MINUTES OF A WORK SESSION OF THE MAYOR AND COUNCIL OF THE TOWN OF

CHAPEL HILL, THURSDAY, MAY 14, 1992 AT 7:30 P.M.

Mayor Broun called the session to order at 7:40 p.m.

Council Members in attendance were Julie Andresen, Joyce Brown, Mark Chilton, Joe Capowski, Joe Herzenberg, and Alan Rimer. Council Members Art Werner and Roosevelt Wilkerson were absent excused. Also in attendance were Town Manager Cal Horton, Assistant Town Managers Sonna Loewenthal and Florentine Miller, Town Attorney Ralph Karpinos, and Assistant to the Manager Greg Feller.

Mayor Broun stated that this evening's meeting would be devoted to the discussion of proposed water and sewer policy guidance to the Orange Water and Sewer Authority (OWASA). Mayor Broun then turned the meeting over to Council Member Andresen, Chair of the Mayor's Committee on OWASA matters.

Council Member Andresen noted that a committee constituted of Council Member Chilton and Council Member Herzenberg and herself had spent several hours reviewing a draft prepared by Mr. Feller concerning proposed water and sewer policy guidance to OWASA. She noted that Council Member Werner's comments had been incorporated into the draft document. Council Member Andresen said the main question was whether the document should be conceptual or specific. Council Member Andresen noted that the draft document established a number of important principles.

Memorandum of Understanding

Council Member Andresen noted that the committee recommended that the Council reaffirm the value and the need for the 1989 memorandum of understanding regarding sharing of information and proposed plans and policy actions. The committee also expressed appreciation to OWASA for seeking comments from local governments regarding the requests from Town of Hillsborough and Chatham County during the last year.

Mayor Broun inquired when the Town might receive a copy of OWASA's proposed Capital Improvements Program. Council Member Andresen asked whether this would be presented to the Council. Mr. Horton replied the document was being drafted and would be made available by OWASA. Council Member Rimer said some items in the capital budget, such as whether or not to build a pumping station, were not directly relevant to the Town. Council Member Andresen stated that the Town should review OWASA's capital budget without going into minute detail. Mayor Broun said the Council should concentrate on major capital items such as the Bolin Creek interceptor. Mayor Broun said he favored a review format whereby the Council could react to OWASA's overall proposal without involving a great level of detail.

Council Member Rimer said the Bolin Creek interceptor matter was a major concern meriting detailed study of a long-range plan. Council Member Rimer said the Council should be given the opportunity to study OWASA's proposed Capital Improvements Plan in detail. Mayor Broun suggested that the Council request copies of OWASA's proposed Capital Improvements Program for review. Mr. Horton said copies could be provided. He suggested that Town staff could request that OWASA staff provide a brief report highlighting items of particular interest to the Council. Mr. Horton suggested that time could be set aside at a regular meeting to discuss matters related to OWASA's proposed Capital Improvements Program.

OWASA Service Area

Council Member Andresen requested that Council Member Capowski briefly review this item. Council Member Capowski stated the principal recommendation was that OWASA's service area be defined as the Chapel Hill-Carrboro urban services area bounded by the rural buffer, University Lake watershed, Chatham County line and Durham annexation/water and sewer service boundary. He displayed a map detailing the proposed service area. Council Member Capowski stated that the proposed service area very closely followed the rural buffer, except for an area in Carrboro. Council Member Herzenberg said that the Carrboro line had been drawn prior to the 1987 Joint Planning Agreement. Council Member Chilton pointed out the proposed boundary. Council Member Andresen stated that the buffer extended down Highway 54 as a result of a prior agreement with the County.

Mr. Feller briefly reviewed the proposed service area utilizing a display map. He stated that the area included the University Lake watershed boundary, the transition area, and followed the Rural Buffer boundary. Mr. Feller stated that OWASA was presently serving the Heritage Hills and Rangewood neighborhoods, both in the watershed. Council Member Andresen stated that a public service emergency, such as failed septic systems, could necessitate service to portions of the rural buffer. Council Member Capowski stated that if such an area was well-defined and OWASA agreed to it, it would solve some current problems. Council Member Brown asked whether the long-range plan produced by OWASA would speak to this issue. Council Member Herzenberg said there was no known statement from the OWASA Board that specifically addressed this issue. Council Member Andresen said it would take an interlocal agreement to address this matter.

