The regular monthly meeting of the Board of the Metropolitan Sewerage District and Public Hearing on the Budget and Sewer Rates was held in the Boardroom of MSD's Administration Building at 2:00 p.m., Wednesday, June 13, 2001. Vice Chairman Mike Sobol presided with the following members present: Aceto, Ball, Bryson, Field, Graham, Gantt, Kelly, Pace and Venable. Absent was Chairman Brady Blackburn.

Others present were: Thomas E. Hartye, General Manager, William Clarke, General Counsel, Gary McGill of McGill Associates, Jim Rogers of Cutler-Hammer, William Langdon of Langdon & Associates, Conway Dameron of The Architectural Practice, Mark Barrett of the Asheville Citizen-Times, Patti Beaver of CIBO, Jim Fatland, Ann LeMieux, Ed Bradford, Roger Watson, Stan Boyd, John Kiviniemi, Sharon Walk and Sondra Honeycutt, MSD.

At. 2:05 p.m., Mr. Sobol opened the Public Hearing on the Budgets and Sewer Use Rates for Fiscal Year 2001-2002. Mr. Sobol asked for comments from the public on the proposed budget. There being no comment, Mr. Sobol declared the hearing closed at 2:06 p.m.

Mr. Sobol called for comments from the Board. Mr. Field asked if there was a final consensus from the manufacturing community on the 20-year rate plan, since Council members received calls from industry representatives regarding the 5 and 12-year plans. Mr. Hartye reported a meeting was held with industry, following the May 9^th Board meeting, with only one (1) representative in attendance, but the 20-year plan was mailed to all industry. He further reported that the Manufacturer's Executive Association (MEA) mailed a letter to it's members expressing concern over the 5 and 12-year plans, which was sent after the meetings on the 20-year plan. He stated that in response to the MEA letter, he sent a letter explaining the 20-year plan and how it came about.

Mr. Aceto stated that, in recent conversations regarding rates, it occurred to him that people do not understand the domestic/industrial rate differential, in that commercial enterprises such as the Grove Park Inn and others pay domestic rates. He further stated by equalizing the rate, the District is helping out commercial users in a significant way. Mr. Pace stated that the word "retail" is the key, since these establishments are paying domestic rates. Ms. Field asked if there is a way this information could be conveyed to the community.

Mr. Gantt asked Mr. Hartye to comment on the rates for industry being unusually low. Mr. Hartye stated the comment was made that Gerber and other industry left the area because of high rates, but in fact, MSD had the second lowest rate in the state at the time Gerber left the area.

Mr. Venable asked if the rate equalization is included in this budget. Mr. Hartye stated there is a 4% domestic class increase and an increase to industry, as a class of 6.9%. Therefore, the margin being made up this year between the two classes is 2.9%. He explained that different industries within this class will fare better or worse depending on the nature of waste discharged. Mr. Sobol asked for further clarification on the retail class. Mr. Hartye stated that the domestic rate includes residential, commercial and some light industrial. The industrial class

includes permitted industries; those that have specific waste, or categorical users based on EPA criteria. Ms. Field asked what the 4% increase in dollars would mean per month. Mr. Hartye stated that domestic customers would pay an additional $.81 per month, based on an average bill of 6ccf.

Mr. Venable stated that he would vote against the Budget Resolution for the same reason he voted against the Preliminary budget. He further stated that he has nothing against equalization between the classes, but has a problem with this year's 4% increase, since the District has had substantial unexpected revenue this year from various sources. Also, given current fiscal problems with the state, county and city, he feels the District could have used the additional income to hold the line and not increase rates this year.

Mr. Aceto voiced his support of the Budget and particularly the Construction Budget, since it reflects the District's priority of repairing the system and reducing the possibility of sanctions from EPA and State authorities for sewer system overflows.

With no further discussion, Mr. Pace moved that the Board approve the Resolution adopting the Budgets and Sewer Use Rates for Fiscal Year 2001-2002. Mr. Aceto seconded the motion. Roll call was followed: 9 Ayes; 1 Nay (Mr. Venable).

Mr. Hartye presented information regarding the Consolidated Office Building, Plumbers Meeting, Buncombe County Planning Board, Letters in Support of the Water Infrastructure Network's (WIN) Funding Proposal, Swannanoa Interceptor, Environmental Management Systems Training, WEFTEC 2001, and Good Mail.

He reported that staff held a meeting with local plumbing contractors on May 22^nd to go over new and old District programs and policies. Ms. Graham asked what came out of these discussions that would lead people to believe the District is in the line cleaning business and charging for it. Mr. Hartye stated this resulted from a miscommunication of a directive given by him to the System Services Division; not to walk away from sewer backups in those instances where the cleanout is more then five feet off the edge of the pavement and well away from the house, but instead be more customer oriented and clean it out if it's late at night and there is sewerage in the home. However, if the line is clogged or collapsed on the property advise the owner to get a plumber, since the MSD is not allowed to work on private property.

Regarding the WIN Funding Proposal, Mr. Hartye reported that he sent a letter to Senator Edwards advocating recommendations to provide federal funding of water and wastewater infrastructure needs of $57 billion over five years for grants and loans.

