09/03/09 — Residents not happy with higher water rate

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Residents not happy with higher water rate

By Steve Herring
Published in News on September 3, 2009 1:46 PM

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Mount Olive Town Manager Charles Brown, left, attempts to explain the town's reasoning for doubling the water rate for former West Mount Olive Water customers who packed the town courtroom last night. Attorney John Edwards (in white shirt), sitting right of Brown, said the issue could end up in court.

MOUNT OLIVE -- Mount Olive town officials Wednesday evening were told that failure to abide by terms of a 1999 resolution with former West Mount Olive Water System customers could end in a lawsuit.

More than 70 people from areas north and west of town wedged into the Mount Olive courtroom for a hastily called meeting with Town Manager Charles Brown and commissioners Kenny Talton and Gene Lee, who tried to explain the town's reasons for doubling the rate charged those customers.

Also on the table last night were options including returning the West Mount Olive System to West Mount Olive. Brown said he would take those options and comments from the meeting to the full town board when it meets next Wednesday.

"I think the (town) board would be willing to at this point sign this system back to you and sell you water. Another option would be to go back to taxpayers who live inside the city limits of Mount Olive and try to pick up revenue from them. I do not know that that would be well-received," Brown said.

Traditionally, out-of-town customers pay double the in-town rate. Town commissioners in June doubled the West Mount Olive Water rate, citing a need to help offset an anticipated systemwide $107,000 shortfall.

Those customers had been paying the in-town rate since 1999, when the commissioners at that time approved a resolution in which the system was given to the town in exchange for a promise that the out-of-town customers would be charged the in-town rate.

The legal status of the agreement is at question. West Mount Olive customers argue that it is a binding contract. The town says it is a resolution that does not "rise to the level" of a contract. They noted that state law does not allow a sitting town board to "bind the hands" of a future board.

Brown said the increase that went into effect in July also was a matter of fairness to other out-of-town customers who pay the double rate and because town residents were, in effect, subsidizing the former West Mount Olive customers.

Brown said the town received a letter May 11 from the Local Government Commission expressing concern about the anticipated $107,000 shortfall. Also of concern was that the rates were not sufficient to pay the cost of operating the water system. The letter suggested the board examine rates and take action to increase revenues, Brown said.

The town board discussed options and one was that West Mount Olive be charged the same rate as in-town customers in Mount Olive, while everybody else outside the city limits be charged at double the in-town rate. Also, it was costing more to operate the old West Mount Olive system than it was generating in revenues, and it was felt that Mount Olive taxpayers were subsidizing it, he said. At a June 22 meeting, the board voted to increase the rates.

Even with the increase, the rate is still lower than the state average, Brown said.

"It was a matter of being fair to others outside the city limits," Brown said. "Nor was it fair to burden the taxpayers of Mount Olive to cover the cost. We are willing to listen to suggestions, but the bottom line is the Local Government Commission says we have to have money or risk sanctions from them or risk not being able to provide the service."

Attorney John Edwards, speaking on behalf of the West Mount Olive customers, argued that the opposite was true and that Mount Olive was being subsidized by West Mount Olive since the rate increase would more than offset the $107,000 loss.

Edwards said he had been invited by West Mount Olive customers to attend the meeting because he had served as the lawyer for the system for several years.

Edwards hinted that the town would not want to face a lawsuit and that the West Mount Olive customers "don't strike me as people who are backing up."

Brown agreed that the town does not want to wind up in court.

"I don't think anybody wants this to end up in court because it is going to cost everybody a bunch of money. I will certainly be glad to sit down with the board, and we will certainly look at other alternatives and see if there is something else we can come up with," he said.

Edwards said the town is "making money like a bandit off the other outsiders. Am I correct in saying that?"

"Apparently not, since according to the state auditor's office we are not making money like a bandit on anybody," Brown replied.

Ray Amon, former president of the West Mount Olive district, said he does not believe the town is losing money on water. When the system was turned over to the town, it was paid for and operating in the black, he said.

Brown replied that costs have gone up for salaries, benefits, maintenance and other items.

Brown agreed with comments that the town had done not done a good job of notifying customers about the increase.

Another person asked had the board considered raising the in-town rates.

"No," Brown said, when another audience member interrupted and said, "Because they can vote."

"As a fact of matter, Mount Olive customers not only absorbed a water rate increase in 2008, they got a substantial increase in sewer," Brown pointed out.