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NC Appeals Court takes up Asheville water lawsuit

Sen. Tom Apodaca, R-Henderson, talks with Dan Clodfelter, an attorney representing the city of Asheville, following arguments Wednesday before the N.C. Court of Appeals regarding the future ownership of the Asheville water system. Kirk Ross/Carolina Public Press

RALEIGH — Asheville Mayor Esther Manheimer said Wednesday that she remains cautiously optimistic that one of the state’s highest courts will again vindicate the city in its fight against the N.C. General Assembly over control of the city’s water system.

After attending oral arguments at the N.C. Court of Appeals in Raleigh yesterday, Manheimer said that if the state’s appeal is successful, it would have sweeping consequences for cities and towns across North Carolina.

“I think there’s a concern that, if the state prevails, it means that cities don’t own their proprietary assets,” she told Carolina Public Press. That, she said, would impact the financing of projects and improvements. “I think banks would be very interested to learn we don’t have all the collateral we think we have.”

Despite a malfunctioning A/C unit and the high-stakes venue, court arguments over the fate of the Asheville water system appeared to be at their coolest and calmest in years, as both sides made their case over The Water Act, as the bill is known. The law — and the lawsuit that followed — is the latest episode in an almost century-long battle over control and direction of the water system.

In slightly more than an hour of presentations interspersed with questions from a trio of justices, the court reviewed the state’s appeal of Judge Howard Manning’s June 2014 decision. In that decision, Manning had sided with the city of Asheville in its challenge to a 2013 session law that transferred the city-owned system to a new regional water and sewer authority. In addition to finding that the bill violated constitutional restrictions, Manning ruled that the legislation would amount to an unlawful taking of the water system without just compensation.

Even though the legislature was successful in passing the 2013 law, the ensuing lawsuit wasn’t the only reaction. The bill’s two main sponsors, former Buncombe County Reps. Tim Moffitt and Nathan Ramsey, both Republicans, were defeated in their bids for reelection last November after their opponents, Reps. Brian Turner and John Ager, both Democrats, accused them of, among other things, running roughshod over the city.

But in court, most of the discussion focused on who really owns the water system in the first place, a point that formed a key part of the state’s appeal.

I. Faison Hicks, a special deputy attorney general arguing for the state, asserted that since the water system and the city itself are charted by the state, the water system doesn’t belong just to Asheville and its citizens.

“Municipal public water systems belong to the state,” he said.

He also argued that the city would not be harmed in the utility’s transfer because the system would go on as it is, continuing to serve “exactly the same people in exactly the same way.”

Because the city would not have to replace the system, he said, it can’t claim it is a loss.

“The state does not see that as a loss,” he said, “but rather the achievement of a greater good.”

That brought a strong rebuttal from Asheville’s attorney, Dan Clodfelter, who is now the mayor of Charlotte and who was a state senator when the bill was passed.

Clodfelter called the state’s argument that the city doesn’t actually own its water system a “peculiar contention.”

He said the other local governments represented on the new authority set up under the direction of the Water Act would not necessarily run the system in the way the state asserted. It was clear, he said, that Asheville would lose a valuable asset as a result.

Hicks also responded to Judge Manning’s ruling asserting that the act was unconstitutional because it was really a local bill disguised as a statewide act. The constitution prevents the state legislature from approving local bills that relate to “health, sanitation and the abatement of nuisances” and non-navigable streams.

Hicks said the transfer related to improving the governance structure of the system and did not directly impact health and sanitation. He said that if the court interpreted the effect of the bill too broadly, the legislature would be unable to write any law influencing water and sewer systems.

“Yes, this will affect non-navigable streams. Yes, this will affect health, sanitation and the abatement of nuisances,” Hicks said. “But that effect is incidental. It’s not the primary concern of the law. The primary concern of the law is governance, good governance.”

In an interview with Carolina Public Press after the hearing, Clodfelter said he also remains positive on the potential outcome.

“But you never know until they rule,” he said.

Clodfelter’s co-counsel, Ron Payne, of Asheville, added that if the court sides with state, it would have a chilling effect.

“Any city this would apply to would have second thoughts about spending large amount of funds for any proprietary function’” he said, such as parking deck or water infrastructure. Payne said local governments could find it difficult, or at least more expensive, to secure bonds for projects.

Sen. Tom Apodaca, R-Henderson, one of several members of the local legislative delegation in attendance at the hearing, said he’s unsure how the case will end up.

“Some of it seemed to be on point on one side, some on the other,” he said. “I’m glad I’m not a judge having to decide it.”

Apodaca said there has not been a lot of discussion on what might happen on the water system issue going forward.

“There is some communication,” he said, “but, after the last election, that kind of got put that to the side.”

A decision on the case is expected to take 90 days or longer, according to Asheville’s attorneys.

Leading up to Wednesday’s arguments, Manheimer said that she has heard from a number of towns that are monitoring the case because of how it might affect investments like the expansion of water and sewer services.

“I know Boone is watching this case carefully as it looks at some significant upgrades,” she said. “Towns want to understand (that) if they build something they can hold on to it.”

Kirk Ross

Based in the Triangle, Kirk Ross is the capital bureau chief for Carolina Public Press. Contact him at kross@carolinapublicpress.org.

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