Regarding the Swannanoa Interceptor, Mr. Hartye reported the contractor has finished the entire mainline replacement of approximately 38,000 feet and is working to complete the lateral line connections. He stated approximately 20,000 feet of new main (including the tunnel) is now online and the remainder would be online in July.

Mr. Hartye expressed his appreciation to Mr. Fatland for his effort in collecting approximately $50,000 from the Regional Water Authority for interest owed on approximately $700,000 in District funds held by the Water Authority.

With regard to the North Swannanoa Interceptor, Mr. Sobol asked if the difference in the amount of flow could be determined following connection of the new main. Mr. Hartye stated the before and after flow has not been metered, but in time, a temporary flow meter would be installed.

In the absence of Mr. Blackburn, Mr. Aceto suggested that Mr. Hartye express in a letter the Board's appreciation to Steven Briggs for providing information and follow-up support in a project being done by Market Center Holding, Inc.

Mr. Pace reported a meeting commemorating ten years of right of way acquisition for the District was held May 23, 2001. He stated Ms. Banks gave a presentation on the history of the Right-of-Way Section from its beginning in March of 1991 to present day. He further stated the Committee considered two condemnations on the Glenn Bridge Road project and approved staff's recommendations.

Mr. Aceto reported the Planning Committee met May 30, 2001 to consider changes to the Procedure for MSD/Developer Cost Share Sewer Rehabilitation Projects and Private vs. Public Pump Stations. He stated the District has a formula used to participate in the cost with developers for those projects that are in bad shape and are scheduled for repair. He further stated that in order for MSD to get the appropriate share of actual expenditures, the Committee recommends amending the policy whereby the District would receive a deposit up-front for projects that the District will construct from the developer and settle at the end of the project based upon actual cost. For projects the developer will construct, the District will participate (after construction is complete) on a "not to exceed" basis. The developer will provide evidence of actual cost.

Regarding Private vs. Public Pump Stations, Mr. Aceto stated the Committee considered whether to allow private developers to construct and maintain sewerage pump stations or require that they be constructed to District standards, which would be turned over and maintained by the MSD. He further stated the Committee discussed the difference between MSD and State standards. As a result of these discussions, staff was asked to perform a cost benefit analysis

based on allowing a less expensive standard in any or all instances for MSD ownership and maintenance.

In other business, Mr. Aceto reported a discussion was held regarding developers turning over lines and rights of way to MSD once a development is complete. Mr. Venable noted an incident where a homeowner could not obtain a Certificate of Occupancy (C.O.) because the developer failed to turn over rights of way and paperwork to MSD. He asked if there is some way the District could hold developers responsible rather than the homeowner. The Committee directed staff to investigate options pertaining to this issue.

Mr. Hartye reported the Citizens Participation Committee met June 1, 2001 to hear a report on the Master Plan presented by Camp Dresser & McKee. He stated an update on hot spots, dry vs. wet weather flow was given, emphasizing that from a financial standpoint, the District would be dealing largely with the wet weather aspect over the next 20-years. Also, a discussion was held concerning inflation rates. Mr. Hartye further stated since estimated costs were in today's dollars, it was recommended they be adjusted to compensate for inflation in future years. Mr. Sobol asked when the Master Plan would be complete. Mr. Hartye stated a draft would be complete within 60-days followed by workshops with the Board prior to completion of the final draft.

Mr. Venable reported the Construction Committee met June 4, 2001 to discuss liquidated damages on the consolidated office facility, which was well attended by contractors/architects who worked on the building. He further reported a discussion was held regarding a letter written to staff from the architects, which was intended as a starting point in determining the distribution of liquidated damages. He stated that since there were so many disagreements, it was suggested that the architects, contractors and attorneys get together and come up with a determination. As a result, staff met with the parties involved and recommended the total amount be assessed equally among the four contractors or $1,187.50 each. The Committee's recommendation was to assess $4,750.00 by reducing retainage on percentages of contract value as follows:

Payne General 71% $3,372.50

Haynes Mechanical HVAC 12% 570.00

Haynes Plumbing Plumbing 5% 237.50

Mr. Venable reported that it cost the District approximately $1,197.00 in time to resolve the issue of liquidated damages. Mr. Pace stated the purpose of this recommendation is to let contractors know the District can expect to pay for time delays on future projects. With no further discussion, Mr. Venable moved that the Board approve the recommendation of the Construction Committee. Mr. Pace seconded the motion. Roll call vote was as follows: 10 Ayes; 0 Nays.

With regard to item d., Mr. Aceto announced that Mr. Fatland is now serving on the Advisory Board of the North Carolina Capital Management Trust.

Regarding item c. Mr. Sobol stated that Windridge Apartments is a prime example of how the procedure for MSD/Developer Cost Share will work.

With no further discussion, Mr. Venable moved the Board approve the Consolidated Motion Agenda as presented. Ms. Graham seconded the motion. Roll call vote was as follows: 10 Ayes; 0 Nays.

With no further business, Mr. Gantt moved for adjournment at 3:20 p.m. Mr. Venable seconded the motion. Voice vote was unanimous in favor of the motion.

Jackie W. Bryson, Secretary/Treasurer