As several WNC communities debate water control, public utilities have ready private buyers

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This is the first of a two-part report.

Tryon leaders are considering a private bid for its water system. Is Asheville next?

Angie Newsome/Carolina Public Press

Even as a state House committee explores the prospect of moving Asheville’s water system to the control of a new authority – spawning worries about whether privatization could follow – Tryon leaders are discussing a private corporation’s offer to buy its water system.

The Town Council of Tryon, the Polk County town with a population of about 1,640, met twice in February. During the meetings, leaders discussed an offer from Houston-based Ni America, which operates private water and sewer systems in Florida, South Carolina and Texas. Recently, the council agreed to form a committee to consider the proposal and make a recommendation.

Ni America has said that it has allocated some $250 million for the acquisition of municipal water systems in the southeast as its initial goal.

“We’re not in North Carolina,” said Stan Jones, regional president for Ni America. “We would love to be your neighbor and your partner.”

But Ni America isn’t the only private company interested in public water systems.

It would join several other national firms already established here, according to Katie Hicks, assistant director at the nonprofit Clean Water for North Carolina. Companies such as Aqua North Carolina – a subsidiary of Aqua America – and Utilities Inc. are quietly acquiring water and sewer distribution networks in the state. Aqua North Carolina, for example, already has customers in Henderson, McDowell, Mitchell, Polk and Rutherford counties.

That potential scenario has drawn concern from some Asheville-area residents as the Metropolitan Sewerage/Water System Committee, chaired by Rep. Tim Moffitt (R-Buncombe) and comprised of other House members, including Rep. Chuck McGrady (R-Henderson), continues its study of the future control of Asheville’s public water system.

The next meeting of the state’s House Metropolitan Sewerage/Water System Committee is set for Wednesday, March 14, at 1:30 p.m. in Room 643 of the Legislative Office Building in Raleigh. More information, including the agenda, can be found on the committee’s website. Live audio of the meeting will also be available through the N.C. General Assembly website.

‘Beating the bushes’ for small water systems to buy

Two years ago, Ni America sent letters of inquiry to dozens of small water systems in North Carolina and other Southern states, “beating the bushes” for those of the right size who might be interested in selling, said Rick Melcher, Ni America’s public relations manager.

Ni America describes itself as a growth-oriented company in the business of operating water and wastewater systems and providing the capital needed to bring deficient ones up to standard. With some 1,100 employees and $200 million in annual revenue last year, its holdings serve about 20,000 customers in three states. On its website, the company notes the word Ni is “the Osage word for water.”

One of its holdings includes the Elgin, S.C.-based Palmetto Utilities, the largest privately held water and wastewater utility in South Carolina. According to Ni America, it has more than 15,500 residential and commercial customers.

Company officials told Tryon’s council members that it would take about 12 months to examine the system and determine what rates would be.

Alan Peoples has been mayor of Tryon since 2001. And while he acknowledges that Tryon’s water and sewer distribution systems are definitely in need of the kind of upgrades Ni America has provided at Palmetto and five other systems, “I don’t think we should sell our system,” he told Carolina Public Press.

Peoples says he’d rather the town join a regional water authority that unites neighboring Saluda and Columbus communities and other Polk County residents in a larger system that shares equipment and staff.

A grant-funded water line connects these communities now, he said. In case of drought, an agreement outlines how they’d sell water to each other.

“The key is local control,” he said. “I like the idea (of a regional authority) because local people would be the ones who make the decisions … not someone at a company in another state.”

The potential consequences for consumers are significant when a private company buys a water system, according to Hicks — including higher rates, continued leaks in some areas, and a lack of scrutiny by the state commission that certifies systems and controls rates.

Facing debt, repairs and needed upgrades

Like many towns this size, one department handles water and sewer services, and Tryon is small enough to struggle over purchases many larger cities make more easily.

A decision to finance approximately $77,000 to purchase a backhoe for the department was delayed in case the town opted to sell its system.

Meanwhile, the town estimates that it needs to make at least $685,000 worth of sewer improvements, including replacing a main sewer line that has been subject to state fines due to overflows.

And they still carry roughly $1 million in debt owing to system repairs made in recent years.

“It’s very tempting to take their offer,” said Interim Town Manager Joey Davis.

But, he added: “When you sell that system, it’s gone. If there’s some problem (later) … you lose that ability to control and regulate what’s going on.”

“It’s very easy to say, ‘We could sell off our water system and pay off our debts,’” Davis continued. “The water system gets fixed, and that’s good. What I’m looking for is, what’s the bad side? What about these towns that haven’t enjoyed success? I’d love to see, for those communities that have sold their systems, what’s the demographics of their communities now.”

“For some towns, (selling is) their only option right now,” he continued. “If Tryon’s system was healthy, we probably wouldn’t even be looking at this. ”

But it’s not the only town facing costly repairs and upgrades.

A recent analysis by the American Water Works Association of water infrastructure needs nationwide found that the cost of repairing and expanding U.S. drinking water infrastructure is on track to top $1 trillion in the next 25 years.

The association’s report said that small communities would face the greatest challenges because they have more “pipe miles per customer” than the more condensed systems in cities and fewer ratepayers to bear the cost of needed updates.

Hicks, with Clean Water for North Carolina, said that WNC hosts a high proportion of these small, aging systems statewide.

“That’s the opening these private companies are seeing,” she said. “These systems face a huge (infrastructure) challenge, and it’s hardest for the small systems” to make all the improvements needed to keep their systems fully pressurized and leak-free.

Like Tryon, Hicks said, these communities are struggling with the question, “How do we go forward without taking systems out of the public hands?”

Coming tomorrow: Is there a link between the Tryon and Asheville debates over water ownership and control?

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About the Author

Susan Andrew

Susan Andrew is contributing reporter for Carolina Public Press. Contact her at waterthrush@bellsouth.net.

2 Comments on "As several WNC communities debate water control, public utilities have ready private buyers"

  1. Heather Rayburn March 14, 2012 at 10:52 pm · Reply

    Hi Friends,

    Thank you for doing this story. I found the site while working on the water issue in Asheville and have posted a link to my blog. It would be helpful to put a link at the bottom of this first part of the story that sends the reader straight to part two. Keep up the good work. I intend to send a donation. As a former journalist, I think what you’re doing is so very, very important for the community.

    Cheers,
    Heather

  2. Angie Newsome
    Angie Newsome March 15, 2012 at 6:24 am · Reply

    Thank you, Heather, for your comment and suggestion. We’ve updated the links from part one to part two of the story.

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