Mr. Horton stated that the Assembly of Governments had been asked to develop a list of issues concerning OWASA matters. He noted that a draft of this list was being prepared and would soon be completed and distributed. Council Member Capowski inquired whether specific lines had been drawn to distinguish service areas, similar to those outlined by other utilities. Council Member Herzenberg noted that OWASA's structure was relatively unique in North Carolina, given its multi-jurisdictional structure.

Council Member Rimer stated that this organization is anything but unique in the rest of the country, especially in the northeast.

Playing the devil's advocate, Council Member Rimer said that OWASA was a water supplier with a strong infrastructure that could solve supply problems and provide water at reasonable rates for communities such as the Towns of Efland or Hillsborough. He noted that current State law had no provisions to limit development between the Town and Hillsborough, in the event that water line extensions occurred. Mr. Feller stated that the current understanding was that the Town of Hillsborough would not annex into the rural buffer. Council Member Rimer noted that there were laws in other states concerning prohibition of transmission lines into environmentally sensitive areas. He emphasized the importance of establishing specific boundaries for OWASA's service area.

Council Member Chilton emphasized the importance of maintaining good quality water sources such as University Lake and Cane Creek. Council Member Rimer said if the Town wanted to buy or sell water to another jurisdiction, the purchaser could determine the quality of water involved. Council Member Chilton said he did not want the Town to be put in a position of having to draw water from Jordan Lake. Council Member Chilton said he felt the Town had an adequate water supply if adequate conservation measures were followed.

Council Member Capowski inquired about the long-term ramifications of a water supply agreement with Chatham County. Mr. Karpinos replied that a judge could insist that a water supply contract be continued once initiated. Mr. Horton noted that it would be extremely unlikely for a court to rule that water service could be discontinued once initiated.

Council Member Brown said entering into contractual sales would obligate OWASA to provide future water service, even if future supply shortages occurred. Council Member Herzenberg suggested that the Council remember that although the proposed service area currently had an adequate water supply, it was only a few years ago that shortages were common.

Non-Emergency Water Sales

Council Member Andresen stated that the proposed recommendation was that any non-emergency water sales to other utility systems should protect the long-term availability of OWASA's current water supplies through plans by the utility buying water to develop its own permanent water sources. She stated this approach should be tied to any agreement for the sale of water. Mr. Horton said that a contract could be written to reflect this requirement. He said Chatham County could be provided water based on an approved schedule of providing its own water sources, and if they failed to meet the schedule, the amount of water provided could be reduced. Council Member Rimer said he was not comfortable that such a contract would be binding.

He said that if Chatham County signed an agreement with OWASA for thirty percent of its water supply needs and subsequently determined it could not obtain its own supply, a judge might decide a hardship could not be placed on families receiving water service and might force OWASA to continue service, if supplies warranted. Mr. Karpinos said the sale of water could be discontinued if it were determined that supplies were limited. Council Member Rimer stated that the Town of Hillsborough needed water. He said such service could be provided if it were possible to guarantee that development would not occur in the rural buffer.

Council Member Herzenberg stated that Town's interactions with Chatham County were very limited. Council Member Andresen said that if the Town entered into a water agreement with Chatham County some circumstances might make it difficult to discontinue service in the future. Council Member Brown noted that curtailing future water service would be very difficult. Mayor Broun said there was always some level of risk with any agreement. Mayor Broun also said he felt that the committee had drafted an acceptable recommendation concerning the possible sale of water to Chatham County. He noted that it was possible to draft an enforceable contract for the sale of water to Chatham County.

Council Member Rimer said although the proposal was reasonable, there were certain risks involved. He noted the difficulty of placing value on these risks. Council Member Rimer inquired whether OWASA could set a value on these risks. Council Member Andresen said OWASA probably would not want to sell the water unless some attempt was made to put a contract in place with Chatham County. Council Member Rimer said the proposal was a good, reasonable business deal. Mr. Horton said he thought it would be possible to negotiate a contract. He noted that Chatham County already had plans in place to develop a water system. Council Member Chilton said he felt any written agreement should contain stringent performance measures concerning Chatham County's provision of its own water supply. Council Member Andresen inquired about the provision of water service in northern Chatham County. Mr. Feller said he was not acquainted with specific arrangements for this service. Mr. Horton said northern Chatham County would benefit by establishment of a service district.

