History of the Water System

by John S. Stevens
Before 1884 residents of the small town of Asheville obtained water from springs and wells. Water for
drinking, cooking and cleaning was hand carried from springs and wells to homes, businesses, hotels
and restaurants. One did not turn on a faucet in ones hotel room; water to drink and to bathe in was
toted up to hotel rooms from barrels.Historian Foster Sondley who lived through the period wrote that
there were two public wells on Pack Square and a large spring located in the area now occupied by T.S.
Morrison Hardware on North Lexington Avenue. At that time Lexington Avenue was known as Water
Street and writers often spoke of its persistent muddy condition. Sondley commented on fire
protection in Asheville during the Civil War saying: a fire department could be of no use when there
was no public water supply.
In 1884 Asheville constructed a reservoir on Beaucatcher Mountain collecting water from various
springs and branches. Pipes were laid and unfiltered water distributed by gravity flow down into the
town.
Later, water was also channeled into what was known as the Beaucatcher Mountain Standpipe that
was finished in 1887 and located at the east end of College Street near the bottom of the mountain. The
upper portion of this circular structure was made of metal plates and collapsed under pressure from a
strong windstorm during construction. After repair it was filled with water and used for several years.
In January, 1893, when, following a period of alternating thawing and severe freezing and ice
expansion, there was a spectacular explosion as the standpipe failed and all the water and ice swept
down the mountain causing considerable damage in its wake.
It was against this background of early, sporadic efforts, as Asheville became a real city in the early
1900s, that the need for a substantial and reliable system of water supply and distribution was
recognized by city government. In 1903 Asheville completed a water intake and pumping station on
the Swannanoa River at the location of present day Recreation Park. Lines were laid from the intake
down the valley and across Beaucatcher Gap into a new reservoir built two years earlier. Later,
additional reservoirs were built including in 1920 the one on White Fawn Drive at the southern end of
Beaucatcher mountain. In 1916 the city acquired the watershed of Bee Tree Creek, constructed an
intake there and brought water in newly build lines down the Swannanoa Valley to the White Fawn
Reservoir. By 1927 the city completed the acquisition of 20,000 acres comprising the watershed of the
north fork of the Swannanoa River above Black Mountain known since simply as North Fork. Still,
Bee Tree Reservoir remained the principal source of water for the Asheville system with limited
amounts of water being drawn from North Fork.
In the decade of the 1920s, Asheville and Buncombe County experienced a period of explosive growth
and real estate development. Ashevilles growth in the 1920s was exceeded only by the land booms in
Florida. This real estate boom was a major contributing factor to the severe economic depression that
so afflicted the area for several ensuing decades. This development occurred in areas outside the city as
well as in the city. Recognizing the need for water services in those new developments outside the city
eleven separate water districts were organized to sell bonds and construct water and sewer lines. When
completed those water districts bought water from Asheville and sold it retail to consumers of water in
those districts. Also, during the 1920s the town of Weaverville and the Woodfin Water and Sanitary

