MSD board discusses potential lease of Asheville watershed property

While there was no formal action taken, the board of the Metropolitan Sewerage District has reviewed what were called “underlying assumptions” used by staff in studying the proposed merger of the Asheville water system with MSD’s operation. The option of leasing the approximately 20,000 acres of protected watershed, leaving ownership in the hands of the city, was one item on that list of eight.

The list came up under old business in the agenda for the October 17 board meeting, and was introduced by Steve Aceto, board chair and town of Montreat representative. The document presented included the following points: retention of all water department employees (subject to applicable MSD personnel policies); assumption of all outstanding water capital indebtedness; separation of sewer and water accounting (thus no impact to sewer customers or MSD’s long-term business plan); funding of the newly increased capital improvement plan for the water system over the next 10 years (estimated at $100 million); joint city/MSD statement opposing privatization; retention of ownership of reservoir lands by city, with lease to MSD plus operational control; water eligible for new public and private development under the same MSD incentives for sewer. The final item, compensation, awaits consideration pending completion of MSD’s formal merger study.

“I want us to take a minute,” said Aceto, referring to consideration of the unofficial working document. “First of all, do you all have any comment about the watershed property?”

Board member Max Haner, one of three Buncombe County representatives, responded with concerns about liability and security under any prospective lease agreement, and what costs might be involved. “That would be our problem,” Aceto answered, should MSD be given responsibility for the water. “It’s the city of Asheville’s problem right now – they’ve been dealing with it for years. I don’t think there’s anything in this proposal that exposes us to greater liability. We might end up with this thing, whether we like it or not.”

Aceto was referring to the larger context of the proposed merger, precipitated by actions of the state legislature – not local government. The impact study being undertaken by MSD (see “MSD Awards Contract,” July 19, 2012 Xpress) is expected to give more guidance to the board when it is completed in November, regarding the weight of financial obligations and forecasts.

Haner observed that should the Legislature force the merger, the idea that MSD “has to own everything” is not necessarily true. “We can make a counterproposal to the Legislature,” he noted.

“It seems to me the most that we’re doing here is trying to aid the city,” observed Al Root, Weaverville representative who chairs the planning committee for MSD that is overseeing the merger topic. “The city is already starting down this thought process.”

“I would like to have some benchmarks for what MSD really is prepared to do … rather than just have people speculate,” Aceto said, referring to what he called the “noise and food fight” that might surround the upcoming referendum vote on the general-election ballot for Asheville residents. That vote will be a yes/no option for whether the city should “undertake the sale or lease of its water treatment system and water distribution system” (see “Council Puts Water Referendum on Ballot,” Aug. 14, 2012 Xpress). There is no specification in the referendum’s wording regarding the watershed property.

“I think it’s good that we’ve got at least this option saying we’re willing to lease the property, as opposed to flat-out ownership – and we can put finite details on it later,” said Robert Watts, Black Mountain representative.

“This is just the watershed property,” commented Esther Manheimer, vice mayor of Asheville and a city appointee to the MSD board. “Items you would repair or rehab, you would want ownership of those,” she added. “The idea is that the transmission and distribution system would transfer.” The watershed lease option, she noted, would address one of the main concerns of city constituents.

“Any comment about the underlying assumptions?” the chairman asked again. As the board sat quietly, Manheimer spoke up to say, “This certainly isn’t as lively as our City Council meetings.”

“I think we can wait 14 days (for the anticipated impact study) before we go too deeply,” offered Glenn Kelly, Biltmore Forest representative, as the discussion closed.

Other items attended to at the monthly board meeting included a commendation and photo op for staff members who were part of MSD’s “Flo Motion” team, which represented North Carolina at the Operations Challenge recently in New Orleans – the first time a state team has placed in the national competition. A series of bids was examined an approved, and the board moved into closed session to consider a condemnation proceeding.

Upcoming activities regarding the water merger issue include an October 30 public meeting hosted by Asheville City Council, to which MSD is to be invited, and an MSD planning committee meeting on at 10 a.m. on November 1 for presentation of the draft merger study. The board meets again at 2 p.m. on November 14, at MSD’s administrative headquarters, 2028 Riverside Drive.

by Nelda Holder, contributing editor

Editor’s note: A copy of the “Water/Sewer Consolidation: Potential Merger Underlying Assumptions” can be found here at page 15 of MSD’s Oct. 17 online agenda; page 16 offers a draft statement regarding potential options for a lease agreement.