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Tuesday, 24 October 2006 17:35 |
By DAVID FORBES
Asheville may end up issuing about $35 million in bonds to make improvements and repairs to the city-owned water system, as City Council discussed the step on Oct. 17.
"This will allow us to deal with some much-needed repairs and also build up a reserve to deal with other capital projects as they arise," Chief Financial Officer Ben Durant said in a presentation to council.
If approved, the bond would be paid back by revenues from the water system ÇƒÓ and would be accompanied by a 20 percent drop in the current Capital Improvement Fee, which has been levied by the city to meet the costs of repairing and updating the system Asheville took control of last summer after the regional water authority disintegrated.
"Twenty
percent is a pretty nice cut," Councilman Jan Davis said. "I think this
is a good step ÇƒÓ itës a fiscally responsible way to get this money and
make sure we get done what we need to get done. This will help us get a
good water system."
He added that businesses needed relief from the fee ÇƒÓ as much or more than residential water customers.
"Two dollars off your water fee doesnët mean a lot when you donët have a job," Davis said.
However,
Councilman Carl Mumpower said that taking out a bond before the ongoing
lawsuit between the city and the state has been resolved would be risky.
"I would suggest
that making substantial changes in how we finance the water system
before we get our legal issues resolved is premature," Mumpower said.
"Iëm a little embarrassed that in a few short months weëre backing off
of the improvement fee. That indicates poor planning and a lack of
foresight on our part. I find that very disturbing."
He added that
the city should wait until there is "a clearer sense of how the legal
battle is going" before making such a decision.
The cityës
lawsuit aims to overturn laws passed by the General Assembly that
prevent Asheville, unlike most municipalities, from charging higher
rates to customers outside the city and using water for annexation
purposes.
An estimated $65 million in repairs is needed over the next six years.
In response to
Mumpowerës remarks, Councilwoman Robin Cape said that she thought it
was a sign of the cityës responsibility that "weëre planning this as if
weëre operating under the same sanctions that we are now" and that the
situation could only improve if the lawsuit was successful.
"Weëre making
decisions about how to run this in the best way possible ÇƒÓ itës showing
that weëre continually looking for ways to do this in the best way for
our community," Cape said. "With this extra piece we can not only make
some needed improvements but take some of the burden off."
In separate
remarks, Durant noted that if the city wins its lawsuit, it could look
into eliminating the CIP fee, because funds from differential rates
would bring in additional money.
Also supportive of the proposal, Councilman Brownie Newman said that he feels it could help small to medium-sized businesses.
"Theyëre hardest
hit by the CIP fee, because theyëre not residential, but they donët get
the volume discount for water that some larger businesses get," Newman
said. "In some ways, it seems that it really hits them. Iëm certainly
open to looking at adjustments we can make to make it more fair."
In seperate
remarks, Mayor Terry Bellamy noted that waiting for the results of the
lawsuit "could take quite a while" and that council needed to move
forward in the meantime.
"We need direction on this," Bellamy said.
In response,
Durant noted that consultants hired by the city had recommended taking
out such a bond in two to three years, but that staff "had decided to
be more aggressive."
If approved, the
bond would go into effect next year, though Water Director David Hanks
mentioned it might take several years to coordinate the projects and
spend the entire sum.
Since the meeting was a work session, no
formal actions were taken as council discusses policy issues, but
cannot take action on them.
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