District constructed their own separate reservoirs and water systems. The Town of Black Mountains
water system was and continues to be obtained from wells, although today Black Mountain buys much
of its water at wholesale from Asheville. The Town of Biltmore Forest built its water system in the early
1920s and has always purchased water at wholesale from Asheville and then retailed water to its users.
The rapid real estate development throughout the 1920s led to rampant land speculation, financed in
large part by local Asheville banks. By 1929 both city and county had incurred over $56 million in
bonded debt to pay for a wide range of municipal and infrastructure improvements including the
Courthouse and City Hall, paved streets, Beaucatcher Tunnel, school buildings and municipal parks.
Part of Ashevilles bond debt was also for its water system. The eleven water districts in the county had
incurred their own, separate bond debt to build water and sewer lines to serve development in those
areas outside the city.
Following the stock market crash in November, 1929, sales of land in the city and county largely
ceased and banks began calling loans. With increasing numbers of people out of work these loans
remained unpaid. On November 30, 1930, all six local Asheville banks failed. Only Wachovia remained
open with infusions of cash from Winston-Salem. The city, county and the eleven water and sewer
districts defaulted on the combined $56 million bond debt. People were indicted and some went to
prison. Ashevilles mayor committed suicide. It is not suggested that indictments and the mayors
suicide had anything directly to do with Ashevilles water. These happened because city and county
governments deposited most of their money into Central Bank and Trust Company and all of that
money was lost when the bank failed. The entire area fell into a decline from which it did not
completely recover until after World War II.
It was against this background that the North Carolina General Assembly in 1933, adopted Chapter
399, An Act to Regulate Charges Made by the City of Asheville for Water Consumed in Buncombe
County Water Districts, known then and since as the Sullivan Act after its introducer, Buncombe
County resident, Representative William (Billy) Sullivan.
The Sullivan Act made it unlawful for the city to charge residents who lived in those water and sewer
districts that had issued bonds to pay for the districts water lines a higher rate for water than that
charged to persons residing in the city. The Act also provided that only surplus water, that exceeding
the needs of city residents, would be available for sale to district consumers outside the city. The
county and water districts were directed to repair and maintain those district lines to insure against
leakage and waste.
Looking back over these 69 years it is difficult to exactly discern Representative Sullivans motives. On
the surface it would seem that he was simply trying to protect his fellow county residents from having
to pay more for water. After all, no one had any money and people had to have water. It is unknown
whether Sullivans legislation followed actual rate increases for district consumers or whether such
increases were simply threatened. It is also unknown whether before the Sullivan Act the city was
charging more for its water sold to district users. It is known that after the bond defaults by city and
county there followed a 4 to 5 year period during which efforts to find solutions to the bond debt were
undertaken. It is also known that during this period bond holders made serious efforts to seize control
of the citys water system in order to secure a source of payment on defaulted bonds. Bond holders
realized that people may not be able to pay their mortgage or their taxes, and a substantial number
paid neither, they would pay their water bills. Whether the Sullivan Act was adopted as part of the

overall strategy in dealing with bond holders is worthy of consideration.

Following the adoption of the Sullivan Act in 1933 and following protracted efforts to reach
accommodation, in 1936 the city and county finally reached agreement with bondholders. Bond
payments were renegotiated to mature in 1976 and a sinking fund created to assure payment. The area
began its slow climb out of the economic depression and the Sullivan Act remained on the books.
Beginning in the 1930s tax revenue plummeted and notwithstanding the constraints of the Sullivan
Act the city began to rely on water revenues as a source of funds to pay for municipal services and for
general operations.
Following the end of World War II the demand for housing and development resumed in the city and
the county. With increased development in the area came the need for other infrastructure
maintenance and improvements. For the city much of these improvements were funded with excess
revenue derived from sale of water. This helped to keep down ad valorem taxes. One of those
infrastructure improvements that was required after World War II was to the citys water system itself.
By the late 1940s water demand was beginning to exceed supply. This coupled with a severe drought
in 1950 led to the construction of a new, larger dam and intake system at the citys North Fork
Reservoir. By 1955 North Fork became the primary source of the citys water system and a few years
later the Bee Tree Reservoir was converted to a recreation facility. Bee Tree has since been reactivated
and then again decommissioned as a water source. In the 1970s a modern filtration system was added
to North Fork as result of some matters I shall ask my Respondent to explore.
The Sullivan Act and coping with increasing demand have not been the only problems with which city
water managers have had to contend. In 1963 Nell Stroup and Frances K. McLaren, president and
secretary of The Pure Water Association sued Ashevilles mayor and city council to restrain the city
from introducing fluorides into the citys water system. This action followed a 4 to 3 vote by city
council to begin fluoridation after having been advised to do so by the County Health Officer and the
Buncombe County Dental and Medical Associations. In 1964 the Supreme Court of North Carolina
ruled in favor of the city, no doubt persuaded to do so in no small measure by the extra ordinary
eloquence of counsel for the city, attorney O.E. Starnes. In its decision the court pointed out that the
city councils action could be reversed upon a referendum of voters but that such recall could only be
determined by the voters of the city, those outside (the city) notwithstanding their dependence on
the city for their water supply, may not participate in any election to recall an ordinance of city
council. The Pure Water Association was given a reasonable time to call for a referendum but one was
never held and the citys water was and remains fluoridated.
Throughout the decades following World War II there was continued growth and development in both
city and county and continued expansion of the citys water system. New lines were constructed in the
county, many outside of the old eleven districts. These county lines were built both by the developers
who conveyed their completed lines to the county and by the county itself. Meanwhile substantial parts
of the area of the original eleven water districts were annexed into the city and the city assumed
responsibility for construction and maintenance of water lines in those areas. In some instances the
entire area of old water districts were annexed into the city. Meanwhile excess water revenues
continued to be used by the city to augment general city revenues.
By the late 1970s and notwithstanding some enlargement of city limits by annexation it became clear
that most major new residential and commercial development was occurring in the county. City

