City copes with fallout from water authority case

Jan. 02, 2013 @ 04:38 PM

High Point officials say the blame doesn’t lie with them for the loss of a court case that could result in a significant financial hit.
The city could be liable for as much as $1 million in damages and fees against the agency that oversees the Randleman Regional Reservoir following a decision earlier this month by the N.C. Supreme Court,
High Point has a 19 percent ownership stake in the Piedmont Triad Regional Water Authority, which must compensate five small power plants that were hurt by construction of the reservoir. After first agreeing to hear an appeal from the water authority, the Supreme Court on Dec. 14 let stand lower-court rulings, which held that the building of the Randleman Dam by the water authority decreased the flow of water to the downstream plants, reducing the amount of electricity they could produce.
That amounted to a taking of property by the water authority, which must compensate the plants for their lost value, courts found. High Point is one of six local governments that owns the water authority and receives water from the lake. The city has invested about $40 million in the reservoir and dam, as well as the plant that treats the water and the other infrastructure associated with the project.
The water authority built the dam and lake. City Manager Strib Boynton faulted the agency for the complicated legal case that resulted in the anticipated additional cost to the city.
“Obviously, a million-dollar loss is big dollars for us,” Boynton said. “It’s a mistake that the city did not make. Others made the mistake, and it’s just frustrating when others make decisions that cost our citizens and taxpayers and ratepayers.”
The small power plants asked for $5 million in damages. Officials said they hope this figure will be reduced, but it will be up to a Superior Court jury to determine the actual amount that is awarded. Local attorney Fred Baggett, who advises the city on legal matters, said in addition to damages, the authority must pay the plaintiffs’ attorney and expert witness fees, which could drive the figure up by another $500,000 to $1 million.
“We’ve got a significant, unknown amount of liability, and (the city is) going to have to write a check, unless we can find a way to spread it out over time,” Baggett said.
Boynton said it’s too early to tell how the payout will affect city spending priorities.
Among these are the annexation of a proposed 431-acre business park north of the city and the potential $13 million in road, water and sewer upgrade costs to High Point that would come with the deal. He said he hopes the courts determine that the city can pay its share of the damages and fees over a few years, rather than all at once.
“I want to minimize the cost to our citizens and businesses, because it wasn’t our mistake,” Boynton said.