1998-08-18 Special Meeting
NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 26
SPECIAL MEETING WITH WILMINGTON CITY COUNCILPAGE 647
AUGUST 18, 1998
ASSEMBLY
The New Hanover County Board of Commissioners held a Special Meeting with the
Wilmington City Council on Tuesday, August 18, 1998, at 4:40 p.m. in the City Hall First Floor
Conference Room, 102 North Third Street, Wilmington, North Carolina.
The purpose of the meeting was to discuss the joint acquisition of the Cape Fear Utilities, Inc.
and Quality Water Supplies, Inc. water systems.
Members present were: Commissioner Buzz Birzenieks; Commissioner Ted Davis, Jr.; Vice-
Chairman Robert G. Greer; Chairman William A. Caster; County Manager, Allen O’Neal; County
Attorney, Wanda M. Copley; and Clerk to the Board, Lucie F. Harrell.
Commissioner Charles R. Howell was absent.
Members present from the Wilmington City Council were: Mayor Hamilton E. Hicks, Jr.;
Mayor Pro-Tem Katherine Bell Moore; Councilmember Frank S. Conlon; Councilmember Charles
H. Rivenbark, Jr.; Councilmember Harper Peterson; Councilmember J. C. Hearne, II; Councilmember
Jim Quinn; City Manager, Mary M. Gornto; City Attorney, Thomas C. Pollard; and City Clerk,
Penelope Spicer-Sidbury.
Chairman Caster and Mayor Hicks called their respective boards to order.
REPORT FROM THE CITY-COUNTY UTILITIES COMMITTEE
Councilmember Rivenbark presented background information on the debate that occurred
during the joint meeting of the Wilmington City Council and the New Hanover County Board of
Commissioners held on July 28, 1998. Discussion was held on the joint purchase of the Dobo water
systems as well as the need to create some type of governmental entity to bring the city and county
water and sewer systems together into an independent entity. It was concluded that the City-County
Utilities Committee should begin meeting again to see if some type of an agreement could be reached
to combine the water and sewer systems.
Commissioner Howell, Vice-Chairman Greer; Councilmember Hearne and Councilmember
Rivenbark were appointed to serve on the City-County Utilities Committee. Since that time, the
Committee has met four times with the first two meetings being unsuccessful. After discussion, the
Committee decided to invite the County Finance Director, Bruce Shell, New Hanover County Water
and Sewer District Finance Director, Julie Griffin; and City Finance Director, Brent McAbee. This
idea proved to be quite successful. The financial staff presented and explained the financial positions
of the current water and sewer services being provided by the City and County. Figures and
projections were presented that showed how the two systems could be combined.
Councilmember Rivenbark said after the last Utilities Committee meeting, he had learned
enough to feel comfortable with continuation of these meetings to see if the group can develop a
structure to unify the City and County water and sewer services. If the City and County can agree
to jointly purchase the Dobo water systems, it would be the first step in moving forward with a
unified water and sewer service.
Councilmember Hearne concurred with Councilmember Rivenbark’s remarks, and he
remarked on changing his mind after viewing a unified system from a County and City point of view.
The major obstacle at this point will be working out the numbers. It appears the figures on the sewer
are already in place, but the water issue will be complex. However, a rate structure can be developed
to protect the City taxpayer’s investment. Many questions must be answered, but most of these
questions are answerable. For the benefit of the citizens, the City and County should jointly purchase
the Dobo water systems and continue to pursue an agreement for unifying water and sewer services.
Vice-Chairman Greer agreed with the statements made by Councilmember Rivenbark and
Councilmember Hearne. He said as an elected official representing all citizens living in the City and
County, he believes the time has come for the County to move forward with purchasing the
NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 26
SPECIAL MEETING WITH WILMINGTON CITY COUNCILPAGE 648
AUGUST 18, 1998
Dobo water systems and then continue to work with the City on unifying water and sewer services.
This action will provide an answer to the Dobo brothers and at the same time allow the Attorney to
begin processing the agreement before the IRS ruling changes.
Discussion followed on the appraised value of the water systems. County Manager O’Neal
explained that a cap of $22 million has been placed on the purchase offer; however, the County’s
purchase will be contingent upon the evaluation by Hartman and Associates. If Hartman comes back
with a figure less than the $22 million, the County will enter into negotiations with the trustees. The
evaluation from Hartman and Associates should be received within the next week.
