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<br />THE UNIVERSITY OF NORTH CAROLINA <br />AT <br />CHAPEL HILL <br />Ofrioe of Uw <br />aownire Yoe Chancellor <br />May 12, 1998 <br />Mr. Ed Kerwin <br />Executive Director <br />Orange Water & Sewer Authority <br />P.O. Box 366 <br />Carrboro, NC 27510-0366 <br />Dear Ed: <br />~D'~~~~~,~~ <br />-,,:;:. <br />l~AY 5 • ' ~' ~. <br />;.; <br />~---.~. <br />t <br />., --~ <br />The Uaiveairy of Noah Carolun at Chapel HiU <br />CSN 9155. 103 So°th aaUdiog <br />~ xal, lvc rs99Alss <br />(919) 9626716 FwX: (919) 962.1647 <br />Thank you for your letter of March 27, 1998. As you requested, we have~reviewed your discussion paper <br />entitled Assessment Policy Applicable to FYater and Sewer Service Extensions to Existing Unserved <br />Neighborhoods. Our comments are directed to the proposal that suggests 8liminating public health threats <br />from failing septic systems by subsidizing sewer extension projects through the general rate base. <br />As you are aware, the Agreements of Sale and Purchase between tfie University and OWASA for both water <br />and sewer specify that "...the ultimate cost of any such extension will be borne by those primarily benefiting <br />from such extension".' It is our continuing position that the general rate base should not be used to subsidize <br />extension projects. The discussion paper describes various funding alternatives. Any alternative that <br />envisions the use of OWASA funds accumulated from the resources generated by the sale of water and sewer <br />services is not consistent with the terms of the agreements described above and, therefore, not acceptable to <br />the University. <br />The information provided relating to the six recent projects indicates that the OWASA rate base paid SO <br />percent of the total cost ($1,595,096) for those six projects. These projects benefited a small portion of <br />OWASA customers. Our records indicate that OWASA receives 24.1% of its annual revenue from the <br />University. This suggests that the University's contribution to these six projects was approximately <br />$385,100. It is our position that the use of funds received from,the sale of water and sewer services should <br />clot have oeea used Y~orch~se projects. <br />We agree that it is important to address long-term public health and environmental concerns. However, we <br />feel that it is appropriate to deal with any subsidy issue through the city or county tax base rather than <br />additionally burden the water and sewer rate. This approach appears to be the philosophy of our surrounding <br />cities and towns in the Triangle and Triad areas. <br />if you have any additional questions regarding our position on this issue, please do not hesitate to call me at <br />962-6176 or Bruce Runberg at 962-7248. <br />Sincerely, <br />~. <br />r-_Ison s. rl~yd <br />;:xecutive Vice: Chancellor <br />