MINUTES

STATE OF NORTH CAROLINA BOARD OF COMMISSIONERS

COUNTY OF HENDERSON JULY 11, 2002

The Henderson County Board of Commissioners met for a special called meeting at 3:00 p.m. in the Commissioners= Conference Room of the Henderson County Office Building at 100 North King Street, Hendersonville, North Carolina.

Those present were: Chairman Bill Moyer, Vice-Chair Marilyn Gordon, Commissioner Grady Hawkins, Commissioner Charlie Messer, County Manager David E. Nicholson, County Attorney Angela S. Beeker, County Engineer Gary Tweed, Public Information Officer Chris S. Coulson, and Deputy Clerk to the Board Amy R. Brantley.

Commissioner Don Ward arrived at 3:15 p.m.

CALL TO ORDER/WELCOME

Chairman Moyer called the meeting to order and welcomed those in attendance. He stated the purpose of the meeting was a workshop on water issues, particularly in the northern area of the county.

Presentation of Area Maps

Gary Tweed presented a map which showed the areas that receive water service in the northern part of the County. He indicated the study boundary of the Water Master Plan currently being undertaken by the Water Authority. He also indicated the areas served by the two water systems, the City of Hendersonville and the Water Authority. The City of Hendersonville currently serves areas running north on Highway 25 and Fletcher, and running north on Highway 191 and High Vista Estates. The Water Authority is serving an area located in the middle of those Hendersonville lines.

One question in the Master Plan concerns the best way to serve the area. Preliminary reports indicate the two systems should work together and be interconnected. Mr. Tweed indicated that from an engineering and operational standpoint in the water system, loops are the best way to proceed. Loops help equalize pressure throughout the system, and eliminate dead ends. He indicated several areas where dead-ends currently exist. Hendersonville is currently planning to connect lines to create a loop, and would be crossing over the Water Authority line to do so.

Commissioner Hawkins questioned whether there was any agreement in place concerning the running of water lines. Chairman Moyer stated that the City of Hendersonville had adopted an informal policy which provided that they would not extend water lines into the county with the consent of the Board. Commissioner Hawkins confirmed that this was not a formal policy.

Mr. Tweed stated that if the systems were not to work together, he envisioned acquiring a portion of the system from Hendersonville, to connect with the Water Authority system. Chairman Moyer agreed that would be a possibility. When the Regional Water Authority put in their plant, they did make it state of the art. It has turned out to be a very costly producer of water. Therefore, the water produced at this plant is considerably higher in cost than water produced by the City of Hendersonville. That difference has made discussions about putting the two systems together very difficult. A further complication comes from the fact that both systems have plenty of capacity at this time.

Commissioner Messer questioned about how much more the cost was, and Chairman Moyer stated the difference was approximately 3 times more. Commissioner Gordon had some additional figures that specified the cost differences in rates.

Review of Regional Water Agreement Negotiation Team=s Draft Summary of Meeting #7

Chairman Moyer provided for the Board=s information the highlights from the latest negotiation meeting. He recapped several issues. First being the Bent Creek Property, the fact that an appraisal had been done on it, and the fact that the City of Asheville (Athe City@) had questioned the amount of the appraisal. They had requested time to work on this, and talk to the appraiser. The appraisal at that time was $1,345,000. The City of Asheville contacted Chairman Moyer on July 11, 2002 stating that they had a new appraisal for $2,000,000.

Commissioner Hawkins questioned why there had been an appraisal on the Bent Creek Property. Chairman Moyer stated there were several options presented of how the obligation to Henderson County could be satisfied under the agreement. One way was to transfer the Bent Creek Property, free and clear of any restrictions, to Henderson County. A second option was to sell the property, and give the proceeds to Henderson County. There were additional discussions concerning how the obligations to build regional water lines could be satisfied.

Commissioner Messer was concerned about the difference in the appraisals. Commissioner Ward explained how the appraisals could vary, depending on the comparisons used. He stated that the best way do it would be to have another appraisal done, and take the average of the three. Commissioner Gordon stated that there was no way to really know what a piece of property was worth until you try to sell it. She would prefer to have them sell it, and give the proceeds to the County.

Commissioner Hawkins then questioned the original purpose of the Bent Creek property. Was it to provide a place for MSD sewer treatment expansion? Chairman Moyer stated either Henderson County or MSD, that=s all it could be used for. Commissioner Hawkins questioned whether Henderson County planned to get into either the sewer or water business. If so, that property might be something for consideration. He spoke about effective land use planning, which included controlling water and sewer extensions.

Commissioner Gordon asked if Henderson County had a sewer treatment plant, would we want it to be at Bent Creek? Mr. Tweed answered that the Bent Creek site was originally purchased by Asheville for a water treatment plant. If the County did wish to build a treatment plant, he did not feel that it would need to be that far north and have to run an interceptor line to that site, unless it was done on a regional basis. He stated that MSD does not need additional treatment capacity. They have a 40 million gallon per day treatment plant that is getting about 20 million gallons per day. They need lines, but not treatment facilities. Mr. Nicholson elaborated on this, stating that a previous bottleneck no longer existed.

