City, county look at water rates jointly
by: Frank Taylor
(3/3/2010)
Financial agreements made in the 1990s forced the Lincolnton City Council to hike water rates for Lincolnton customers last year, to make up for a declining number of major industrial users of city water.
Meanwhile, Lincoln County had to stop giving out development permits for a while until a wastewater plant can be completed.
Aware of each others’ issues, the two governments are looking at whether they might be able to come up with a solution that will be beneficial to both.
While they are at it, they may be able to look closely at water rates and fee structures to make the city’s and county’s joint effort to recruit new business and commercial development more competitive and more appealing to potential customers.
The City Council met Monday night in joint session with the Lincoln County Board of Commissioners to hear a presentation from Raftelis Financial Consultants, a Charlotte-based firm that provides expertise on water rate issues to governments throughout the United States.
RFC vice president Alexis Warmath told the board that he was pleased to be able to travel such a short distance to meet with them, instead of hopping on a plane. He said his organization has given advice to many local governments in North Carolina, which share some of the same issues as the two in Lincoln County.
The city and county are considering hiring RFC to conduct a study of their water rates and fees and develop a long-term plan. Part of this could be to examine the pros and cons of a stronger relationship in which the county agrees to buy a significant amount of water from the city.
Action from each board will be necessary before RFC is engaged, but both clearly seemed interested in the idea during Monday’s session.
If Lincolnton sells water to the county, especially through a purchase agreement, it could help alleviate some of the uncertainty created by the departure of several large city water customers over the last decade.
Under agreements signed in the 1990s, the city financed improvements to its wastewater facilities. The catch was that it must pay down that debt over time using only funds that are derived from the water utilities, not other funds.
Facing this situation, the city is unable to divert cash from other funds and must rely on the one pool of money that has been hurt most by the closure of textile mills and other water users. As a result, the board felt it was obligated to raise rates and reluctantly voted to do so last year.
However, if the county upped its purchase of water from the city significantly, the city might make up that shortfall and be able to lower the rates again.
As for the county, the new Killian Creek Wastewater plant is nearing completion, but already its capacity is being allotted out in advance to developers.
If the economy returns to good form in coming months and development in eastern Lincoln County returns to its pre-recession pace, that new capacity could evaporate quickly. The situation could be even more complicated if another drought occurs.
As a result, buying water from the city could ensure that the county is never getting too close to the bottom of the barrel. The county could then assure potential residential and business developers that there will be plenty of water for the foreseeable future.
The rate study will also examine more general issues of water rates and fees, to see whether the two government bodies are running their water systems efficiently and getting a fair price for their services.