population was static and city land values, particularly those downtown were static or declining. There
was increased recognition that many services being underwritten by the city were in fact being used
and enjoyed by the county residents as much or more then city residents. These included the airport,
library, civic center and parks and recreation facilities. In 1979 city and county created the Airport
Authority which provided that the county would underwrite any of the airports operating deficit. The
community had also become impressed with the utility of the Metropolitan Sewerage District created
in 1963 in addressing in a cooperative way wastewater treatment needs of the larger community.
It was against this background of successful experience with the Metropolitan Sewerage District and
the newly created Airport Authority together with increasing needs for water system maintenance and
improvements that many in the community began expressing the need for a similar approach to water.
Even though faced with these maintenance and expansion needs the city was initially reluctant to
embrace an authority bringing with it shared control over its water system.
There is certainly sympathy for the citys reluctance. Except for some district and county built lines the
city had built the water system. It had sold and paid off bonds to buy and build Bee Tree, North Fork
and the 20 or so miles of expensive lines to bring water down out of the mountains to the city. In
addition to paying for the water system the city had also paid for the new airport. After the defeat in
1956 of a countywide airport bond referendum, 1960 the city stepped forward and sold city bonds for
the new airport. That airport now serves more out of city residents than those in the city.
Despite these and other serious misgivings the city finally agreed on the 29th of October, 1981 to
creation of the Asheville/Buncombe Water Authority. This Authority was granted policy control over
the citys water system and the district and county lines until June 30, 2005, when pursuant to notice
given a year earlier by the city the Authority ended. In many respects the Asheville/Buncombe Water
Authority was misnamed. While policy control over water and the perceived need to locate a new water
source were catalysts for the agreement it was as much about shared services and tax fairness between
city and county residents as it was about water. For years city residents complained that with their
static tax base they were funding many services that served county as much as city residents. These
included the airport, civic center and city parks. City residents also argued that they paid taxes to the
county for sheriffs services that mostly served county residents.
The Water Authority was initially comprised of seven members. Three appointed by the city, three by
the county and those six chose a seventh. This is the same model as the Airport Authority created a
year earlier. The Water Agreement made clear that ownership of the system remained in the city. In
fact the agreement called for transfer of county and district lines to the city but only so long as the
agreement remained in existence.
The Water Authority had these responsibilities: to identify a new water source, determine water
extension policies, acquire and build new water systems, hire consultants, establish annual budgets
that were subject to approval by both city and county, a feature that created considerable friction in
later years, and to establish uniform water rates throughout the area consistent with the spirit of the
Sullivan Act. Indeed, the Water Agreement contained a specific prohibition against any city challenge
to the Sullivan Act. Commencing in 1986 and thereafter the agreement awarded the city 5% of gross
water revenues annually.
A separate portion of the agreement listed the countys responsibilities: the county agreed to

