The Whole Story on the Water Agreement Controversy

Last May, the Asheville City Council notified Buncombe County of their intention to terminate the twenty-four year old Asheville Buncombe Water Agreement.  This agreement has played a major role in our county government budget and our community at large.  When this agreement was reached in 1981, it was the result of our community’s rapid development in the early part of the twentieth century, the aftermath of the Great Depression, and legal decisions over several decades. 

At the end of the 1920’s, around 100,000 people lived in Buncombe County which represented an almost five fold increase over twenty years.  Many areas were developed during this time including a large part of downtown Asheville.  And by the end of this period, almost every aspect of community lay in financial ruin including local governments.  It took county and city governments over forty years to pay off the indebtedness incurred during the boom period.  One of the components of local government that defaulted on their debt was our local water districts.  These districts were established to provide public water service to many areas of our community.  County government agreed to assume the debts of these water districts.  Because the county was liable for the debt, the North Carolina General Assembly passed the Sullivan Act.  This local bill forced the City of Asheville to provide water service to these districts at the same rates that they charged city residents.

There were several practical implications due to these Sullivan Act restrictions.  The City of Asheville had very little incentive to expand their water system to areas outside their corporate limits because they could not charge a higher rate.  Also, the city was using a large percentage of water revenues to retire their depression era debt instead of reinvesting those funds into the water system.  To provide water to rapidly growing areas outside of corporate limits, county government invested millions of general fund dollars into expanding the water system.  In the 1950’s the city contested the Sullivan Act in court and the North Carolina Supreme Court upheld the law.

So back in 1981 the city and county faced several challenges because of this environment.  With growing budget pressures, the county was tiring of spending large amounts of tax dollars on the water system.  And the city still could not legally charge a differential rate and many 1920’s era city facilities needed major capital improvements.  The Water Agreement resulted in creating one water system that was to be governed by a city and county appointed water authority.  But the city manager was still responsible for hiring water system personnel.  Title to several city owned properties was transferred to the county including Aston Park, McCormick Field, Nature Center, and the former Municipal Golf Course.  The county also agreed to pay all municipalities in the county a payment that represented the amount of the Sheriff’s Department budget allocated to patrol and investigation functions.                      

After twenty-four years, the county has invested over $10 million in these city owned properties.  Also, this past year the county paid around $2.5 million to our municipalities including almost $2.0 million to the City of Asheville.  During this time the water system has grown largely through developer paid extensions and the construction of the Mills River Water Treatment Plant.  With the termination of this agreement there are many uncertainties that potentially will be determined by the courts unless the parties can reach a negotiated settlement.

In the spirit of compromise and finding common ground, several weeks ago the Board of Commissioners sent a letter detailing an offer to Asheville City Council.  Our Board proposes that we establish an independent water authority.  This authority would be composed of an equal number of representatives appointed by the Board of Commissioners and City Council.  The authority would hire a director who would be responsible for the daily management of the system.  Also, our Board proposes that we establish an independent parks and recreation authority composed of all recreation assets owned by the city and county including Pack Place, Civic Center, and McCormick Field.  The revenues to operate these facilities would be derived by a city/county parks and recreation taxing district.  The authority would be composed of three city appointees and two county appointees.  Combined with canceling the current water agreement, this proposal would result in a net gain of $2 million to the City of Asheville’s general fund. 

Our Board believes this proposal represents a fair deal to all our citizens, both those who live inside and those who live outside of the City of Asheville’s corporate limits.  We recognize our community faces many challenges that can best be addressed through a collaborative approach.  From developing a capital improvement plan for the $750 million in water system needs to creating better opportunities for everyone, we are most effective when we work together.  If this proposal is not acceptable to the Asheville City Council, we encourage them to join with us to find an equitable solution for our respective governments and all water customers.       

 What could happen if no agreement is reached?

• Asheville water customers who live outside the City limits could see their water rates double or triple—this impacts residents, businesses, schools, etc.
• New development could be forced to accept City annexation in order to be hooked to a water supply
• Residents who live outside the City limits could pay more to access the Golf Course; McCormick Field; Recreation Park Pool; WNC Nature Center

^{Submitted by Nathan Ramsey, Chairman of the County Commissioners}