Lake Junaluska a good catch for Waynesville, but light on the dowry
Adding Lake Junaluska to its town limits won’t be a windfall for Waynesville despite $775,000 in property taxes it stands to gain each year. Likewise, Junaluska wouldn’t be a financial drain on the town, according to the results of a highly anticipated engineering and feasibility study outlining the pros and cons of a merger.
The findings of the $60,000 study commissioned by the town of Waynesville were released last week.
On one hand, Waynesville would face $10 million in water, sewer and street repairs at Lake Junaluska over the coming decade if the town absorbed the 765-home community into its town limits.
“If you look at the hard numbers you’re going, ‘Oh that’s an ugly pig,’” Mayor Gavin Brown said.
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But Brown said there’s more to the equation than that.
“This is not about today, it is not even about this time next year. Ten years from now, 15 years from now, we will be a stronger community because of it,” Brown said of a merger.
Waynesville Town Manager Marcy Onieal agreed.
“I think the benefit is the intangible. We are getting a population of professional, very engaged, civic-minded people,” Onieal said of Junaluska’s residents.
If not for the $10 million in infrastructure repairs Lake Junaluska needs, the bottom line looks a like a boon for Waynesville. The town would see a $4 million net gain over the next decade thanks to the additional revenue Lake Junaluska would bring in.
“The town would have more critical mass to operate from and the economies of scale would benefit the town as a whole,” Brown said.
Even after hiring an additional 10 or so town employees to provide services at Lake Junaluska — including garbage collectors, street workers, police officers and public works staff — the town would still see a bottom line gain of $4 million over the next decade.
“They are cheap to take care of. They don’t have a lot of trash problems. They don’t have a lot of fights police have to break up,” Brown said.
Study confirms benefits of merger
Waynesville’s intuitive hunch all along was that Lake Junaluska would be a financial boon, but town leaders have been holding out for a more definitive and concrete analysis from a study conducted by Martin-McGill Associates, an engineering and consulting firm out of Asheville.
“Bigger picture, longer term, bringing those two communities together just makes sense,” Jessica Lang, a consultant with McGill Associates, told town leaders when presenting the study’s findings at a meeting last week.
When viewed in broad strokes, that might be true. But the picture isn’t so rosy if you consider the hit Waynesville would take in the water and sewer arena. Factor in losses on the water and sewer side, and Lake Junaluska goes from being a cash cow for Waynesville to a break-even proposition.
Lake Junaluska needs $3.8 million in street repairs and $5.6 million in repairs to its aging water and sewer lines, according to the study.
Waynesville already has $20 to $25 million of water and sewer repairs and upgrades on its own long-range to-do list. The town doesn’t bring in enough in water and sewer fees from customers to pay for the repairs it already needs, let alone taking on the burden of additional repairs needed to Lake Junaluska’s lines.
Brown said an increase in water and sewer fees is inevitable, regardless of whether Lake Junaluska is added to the town.
“We would have to do that to maintain our own system whether Junaluska came in or not,” Onieal agreed.
Waynesville shouldn’t be scared off by Junaluska’s estimated water and sewer line repairs, however, according to Lang.
“The numbers look daunting, but the level of need over there is not abnormal. This is pretty normal,” Lang said. Communities across American are grappling with aging water and sewer systems in need of costly modernization.
More importantly, the town can put off some of the $5.6 million of water and sewer repairs and $3.6 million in street repairs on the 10-year to-do list for Junaluska.
“This is a worst-case scenario if we identify all the needs,” Onieal said. “Any time you do this kind of study you want to know what it would cost to do everything. Yes, these are all things that have to be done, but they aren’t things that have to be done on a specific time frame.”
In other words, the town can beg off some of the $10 million in infrastructure upgrades listed in the study.
“They can be dialed up and down depending on what absolutely has to be done and how aggressive you want to be about undertaking these projects,” Lang said. “The staff and board have to determine what can we afford to do and what has to be done.”
Merger mitigates infrastructure costs
The shortcomings of Lake Junaluska’s water and sewer lines have been a driving force behind the merger discussions. Staring down the costly repairs, Lake Junaluska residents realized they would be facing considerable increases to their water and sewer fees — or a sizeable levy — to cover the cost.
Joining Waynesville could soften the blow for Junaluska residents, thanks to economies of scale that come with being part of a larger town.
“Their infrastructure is essentially in about the same state Waynesville’s is over all. We both have aging sections,” Onieal said. “But it is a lot easier to undertake those improvements and repairs the larger the system is.”