Councilmember Rivenbark asked if the County decides to purchase the water systems, would
the County be willing to sell the portions of the systems that lie within the City.
Vice-Chairman Greer explained that New Hanover County does not want to harm the City.
Since many parts of the system will serve both the City and County, it will be difficult to split up the
responsibility. This is why the two governments should consider a joint entity. But, if this cannot
be accomplished, he personally would be willing to do what is best for the City of Wilmington.
Councilmember Rivenbark said there are some difficult issues to work out; however, there
will be numerous situations to deal with under a joint utility, especially during the first few years.
Also, it will be necessary to insure that any future expansions accomplished by a joint utility would
be paid by the citizens receiving the service, not by a “flat rate” which has been discussed on several
occasions.
Vice-Chairman Greer said he envisions the cost would be the same for everyone; however,
there would be a few inequities for a while. The County is not trying to dump something on the City;
however, New Hanover County does have a lower debt balance and a larger fund balance than the
City of Wilmington.
Councilmember Rivenbark advised that he felt something could be worked out, but he
questioned whether seven Councilmembers would be willing to scrap the City’s system and say yes
before the details of a unified water and sewer service are fully formulated. He asked if New Hanover
County was willing to allow the City to join them in purchasing the Dobo water systems and continue
to work on the details of a unified system.
Vice-Chairman Greer expressed concern for continuing to drag out this process, and he said
the Dobos deserve an answer. The City and County should continue to work on an agreement since
time will be involved before the purchase is actually finalized. During this period, an agreement
could be reached.
Mayor Pro-tem Moore asked if there was time to prepare a structure for the entity before
purchasing the Dobo water systems.
Vice-Chairman Greer said he thought this question should be answered by the City Council.
Councilmember Conlon expressed concern for not having details before voting on an issue
of this importance. It appears the City is being requested to buy “a pig in a poke”, and if the City
does not respond, the County will buy the water systems. He stated he agrees with the general
concepts of a unified water and sewer service, but he needs more information.
Commissioner Birzenieks spoke on the progress that has been made by the committee in
reaching an agreement for a unified system, and he questioned whether it was fair to ask City
residents to pay twice.
Councilmember Rivenbark responded when the City could not negotiate with the Dobos to
purchase the water systems, the City’s goal was to team up with the County for a joint purchase.
This would allow the City to be part of the system and at the same time save money for City
NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 26
SPECIAL MEETING WITH WILMINGTON CITY COUNCILPAGE 649
AUGUST 18, 1998
taxpayers. If the City has to duplicate water lines in an annexation area, that portion of the Dobo
system will be useless. When any annexation occurs, the General Statutes require the municipality
to have sufficient lines to adequately accommodate the needs of the fire service.
Commissioner Davis spoke on frequently hearing this statement, and he asked why the City
was interested in purchasing the Dobos water systems if the lines were not sufficient to provide the
water pressure necessary for fire protection services.
Councilmember Rivenbark replied it would be more cost effective for the City to buy an
existing system and perform the necessary upgrades in lieu of installing new lines. At the time an area
is annexed, the City is required to provide the same level of services, including fire protection, that
are currently received by other City residents. He, again, referenced the knowledge he had gained
in the meetings held by the Utilities Committee, and he stated that details were presented on how an
entity could change existing inequities in rates and incentives. Interlocal agreements between the City
and County have worked well in the past. It is felt the City has expertise in operating water and sewer
services; therefore, it would be logical for the City to operate a unified system.
Chairman Caster suggested that New Hanover County adopt a resolution to purchase the
system and then work with the City in creating a unified system.
Councilmember Peterson stated he felt it would be naive to think the City of Wilmington
would be invited back to the table on an equal ground if New Hanover County purchases the Dobo
water systems. Approximately, two years ago, both boards agreed to create a joint Utilities
Committee to examine the issue and develop a structure to create an entity to provide a unified water
and sewer service. At that time, two options were presented: (1) an interlocal agreement; and (2)
the formation of an authority. However, the compelling reason to move toward unified management
is not only the Dobo water systems but future extensions or systems. From the comments made
today, it appears an interlocal agreement can be achieved.
Councilman Peterson continued by saying if the County purchases the systems, it becomes
a bargaining chip for some future political agenda. It would be unfortunate to see this happen. Why
not agree to purchase the water systems and create an interlocal agreement between the two
governing bodies. When the appraisal comes in, we will accept it, and work out the details.
Commissioner Birzenieks suggested including wording in the resolution that will allow the
City to become a partner in the system at a future date.
