MSD committee endorses compensation for city in water merger
The Metropolitan Sewerage District’s Planning Committee hosted an overflow crowd at a Nov. 30 special meeting called to discuss compensation for the city of Asheville in the proposed water merger.
The committee’s proposal calls for paying Asheville $57 million over 50 years.
Earlier this year, a legislative research committee headed by state Rep. Tim Moffitt recommended a merger with no compensation to the city. Water customers, the committee said, own the assets and shouldn’t have to pay for them twice. And the MSD Planning Committee’s report cites utility mergers elsewhere in the state where this has been the case.
MSD’s compensation proposal was developed by staff in consultation with the UNC School of Government's Environmental Finance Center. The proposal uses a standard accounting method for utilities’ capital assets based on the original cost, starting with a figure of $169 million for the system’s total value and subtracting outstanding debt and other considerations.
During the Planning Committee's discussion of the merger’s potential ramifications, Esther Manheimer, a city appointee to the MSD board, spoke in her capacity as Asheville’s vice mayor. After praising the agency’s recently released impact study as "thorough and objective," Manheimer reminded the board and the audience that City Council and "approximately 86 percent of voters don't want anything to happen," referring to the city’s recent referendum vote opposing any water-system transfer.
Asheville's own impact study, due out Dec. 11, may set the city's losses significantly higher than MSD’s compensation figure, she noted. Manheimer specifically cited the loss of overhead payments by the Water Department and some $1.7 million per year in current compensation to the city from water revenues. The General Assembly authorized those payments when it took away the city's right to charge non-city residents more for water.
"That amounts to a real annual loss to the city in the range of $3.5 million [annually]," she said, adding, “I know that many people will say it's not MSD's role to fill that hole.”
MSD board member Bill Stanley, who’s also vice chair of the Buncombe County Board of Commissioners, said any such negotiations should happen when the Planning Committee sent the proposal to the full MSD board. The committee then voted 6-2 to do just that, with Manheimer and City Council member Chris Pelly opposed.
Weaverville Mayor Al Root, who chairs the Planning Committee, then invited the two state legislators present, Reps. Susan Fisher of Buncombe County and Chuck McGrady of Henderson County, to address the committee.
McGrady said he and newly elected state Rep. Nathan Ramsey, the former chair of the Buncombe County Board of Commissioners, have been meeting individually with City Council members recently. Merger legislation is already being drafted in Raleigh, McGrady reported, adding that he hopes the city and MSD can reach an agreement by January or early February.
"In an ideal world," said McGrady, “we write that in” to the legislation. But he made no promises that this would actually happen.
"You're right in noting that the LRC recommendations were assuming no compensation," McGrady continued, adding, “I expect to be supportive of legislation that includes compensation.”
Fisher spoke briefly, saying, “I appreciate that there are representatives on this board from all the entities that may or may not be included [in the merger]. I hope to be surprised by the result of all this work when this legislation is introduced.”
The MSD board will meet Wednesday, Dec. 12, at 2 p.m. at the Administrative Building, 2028 Riverside Drive in Asheville. The meeting is open to the public. To view the financial presentation to the Planning Committee and the agenda packet for the Nov. 30, go to http://avl.mx/nt.
Nelda Holder can be reached at email@example.com.