reimburse the city and other municipalities for the sheriffs patrol and investigative functions, so called
PI costs, that city residents were paying for as part of their county taxes and for which they received
little benefit. The county took over many of the citys parks and recreation facilities. The county agreed
to pay rent to the city for civic center space at that time used by the Asheville Art Museum, Asheville
Symphony and Coleman Mineral Museum. The agreement recognized other programs and agencies
that served both city and county residents in an attempt to achieve tax and cost fairness between city
and county.
In 1989 and again in 1996 the Water Agreement was amended. The 1989 amendment made
permanent the 5% of gross water revenues allocated to the city and also allocated 2 % of such
revenues to the county for economic development. The 1996 revision to the water agreement extended
its term until 2024 and enlarged the Authority to 10 members to include 2 from Henderson County
and 2 elected by the 8 appointed members. Inclusion of 2 members from Henderson County was
recognition of the Water Authority having acquired land, in the name of the city of course, in
Henderson County and construction there of the new Mills River intake facility.
The perceived need for a unified city-county approach to establishment of a new source of water was
one of the reasons behind the Water Agreement in 1981. Indeed, projections included significant
increases in industrial uses of water that demanded a new source. The French Broad river was the
logical source and, in 1985 the Water Authority acquired land on the French Broad River north of Long
Shoals Bridge for this purpose. A citywide bond issue to construct the intake facility failed. West
Asheville voters, echoing a 30 year complaint of the 1956 airport bond vote that all they would get for
their money was aircraft noise, became convinced that less than quality water from the planned
French Broad intake would be piped to them while the rest of the city would continue to enjoy pristine
water from North Fork. It was following this bond defeat that the Mills River facility was acquired and
built using revenue bonds that required no vote by taxpayers.
The irony to all this frantic search for water is that by 2000 industrial demand for water dropped
sharply due to the closing of Gerber, Sayles Bleacheries and several other large water consuming
industries. The further irony is that one of the principal motivators for the creation of the Water
Authority in the first place, to identify and construct a new water intake facility, was no longer an
issue.
This brings us to June, 2004, when then city notified the county that it was ending its participation it
the Water Agreement effective one year later as it had the right to do under the Water Agreement.
In announcing termination of the Water Agreement city representatives made clear that the city
intended to utilize the water system it had built and paid for to generate additional revenue.
The city announced that it would charge more for its water to those customers outside the city than
those inside city limits. In doing so the city believe that the old 1933 Sullivan Act was both
unconstitutional and no longer applicable since it only regulated water sales to residents in those old
districts.
The city correctly pointed out that almost every city in North Carolina that owned its water system
charged the typical county resident about double for the same amount of water consumed by the
typical city resident. No city in the state except Asheville was constrained by state law to charge equal

rates.
Following the citys 2004 announcement to terminate the Water Agreement formal negotiations
between city and county representatives to head off what was acknowledged by all to be a train wreck
were begun. Motives and attitudes of those persons involved on both sides of the controversy are
difficult to determine. It is probably correct to say that both sides underestimated the resolve of the
other. The city felt it was correct on the facts and law and never appeared to move from its one
principal, that it would charge more for its water to non-city users than to city users. While county
representatives made a number of proposals and, in the view of their representatives concessions in
the form of payment transfers to the city, the county never moved from its position that county users
would not be surcharged for water bought from the city.
It is probably also the case that neither side was as expeditious as they should have been in the early
stages of negotiations. Time elapsed and by late winter of 2005 the parties themselves and indeed
most people in the county could indeed see the train wreck ahead.
The Asheville Citizen-Times kept up a drum beat, publishing a daily count-down chart of days left to
resolve. The parties began to meet more frequently. Each side cranked up public relation machines
that espoused its views. The parties were persuaded to engage in mediation that came to naught.
Responsible citizens in the area, both city and county residents, wrote op-ed articles published in the
Citizen-Times. In general, the prevailing attitude of county residents who thought much about it at all
seemed to be that the Water Agreement had worked well for 24 years and why change it. Many
believed that a substantial number of city residents shared this view. It is possible that members of city
council, aware as they were of the fundamental inequality and unfairness of the old Sullivan Act, were
out ahead of their rank and file residents because of their unique knowledge. It was certainly easier to
explain to county residents that the city is going to double your water rates than for city council to
explain to city residents that the system was unfair and that if we can change it city revenues stand to
be enhanced without tax increases.
It also seems clear that the mayor and city council both failed to appreciate the resolve of county
commissioners and failed to appreciate what, if they had thought much about it would have known,
that members of the General Assembly from the area would get into the controversy and that they
would do so on the side of county residents. The reason lies in the math. There are over two times as
many Buncombe County residents who live outside the city than there are city residents.
It is generally understood that members of the General Assembly, while reluctant to become involved
and were strongly encouraging to city and county to resolve the matter by a continued water
agreement, nevertheless made it understood that they would intervene if the matter remained
unresolved.
At midnight, June 30, 2005, the Water Agreement ended and the city took over control of its water
system. One day earlier the General Assembly enacted what is known as Sullivan II to provide that the
city may not charge more for water to any county consumer than charged to its comparable city
consumer. This had the effect of making the 1933 Sullivan Act (Sullivan I) apply to all county water
consumers, not just those in the old districts.
Also on June 29, 2005, the General Assembly enacted what is now called Sullivan III that purports to