Mayor Broun inquired whether there was a general consensus on non-emergency water sales. Council Member Rimer said that since the recommendation was non-binding, the Council should proceed. Mayor Broun suggested that the Council discuss the possible sale of water to the Town of Hillsborough. Council Member Rimer said that Hillsborough's water supply needs were greater than Chatham County's. Council Member Andresen said Hillsborough's water supply and sewer system were inadequate.

Mayor Broun stated that Hillsborough Mayor Horace Johnson had stated that Hillsborough wanted a line to back up their system in order to increase water pressure. Mayor Broun said the Town of Hillsborough had very old water and sewer infrastructure, coupled with poor elevation. Council Member Andresen concurred, noting that on some occasions, water flowed backwards in pipes, flushing out debris. Mayor Broun noted that the principles were the same for Chatham County and Hillsborough, namely, the Town's desire to protect its existing water supply from OWASA. Council Member Andresen stated that the Town of Hillsborough should receive priority consideration, given its location in Orange County. Council Member Chilton disagreed, stating that county lines were inconsequential. Council Member Chilton said he saw no reason to give Hillsborough preference over Chatham County. Council Member Capowski said he was not wise enough to make comparisons between the two. He suggested that the Council focus its energies on encouraging both jurisdictions to develop their own water supplies. He said the Town should have an agreement between all water suppliers in the area in the event of an emergency. Council Member Andresen stated that such agreements were in place.

Watershed Protection

Council Member Andresen stated the committee's recommendation was to support and encourage continuation of OWASA's purchase of land and conservation easements to protect University Lake and the Cane Creek reservoir. Council Member Rimer suggested that the Town strive for a local watershed protection agreement that was as strong as possible. He stated the Town should proceed on this matter as soon as possible for Cane Creek. Council Member Andresen said this would take very close and careful coordination with Orange County. Council Member Capowski stated that the land around the lake was very well protected, either through ordinances or easements. Council Member Rimer asked whether the Council would agree to pursuing ordinances. There was consensus among the Council.

Conservation

Council Member Chilton stated the committee was quite laudatory in their comments concerning OWASA's efforts towards conservation. He said a critical issue was the potentially controversial goal of not using Jordan Lake water in the future. Council Member Chilton said this would require future strong leadership by the OWASA Board. Council Member Chilton also noted that OWASA will soon need another water treatment facility. Council Member Brown inquired whether OWASA had any information suggesting specific conservation methods.

Council Member Herzenberg noted that great conservation efforts had been made during recent droughts. Council Member Andresen said an ordinance mandating low-flow toilets would be beneficial in complementing building codes. Council Member Brown noted that the State had mandated 1.6 gallon toilets in the building code due to go into effect next year. Council Member Rimer said the Town could mandate low-water faucets and low-flow shower heads to assist conservation efforts. Emphasizing OWASA's role in conservation efforts, Council Member Chilton said he concurred.

Council Member Rimer suggested that all new construction or remodeling projects be required to include low-flow fixtures. Council Member Andresen noted that when the sale of utilities to OWASA was approved, there may have been some limitations placed on agreements of this type. Mr. Feller commented that the agreement was an extremely large and detailed document. Mr. Feller said he did not know whether the agreement contained such limitations. Council Member Chilton stated that OWASA had made good efforts to educate the public on water conservation methods. He noted that some dormitories on the University campus had held contests to see who could use the least water. Council Member Andresen said it would be wise to include the University in future discussions about conservation.

Financing the OWASA System

Council Member Andresen said the committee's recommendation was to enter into discussions with OWASA to seek cooperative means for assisting low-income families with water and sewer costs including assessments, availability fees and other charges. Council Member Andresen said some OWASA board members felt revenue from the one-half cent sales tax should be used for these type of programs. Mr. Feller stated that in some discussions with OWASA, the OWASA board and staff had interpreted the laws governing the sales tax in a different manner. Mayor Broun said one of the suggestions made by the OWASA Board was that part of these funds be used for low-income areas. Council Member Brown asked Mr. Feller how much money was in this fund. Mr. Feller replied between $350,000 and $400,000. Mr. Horton said this revenue had been used for debt service since 1987. Council Member Capowski requested additional information on the proposal for the provision of loans for low-income water and sewer utility hook-ups. Mr. Horton replied that this type of program would simply reduce current reserves.