Commissioner Davis reminded everyone that Attorney Shanklin has no idea when the IRS
ruling will be changed regarding the tax incentive.
Attorney Shanklin reported once the IRS ruling changes, the Dobos will have 30 days in
which to finalize a contract. When the contract is in place, the transfer must be approved by the
Utilities Commission and the application filed with them before the stock can be transferred into the
trust. For example, if an application is filed with the Utilities Commission by this Friday, it could
take two to three weeks to receive approval. Then Judge Traywick has to go through a due diligence
period when he negotiates the contract. We do not know when the 30-day period will begin. It will
be difficult to accomplish all of the necessary transactions within 30 days. The Dobos have spent
three years working on an agreement.
Discussion followed on the meaning of a binding agreement. Attorney Shanklin explained that
a binding agreement could not be finalized until the trustee was appointed. The actual closing of the
deal will not occur for a number of months because the Local Government Commission must approve
the agreement.
Mayor Pro-Tem Moore asked if the agreement could be amended up to the date of closing,
and if the ownership could be amended at a later date. Attorney Shanklin responded the agreement
could be amended. For example, if the IRS ruling was not changed for another 45 days and during
that time, the City and County reached an agreement, the City could be added as a purchaser.
NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 26
SPECIAL MEETING WITH WILMINGTON CITY COUNCILPAGE 650
AUGUST 18, 1998
Mayor Pro-Tem Moore said if the County proceeds with the purchase and the City decides
to join at a later date, she would like to see an official agreement based on a 60/30 split because
otherwise the City residents would pay twice.
Mayor Hicks advised the figure of 66/33 was agreed upon last year; however, unless the City
and County agree on a structure for a joint water and sewer entity, the County will proceed with
purchasing the Dobos water systems.
Councilmember Peterson said the County does not need to be in the water and sewer business.
The City has years of experience in providing water and sewer, and if anyone should be purchasing
the water systems, it should be the City. It would be a better approach for the City and County to
jointly purchase the water systems. If both boards want to protect the City and County assets,
control growth, and represent the taxpayers, the joint purchase should be made. If the County moves
forward with purchasing the water systems, the City will be left out. That was not the intent of the
Utilities Committee.
Commissioner Davis disagreed with Councilmember Peterson. He noted that if the County
adopts a resolution to purchase the Dobo water systems, the County will work with the City to form
an entity to manage a unified water and sewer system.
Councilmember Quinn asked if a motion was made to jointly purchase the water systems on
a 66/33 basis, would the County agree to this arrangement.
Mayor Hicks asked if the County would consider a joint purchase on a 50/50 basis.
Mayor Pro-Tem Moore advised the offer by Commissioner Birzenieks to amend the resolution
to indicate the City could become a full partner at later date should be given consideration.
Mayor Hicks interrupted by saying if the City and County reach an agreement, the resolution
would be redundant because the City would be a partner. He, again, asked if the County
Commissioners would agree to jointly purchase the systems on a 50/50 shared basis. The response
by the County was no.
Mayor Pro-Tem Moore noted that two years ago the City voted with the County to form a
joint utility. She stated, for the record, the process was derailed by a Councilmember who no longer
serves on the City Council. In her opinion, the City and County should continue to work on
establishing a joint water and sewer entity.
Councilmember Conlon said the City Council voted to jointly purchase the Dobo water
systems; however, this action has been turned down by Vice-Chairman Greer because the County
Commissioners want an independent authority.
Further discussion followed on the fact that the City and County have been discussing the
possibility of establishing a joint water and sewer authority since 1983. Commissioner Birzenieks
suggested requesting the members of the Utilities Committee to continue to meet and work toward
creating a entity to provide a unified water and sewer system.
Councilmember Hearne stated he would like to continue to crunch the numbers to see if an
agreement could be reached.
After further discussion, it was generally agreed the Utilities Committee should continue to
meet.
NEW HANOVER COUNTY BOARD OF COMMISSIONERSBOOK 26
SPECIAL MEETING WITH WILMINGTON CITY COUNCILPAGE 651
AUGUST 18, 1998
ADJOURNMENT
Motion:
Commissioner Birzenieks MOVED, SECONDED by Commissioner Davis to adjourn.
Upon vote the MOTION CARRIED.
Chairman Caster adjourned the meeting at 5:36 p.m.
Respectfully submitted,
Lucie F. Harrell
Clerk to the Board