Waynesville not only faces the prospect of water and sewer line repairs at Lake Junaluska, it will actually lose money on its monthly water and sewer operations at Lake Junaluska.
Junaluska’s water pipes are so leaky that more than 30 percent of the water flowing through its pipes seeps out into the ground, never making it to a customer’s faucet.
Currently, Lake Junaluska buys water in bulk from the town and resells it to its own residents. Waynesville is paid for the water that’s lost into the ground, even though it technically isn’t reaching anyone’s water meter.
If Lake Junaluska becomes part of the town, the residents there would become individual water customers — Lake Junaluska would no longer act as a middle man buying and reselling the water. Waynesville could only charge Junaluska residents for their actual water usage — and so the town would have to eat the cost of the water lost from the leaky pipes.
The town would actually see a net loss just in its water and sewer operations to the tune of $300,000 to $500,000 a year.
Technically, the town could offset the water and sewer losses with the windfall from property taxes it will rake in from Lake Junaluska homeowners — thus amounting to a wash.
But water and sewer operations should be self-sustaining and self-sufficient, not propped up by property taxes.
“That is not a good practice,” said Lang.
That reinforces the likely increase in water and sewer rates. Waynesville’s water and sewer rates are currently 30 to 40 percent lower than of most areas in the region.
“Town rates are low compared to their peers and could tolerate slight adjustments if needed to offset the loss in the water and sewer fund,” Lang said.
Onieal said it’s never fun to spend money on water and sewer repairs and upgrades, which is one reason communities can end up with a backlog.
“It is out of sight, out of mind. They don’t see the pipes. They just turn on the faucet and get water,” Onieal said.
Lake Junaluska wouldn’t be guaranteed its own little pot of money to peck away at its own water and sewer needs. Instead, its $5.6 million in water and sewer repairs would be tossed in the heap with the roughly $20 to $25 million in water and sewer repairs the town already has on its own to-do list.
“There would be no sense that Lake Junaluska projects would take priority over the town of Waynesville or vice versa. They would simply all become town of Waynesville projects and be slotted in line accordingly,” Onieal said.
Long-term benefits attractive
While the biggest budget boon for Waynesville should it absorb Junaluska is the $775,000 in annual property tax revenue from Lake homeowners, Waynesville stands to gain financially on other fronts as well.
Adding Lake Junaluska to the town limits will give Waynesville a population boost — from its current census population of 10,000 to roughly 11,000. The bigger population means a bigger cut of state sales tax distributed according to population, as well as other pots of state money that use a population-based formula, Onieal said.
In all, it could mean an extra $1.2 million annually for the town, including both property taxes and the bump in various funding streams.
Waynesville has held two public hearings on the issue, but town residents were largely a no show.
“If someone feels left out or not heard that is their own fault. There has been ample opportunity,” said Alderman Wells Greeley. “That is when you have a great democratic process when everybody has been given a chance to have their piece.”
Waynesville leaders were expected to vote at their meeting Tuesday night, held after The Smoky Mountain News’ press time, on whether the town wants to absorb Lake Junaluska. Various entities at Lake Junaluska will be voting over the coming week on whether they want to join the town.
Lake Junaluska by the numbers
• $190 million: total value of property at Lake Junaluska added to Waynesville’s tax base
• $775,000: property taxes Waynesville would collect annually from Lake Junaluska at current tax rate and property values
• $4 million: cumulative profit in Waynesville’s operational budget over 10-year period from taking on Junaluska
• $7 million: cumulative loss over 10 years to Waynesville’s water and sewer fund from taking on Junaluska
• 100 years: age of Lake Junaluska’s oldest water and sewer lines
• $5.6 million: estimated water and sewer line repairs and upgrades Lake Junaluska needs
• $3.8 million: estimated street repairs and upgrades Lake Junaluska needs
A trip to the chapel
Several boards will weigh in over the next week on which direction Lake Junaluska should take: merging with Waynesville or going it alone?
• Waynesville Board of Alderman: vote likely at 7 p.m. Feb. 26
• Lake Junaluska task force: vote at 7 p.m. Feb. 28 at the Harrell Center at Lake Junaluska.
• Lake Junaluska Community Council: vote at 4 p.m. March 5 at Junaluska Welcome Center.
• Mail-in survey of 800 Lake Junaluska property owners: results announced publicly March 7.
• Lake Junaluska Board of Directors: discussion at 10 a.m. March 7 at Terrace Hotel Auditorium, with vote to follow on March 8.
• N.C. General Assembly: vote in mid- to late-summer.
Last modified on Wednesday, 06/03/2013