Council Member Rimer asked whether the funds were currently being used for municipal purposes. Mr. Horton replied yes. Mayor Broun said if these funds could help low-income areas, then the Council should proceed with these discussions. Mr. Horton noted that under the terms of a new federal home loan program, it was possible for water and sewer assessments to be subsidized for low-income families. Mayor Broun expressed a desire for OWASA to be more receptive in handling of bill collections from low-income families. Mr. Feller noted that OWASA had discussed creating a fund with customer donations to handle these situations.

Council Member Capowski inquired about third paragraph on page ten of the committee's memorandum, stating in part, "...were important considerations for the Town in selling its wastewater lines and one-half interest in the Mason Farm wastewater treatment plant." Council Member Herzenberg said the Town had sold its one-half interest in the sewer utility.

Other Matters

Council Member Andresen said that at present, OWASA levied a significant fee on businesses with sprinkler systems. Council Member Andresen said she thought businesses should be encouraged, rather than discouraged, to install sprinklers. Mr. Horton noted that most businesses were not required by State statute to have sprinkler systems. He said some businesses decided not to install them due to this fee, while others cut off service to existing sprinklers. Council Member Herzenberg note that cost was a disincentive. Council Member Rimer stated that the cost of installing lines, maintaining pressure, and related expenses was a disincentive to installing sprinklers. He suggested that the Council further examine the matter.

Noting his role as devil's advocate, Council Member Rimer stated that the Council, during its discussions concerning the Bolin Creek interceptor, had raised the issue of whether OWASA should continue as an independent utility or should be operated by the Town. Mr. noted a board and agreements with neighboring communities for operating the utility were in place. Mr. Horton said he thought it would be very difficult for a transition of the utility to occur, whereby the Town would handle operations. Mayor Broun noted that legislative action would be necessary. Mayor Broun said he did not think that problems were so severe at this point that they could not be worked out. Council Member Rimer said he did not think that operation of the utility by the Town was an option.

Council Member Capowski asked the Council to consider the issue of OWASA doing repairs under Town streets. He inquired whether the Council was concerned about this matter. Mr. Horton said the issue was whether or not the customers of OWASA should accept the cost of the repairs or whether the costs should be handled administratively by OWASA. Mr. Horton said different contractors were conducting the work with varying degrees of efficiency. Council Member Andresen said the Council should be concerned with the environmental impact of installing sewer lines. She said a document that stated Council concerns on this matter should be forwarded to OWASA. Council Member Rimer stated that sewer easements in his neighborhood had been a blessing in disguise. He said they had also served as frequently-used greenways.

Council Member Capowski suggested that the Council discuss customer relations issues. Council Member Capowski said he had found that customer relations at OWASA were problematic. He suggested that OWASA strive to meet the standards similar to other utilities. Council Member Capowski emphasized the importance of bill-paying customers to utility operations. He inquired whether there were formalized procedures to follow up on customer complaints, or telephone inquiries. Linda Vaughn, OWASA Customer Service Manager, said that some procedures were in place for specific areas of concern. Council Member Capowski said that a formal policy was needed. He suggested that the Council add to the proposed agreement concerning initiation of such procedures. Mayor Broun said concerns had been expressed by customers repeatedly and needed to be addressed.

Council Member Capowski noted that customers needed to know that their individual problems would be given the appropriate attention. Ms. Vaughn assured the Council that if a customer were dissatisfied, they could contact her and she would resolve the matter. Council Member Rimer said this information needed to be communicated to OWASA's customers. Ms. Vaughn said a newsletter would be distributed to customers outlining procedures for handling complaints. She thanked the Council for their comments and encouraged the Council to route any complaints directly to her.

Mayor Broun expressed his appreciation to the committee and to Mr. Feller and stated that the document was in an understandable format and was very well-written. Mayor Broun also thanked OWASA for their participation in this evening's session.

The session concluded adjourned at 9:28 p.m.