County disputes water contract

Aug. 05, 2014 @ 04:37 PM

Editor's note: This story has been updated to correct the current terms of the water contract and what the county's proposal is.

Caldwell County wants to change the terms of the contract it signed to buy water from Lenoir in 2007.

Under the terms of that contract, the county had to pay about $130,000 for water that customers of the county water system didn't use during the last fiscal year, from July 1, 2013, to June 30, 2014. The county board of commissioners voted unanimously Monday night to try to renegotiate the terms of the contract, emphasizing that none of the current commissioners were on the board that approved the contract in January 2007.

The agreement runs until 2022, but board chairman Clay Bollinger called it “monopolistic,” saying it’s “the most unfair thing I’ve seen in my six years” on the board of commissioners.

But city officials argue that the terms of the contract were agreed to on both sides as part of the deal to lure Google to Caldwell County. City Manager Lane Bailey could not be reached Monday night, but a letter from Mayor Joe Gibbons to the county board of commissioners released by the county board says that Lenoir agreed to pay for upgrading its water capacity, and Caldwell County agreed to help foot the bill by buying a certain amount of water.

“This issue is not about selling water,” the letter reads. “It is and was about an economic development issue to Google. At the County Commissioners’ urging, the City made $8 million in water plant improvements to ensure the water capacity issues with Google would be satisfied. The County in turn made this commitment to the City to help justify the capacity improvements.”

Bollinger said he never intended to make this dispute public, hoping to have it resolved in private meetings between city and county officials. He said the county has been trying to change the contract terms for two years.

At the most recent such meeting between county and city officials, Bollinger said, he felt “challenged” by Gibbons about whether the rest of the commissioners agreed with Bollinger.

The contract requires the county water system to pay Lenoir for at least 505 million gallons of water.

During fiscal 2006-07, when the contract was signed, the county used about 545 million gallons, but that was a peak usage in a dry year, and no year since then has come close. The low point of the county's water use since then was in fiscal 2010-11, about 430 million gallons, and in the last fiscal year, from July 1, 2013, to June 30, 2014, customers on the county-owned water system used only 450 million gallons.

For the amount that is not used up to the contract's minimum, Lenoir charges $2.09 per thousand gallons of water. For fiscal 2013-14, that meant the county paid $130,000 to make up the difference between what was used and what the contract requires, said Tony Helton, county finance officer.

Lenoir has offered to drop by 10 percent the fee it charges when county water use falls under the minimum called for in the contract, but the commissioners said that was not enough.

The commissioners directed the county manager to offer a counter-proposal to amend the formula for calculating the annual payment that would base the minimum water usage on the past 10 years' usage, except leaving out the lowest-consumption year and the highest-consumption year.

In other business, the board approved nearly $350,000, all from state funds, for the purchase of an upgraded 911 system that would new features such as text messaging and emails to report emergencies to law enforcement. The current telephone system being used by the county’s communications center is 13 years old and will no longer be supported by the manufacturer after April.

The board also approved an economic incentives package for an expansion of Menlo Worldwide Logistics that will pay $2,000 for each of up to six new jobs to be created over the next year. The jobs are expected to pay an average wage of $27,000 a year. Menlo, founded in 1990, has operated in Lenoir for seven years and currently employs 13.