There followed additional discussion on long range planning for water and sewer. Mr. Tweed stated that in the area around Fletcher, the agreement with MSD allows a 1.35 million gallon allocation. Of that, the County is using approximately 700,000 gallons. In the rest of the district, the agreement states that MSD has to accept flow from the County as long as they have treatment capacity and interceptor capacity. Given the plant capacity of MSD versus their current usage, there should not be any concern. One area that Mr. Tweed did have a concern about, was running up Cane Creek Road toward Fairview. At some point in the future, growth is this area may create some interceptor line capacity issues.

Chairman Moyer then spoke concerning the discussion of the establishment of a Water Authority. All parties spoke in favor of a true Authority, while the City of Asheville planned to look at what basis they would consider a true Authority. It was Chairman Moyer=s belief that the City of Asheville would not support setting up an Authority. Commissioner Gordon was of the same opinion. Following some discussion of various possibilities, Chairman Moyer stated that he felt that all control of this would ultimately remain in a department in the City of Asheville.

Commissioner Ward questioned if the Asheville/Buncombe/Henderson Water Authority (ABHWA) dissolved, where Henderson County would stand in regards to the agreement. Chairman Moyer answered that the City of Asheville would assume the obligations to us. The City of Asheville looks at this as their assets and their control. This opinion was not shared by other members of the Authority, since the assets have been purchased with fees paid by the users.

Commissioner Gordon questioned if the true Authority does not work, what will work best for Henderson County, what will work for the users, and how we get something out of all this agony? Commissioner Hawkins stated that he believed that it might be time to pursue legal recourse against the City and insist they fulfill their agreement. Chairman Moyer stated that it would be very costly, and may not be worth our while.

There was much additional discussion on the best option for the county, including the possibility of selling the Bent Creek property and getting into the water business. The High Vista line is currently underused, and might be purchased by the County as a starting place. Mr. Tweed felt the City of Hendersonville would probably not be receptive to such a plan.

In October 2001, Chairman Moyer had devised a proposal to get something out of the Regional Water Agreement. The list of what the County would get consisted of:

1. $250,000 a year for 20 years

2. All customers in Henderson County would be turned over to the County

3. Purchase water from the Water Authority at $.56 per 1000 gallons with a 2.5% annual inflation factor.

4. No guaranteed purchase

5. Right to tap main transmission line

6. Water metered at the customer

7. Henderson County would agree to drought provisions as administrated across the system

8. County would build or require developers to build at Water Authority standards

Henderson County would give up:

1. All rights under the current agreement including:

a. Board Membership

b. Bent Creek Deed

c. Regional Waterlines

d. Discussion of a Atrue@ authority

There are a number of these options which have changed based on our preferences, or an unwillingness by the City of Asheville. An example is the Bent Creek property, and the aforementioned possibilities for this property in lieu of the $250,000 a year for 20 years. Chairman Moyer stated that this was his best idea of what could come out of the Agreement, other than protracted litigation at tremendous cost. This plan would provide some infrastructure money for the northern end of the county.

Commissioner Hawkins discussed the problems that were encountered with trying to get water to American Freightways. He stated that part of the problem is that in the State of North Carolina, counties are not well equipped to be in the water and sewer business. It is difficult to provide all services to the rural parts of the county, given the lack of density.

There followed much discussion on the various options for the County, including possible future litigation. It does not appear that the City of Asheville has any intention of building lines and creating customers to help Henderson County get into the water business. Commissioner Hawkins questioned again why Henderson County does not bring a case against the City of Asheville based on their breach of contract.

Angela Beeker stated that the County=s greatest leverage is that the City is as unhappy with the agreement as anyone in Henderson County, and they want out of it. The county must be willing to enforce the original agreement by whatever means necessary, or we lose all leverage.

Commissioner Ward suggested a surcharge to the Henderson County customers to produce some income. Mr. Tweed stated that he would simplify that, seeking a royalty for a portion of the water produced at that plant. Mr. Nicholson felt this option was unlikely, and the benefit of a one time payment would be that this would be over.

Ms. Beeker suggested the Board consider with their one time payment, locking the City into some type of rate schedule. This may be less objectionable, since the County will not be trying to pocket money. She also pointed out to the Board that the current agreement gives the City the authority to purchase any property in Henderson County they need to provide water, including any interest in property.

Chairman Moyer stated that the next negotiation meeting will be held next Thursday. The Board can wait to see what is offered at that meeting.

Commissioner Hawkins asked Ms. Beeker to outline the legal options open to the county. Ms. Beeker prefaced her discussion to occurrences prior to the American Freightways line. Based on that, she stated that a case could be pursued for the American Freightways line. The Board paid for that line, and should be entitled to the net revenues. She stated again that her best advise to maintain the leverage of the Board=s willingness to go to court to enforce the agreement. That is why the current offer is on the table.

It was the consensus of the Board to pursue court action if necessary. Chairman Moyer stated too that the County would be receptive to a negotiated settlement if it reasonably compensates Henderson County, and would terminate the agreement if that settlement was acceptable.

Commissioner Hawkins made the motion to adjourn the meeting at 4:45 p.m. All voted in favor and the motion carried.

Attest:

Amy R. Brantley, Deputy Clerk to the Board William L. Moyer, Chairman