restrict the city in how it uses surplus revenue from its water system. As pointed out in the citys
Declaratory Judgment lawsuit Sullivan II and Sullivan III were enacted to prevent Asheville from
utilizing its water system asset in the manner otherwise permitted by law and as enjoyed by every
other city and town in the state that owns it water system.
In its lawsuit Asheville relies on provisions in the North Carolina Constitution that prohibits the
General Assembly from enacting any local or private act relating to health, sanitation and abatement of
nuisance and from enacting any local or special act regulating labor, trade or manufacture. The case
will be heard by Wake County judge and will likely be ultimately decided by the North Carolina
Supreme Court. The ultimate decision could be as much as eighteen months to two years off.
Meanwhile, the city will run its water system, its civic center and parks and recreation and county
water consumers will see no differential in rates. If the city wins its case and the Courts say that the
legislatures passage of Sullivan I,II and III violated the states constitution the city will likely do what
it said it would do, increase water rates for out of city users, something denied the city for almost
seventy years.
If the county wins the case Sullivan I, II and III will remain the law in Buncombe County. Water rates
will remain uniform and relations between city and county government will likely suffer further. With
only Sullivan I on the books, and it becoming more and more vulnerable because of its limited
applicability to the eleven districts, the city had considerable leverage with the county when it
negotiated the Water Agreement in 1981. If not only Sullivan I but also the more restrictive Sullivan II
and III remain the law in Buncombe County this will represent and almost seismic shift in the balance
of power between the city and county. Sullivan II will make rates uniform throughout the county and
Sullivan III will impact to some degree the citys ability to extend its municipal boundaries through
involuntary annexation. The city has much more at stake in the outcome of its declaratory judgment
lawsuit than does the county. If the city wins it wins big; if the city loses future development and
growth in the city will be inhibited. If the city loses it will be like the standpipe failure of 1893.
The citys historical role in Buncombe County has been one of risk taking, of daring to change, of being
modern and of committing itself to undertaking large things. There is no better monument to the
different historical philosophies between city and county than the magnificent city hall and the staid,
drab courthouse that sits beside it. The citys gamble in this lawsuit, its willingness to stake much on a
favorable outcome is rooted in that historical cultural difference between city and county.
But is the citys position in staking so much on a uncertain outcome a wise course? If the city loses, will
county residents be better off in the long run? Perhaps not because a strong county is inseparable from
a strong city.
So what should the parties do? Very simple; now that city council elections are over, and with a new
mayor, the city should immediately initiate renewed negotiations with the county over a new water
agreement. Given that the citys odds of winning its declaratory judgment are better than 50/50 the
city will continue to enjoy considerable leverage in renewed negotiations. The principles on which the
1981 Water Agreement were based reflected acknowledgement of certain inequities in the cost of
services and the burden of paying for those services between city and county. That 1981 Agreement,
while rigid and imperfect in many ways did achieve some measure of tax and cost fairness between city
and county.

There is a short window of opportunity for city and county representatives to agree on a new water
agreement before the lawsuit is decided. Failure to do so leaves this areas future to chance. It is time
now for the parties to resume negotiation and produce a new water agreement.