City loses water lawsuit

The North Carolina Supreme Court on Friday declined to hear an appeal by the city of Asheville in a long-running legal battle over the constitutionality of state laws that govern how the city oversees its water system.

In August 2008, the N.C. Court of Appeals ruled against Asheville in its lawsuit seeking to overturn the Sullivan Acts, which are laws that restrict the city from charging differential rates for water, dictate what the city can do with the revenues it receives and bar the city from using water service as leverage for voluntary annexation. Two lower courts have also sided against the city.

In a statement on Friday, City Attorney Bob Oast said, “We believe strongly in our position, and we are very disappointed in this ruling.”

Asheville City Councilman Carl Mumpower also issued a statement Friday.

“What power brokers legally can do and morally should do are not always the same,” Mumpower said in an e-mail. “Treating Asheville differently than other cities who also own their water system is a dramatic betrayal of fairness and principled representation.

“I am proud of the current city council for fighting against this conspiracy of action between state and county officials and business interests seeking control of Asheville’s billion dollar water assets.”

The legal fight has roots in the passage of the Sullivan Act in 1933, the 1981 Water Agreement between Asheville and Buncombe County, and the state legislature’s adoption of Sullivan Acts II and III when Asheville pulled out of the agreement in 2005.

The first Sullivan Act was passed during the depths of the Great Depression, when many local banks had failed, water districts in the county had defaulted on their bonds, and the city was desperate for cash. The act prohibited Asheville from charging residents who lived in water districts outside city limits a higher rate for water than those residents living inside the city. Asheville protested the law for decades, mounting a failed court challenge in the 1950s and an unsuccessful campaign to get the state legislature to repeal it in 1969.

Under the expansive Water Agreement of 1981, the city agreed not to mount further challenges to Sullivan Act. But in exchange, the county agreed to reimburse the city for Sheriff’s Department services that city residents pay for in their taxes but don’t use. The county also took over managing and maintaining several city-owned recreational facilities that were used by residents from throughout the county.

The agreement gave responsibility for water policies, including approval of new lines, to a newly formed Water Authority of Asheville and Buncombe. City staff, meanwhile, administered the system. The city retained ownership of its water assets and was given title to the county’s lines. Under the agreement, 5 percent of water revenues went to the city and 2.5 percent to the county.

In 1994, fears about potential water shortages prompted Asheville and Buncombe County to broker a deal with Henderson County so that a plant could be built at the confluence of the Mills and French Broad rivers. The Water Agreement that the three governments signed in 1995 added Henderson County representatives to the Authority.

The water system’s hybrid structure proved increasingly difficult in the following years. City dissatisfaction grew in 2003 when Buncombe County, at the urging of business interests, rejected a water budget that included new fees to pay for maintenance that the city felt was long overdue.

The following summer, the city gave notice that it would be pulling out of the 1981 Water Agreement in a year’s time, stating a desire to better maintain the system, control growth, promote voluntary annexation and achieve fairer rates for its residents. That prompted Buncombe County commissioners to petition legislators to enact Sullivan II and III, which, in turn, led to the city’s lawsuit challenging the constitutionality of those acts.

Jason Sandford, multimedia editor


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3 thoughts on “City loses water lawsuit

  1. Water Customer

    So what now?

    We city residents get to pay extra taxes to support the water system owned by the city. We city residents get to pay water rates higher than most areas in the state or country. We city residents get to continue paying the county for millions of dollars in services they provide to other county taxpayers, but not the ones in the city. We city residents get to continue paying double taxes on public safety, animal control, and a number of other services. We local water customers get to subsidize land raping developers’ expansion in the county. We residents of the region get to watch as low quality, high profit, cookie cutter neighborhoods pop up all around us to suckle on our water pipes.

    And who do we have to thank for all this financial goodness while the economy tanks? Every one of our elected representatives in the city, county, and state.

    Way to go City Council! Your reputation for irresponsible and irrational leadership preceeded you at the state congress and state courts.

    Way to go County Commission! Your ability to put the screws to a huge section of county taxpayers and commit outright tax fraud has suceeded again.

    Way to go local representatives and the entire state legislature! You’ve suceeded in creating an open door policy for every developer in the country who wants to come take advantage of guaranteed cheap access to a municipal water system while passing their development impact costs on to every water customer in the area.


  2. The court decision hasn’t changed anything, we are left where we were a few years ago, with both the city and county a good bit poorer for the legal battle. We need to make useful reforms under the auspices of the Sullivan Acts.

    Here’s the proposal I advanced during last year’s county commission race and which I am advocating as part of my platform in my bid for city council:

    Our present water rate structure is irresponsible and untenable because it ignores water conservation and essentially treats water as an unlimited resource. In fact, because of the way we fund the water system, we force the Water Authority to maximize water sales. That is, simply put, nuts. (Last summer you could walk across some sections of the French Broad below Asheville without getting your feet wet, and yet the city pretended that there was no water crisis. When the river bed is dry, will we finally admit that the drought matters?)

    The city and county should put money into infrastructure repairs and maintenance. That can be negotiated.

    The rate structure should be modified so that home owners pay a lower rate below the current average use and a higher rate above the current average. Industry should pay the mid-point residential rate (currently industry gets a discount.) This rate structure will encourage conservation and the average can be periodically reevaluated and rates adjusted accordingly. Gradually we will all pay less for water use and use less water. This will benefit the ecosystem as well as the economic system and individual family budgets.

    Ignoring the looming water crisis which faces our region and the planet is extremely shortsighted. We are lucky enough to live in a region which will probably have sufficient water in the foreseeable future (due to the atmospheric effect of mountains), but global climate change makes any bets on future weather patterns pretty iffy. Conservation makes both dollars and sense.

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