetings, Sneed also paid the city a rare compliment, commending it for holding down its tax rate.

But Jesse Ledbetter, a former Buncombe County commissioner and state senator, criticized the city for having antagonized the Buncombe County commissioners and the local legislative delegation in Raleigh by pulling out of the Water Agreement.

Stuck again

Meanwhile, city/county negotiations to craft a new water agreement have apparently stalled. On July 31, Asheville offered to forsake rate differentials, used by almost every other municipality in the state, in exchange for $4.5 million in annual tax-equity payments from the county. The city had originally asked for $6.2 million — the amount it says Asheville residents would save on their water bills if customers outside the city limits were charged 85 percent more (the average differential statewide).

The city can’t currently charge differentials because of Sullivan Acts II and III, which prohibit Asheville — alone among the state’s municipalities — from charging differentials or using water hookups as an annexation tool. The local delegation to Raleigh introduced those laws in 2005 at Buncombe County’s behest after the city announced that it was pulling out of the Water Agreement.

The county, however, countered with a $4.1 million figure. And that offer was contingent on the city’s giving up ownership of the Civic Center, Mccormick Field, Recreation Park and the Nature Center. The county says it needs those assets in order to be able to issue bonds without resorting to a referendum, but the city isn’t willing to part with them.

Asked about the potential for compromise, Council member Davis said he is extremely pessimistic and expects the water war to be decided by the courts. Asheville has filed a lawsuit against the state claiming that the Sullivan Acts are unconstitutional.

There’s been no news on the legal front since July, when the county filed a motion asking to become a party to the lawsuit. That came on the heels of the city’s motion for summary judgment. Asheville is hoping for a quick ruling, but for this to happen, the court must first find that the case involves only disagreements about legal interpretation and not about fact. Wake County Superior Court has yet to rule on either motion.

[Jonathan Barnard, a freelance translator and writer, lives in West Asheville.]