Asheboro Citizens Costs

Asheboro Citizens’ Costs

The Asheboro City Council plans to spend approx. $30,000 per home on Dave's Mountain to install sewer lines for 243 homes.

That’s more than $7 million for a service that a large majority of Dave's Mountain residents do not want or need!

The City is planning to use $4m of its General Budget reserve to fund a portion of this sewer project. That’s your tax dollars that make up the cash reserve.

The City will have an approximately $7 million financial outlay to install the sewer lines and necessary pump stations for this project. That does not include any costs for the on-going maintenance of sewer lines or personnel and equipment (leaf truck, etc.) added to provide services to Dave's Mountain residents as new City residents when the annexation takes place.

The City's plan to pay for this project does not reflect a financial profit for Asheboro.

In order to pay for the installation, the City will use:

1.Approximately $2.4-2.6 million loan from governmental sources.
2.Approximately $1.2 million loan from a local bank
3.Approximately $4 million from current cash reserves of the City
4.Remainder from a recommended 5% increase in water& sewer rates for all citizens

Based on the City's 5-year projection of Revenue & Expenses (page 16 of the Annexation report):

1. The City will receive new tax revenue from Dave's Mountain in FY 2009-2010, but the City will begin spending on the project now in FY 2007-2008.

2. Based on the City's projections, they will spend $4.2 more, in the first 3 years of the project than they will receive from new taxes being charged. After the first 3 years of incurring a net cash outflow of $4.2 million , the City will begin receiving more receipts , than expenditures to manage the debt from the two (2) loans take out.

3. This analysis does not reflect how long it will take the City to recoup the whole $7 million to be spent to install sewer lines and cover the annual operating costs of this project (additional maintenance of the sewer line, additional personnel to provide the new services, etc.). To date, the City has not conducted a long-term financial analysis to determine an accurate timeframe for the City to see a financial return on this project.

4. The City $4 million of reserves used to pay for this project will not recovered based upon the current project analysis provided by the City. The City has only projected servicing and retiring the loans that will be taken out. Also, spending the City's reserve money on this project instead of leaving it in the bank will result in the City losing money that it would have earned had the money earned interest (i.e., the "opportunity" cost - there was opportunity to earn interest, but that opportunity was lost because the money was spent on this project).

The City's current estimated financial outlay may not accurately reflect additional expenses that will be incurred in this project.

The Wooten analysis is only a projection based on a "best-guess". None of the figures provided in this document will be actual numbers until the City puts out bids for the project and the City gets back bids from contractors. Contractors who install sewers may hit rock (which is likely given the mountainous terrain of Dave's Mountain), and additional fees may be assessed. However, these costs have not been calculated to date.

All residents and businesses within Asheboro City limits will have a 5% increase in water & sewer rates.

There is a potential conflict of interest at work in this process.

The City Council appointed a Task Force on Annexation to study and then decide whether annexation was a good idea or not. After the Task Force met, the co-chairman of this Task Force reported to the City Council that this annexation WAS a good idea and recommended that the city proceed with an engineering feasibility study. The co-chairman of this Task Force, who encouraged the city to proceed on their annexation plans, was awarded more than $500,000 in engineering contracts for this project with no other bids requested . It appears that this engineer had a vested interest to present a cost that would seem reasonable and hence , has submitted an inferior sewer system installation estimate that will require you, the taxpayer, to pay higher maintenance costs over many years.

The sewer contractors we have talked with say that this is not a reasonable cost estimate. It is very likely the cost of this project will be MUCH more expensive! We’ll get an indication once the formal bidding process starts. But, that may not be the last word. The terms of the bids and contract will determine whether the contractors can charge the City more money for “unforeseen obstacles”….like ROCK!