Lengthy discussion on the pros and cons of entering into a 10-year managed services contract for water meters, versus purchase of the units was the primary item of business at the Sept. 4 meeting of the Norwood Board of Commissioners.

At a meeting of the board on Feb. 5, commissioners heard a report from Utility Metering Services (UMS) on the feasibility of replacing the town’s existing water meters with updated models.

The newer units would eliminate the need for town personnel to manually read meters, as the updated models would be equipped with telemetry that would allow the meters to be read and monitored from Norwood Town Hall.

The presentation quoted a price of $7.17 per meter per month, with the meters being installed and managed by UMS for a 10-year period, at the conclusion of which the contract would be reviewed and renegotiated. This would leave the town with the option to purchase the meters, upgrade to new meters or negotiate another agreement.

Town Administrator John Mullis recommended entering into the managed services agreement, but some commissioners subsequently asked him to explore the potential advantages or disadvantages of an outright purchase of the meters.

“The question is, do we step out and move away from what we have been working on since February?” said Mullis. “I feel strongly that this (managed services agreement) is the best way to go, but the commissioners have asked for cost figures on procuring the meters.”

One concern commissioners felt they would have to address, regardless of the choice they made, was gaining approval from the North Carolina Local Government Commission (LGC), which must approve any loans a municipality undertakes.

A loan would be required to cover part of the initial cost of the managed services agreement.

However, the LGC at its last meeting indicated that such an agreement would not require their approval.

“The LGC stated that this (managed services agreement) is not in their purview,” said Cab Currin, a UMS representative who has been working with the town.

“Our initial concern was would the LGC approve a (managed services agreement) as opposed to ownership,” Commissioner Betty O’Neal said.

“But if we borrow to purchase meters, we will be going right back to the LGC,” added Mayor Pro-tem Linda Campbell.

Mullis expressed concern over potential liability should the town decide to pull out of the managed services agreement.

“UMS and the town of Norwood have worked together in good faith on this matter,” he said. “If we pull out now, UMS may have a legal claim against us.”

Mullis also pointed out the town’s cost to purchase meters, approximately $1,028,000, would not include the cost of connecting the electronic telemetry to make possible the remote reading of the meters.

“The cost to the town under the managed services agreement is $7.17 per meter, whereas purchasing the meters would be $7.73 per meter. But the procurement cost would not include the installation and maintenance of the meters and the telemetry we would get under the managed services agreement. The town would have to pick that up.”

Commissioner Robbie Cohen expressed concerns over what would happen at the end of the service agreement.

“I have no problem with the lease,” he said. “My problem is what happens to the meters at the end of the lease.”

Campbell added her concerns, saying, “Where is the protection for the town of Norwood from UMS coming in and ripping out the meters after 10 years?”

Mullis replied that the UMS contract would be similar to what the town currently has with other service providers.

“At the end of nine years, the board at that time needs to discuss and plan what to do as far as negotiating a new agreement,” said Mullis. “That’s what we do with Waste Management, for example.”

“What do you have in mind after 10 years?” O’Neal asked Currin.

“Most towns want to upgrade,” he said. “We would serve as a partner and work with you…we don’t come in and rip out meters.”

“It scares me to think of the town taking on the cost of installing and maintaining these meters,” said Commissioner Wes Hartsell. “And if we borrow to do it, it will hurt our borrowing power for the future. UMS is here to provide us a service…I think buying the meters would be a bad move.”
Campbell asked Currin about the potential for additional cost through change orders when installing meters, citing the possibility of hitting rock in doing so.

“If you talk to other cities and towns we have worked with, you will find we don’t do that,” he replied.

Mullis added UMS had done a survey of the town’s water infrastructure, and that while the company had done its due diligence, there was no guarantee there would not be some problems with the town’s aging water system.

Currin mentioned that an escalation clause could be included in the town’s contract, and Mullis mentioned that such a clause is already included in the town’s contract with other providers.

“Waste Management’s contract has an escalation clause tied to the Consumer Price Index,” said Mullis.

Commissioner James Lilly then moved to proceed with a managed services contract with UMS, with an escalation clause tied to the Consumer Price Index for 10 years. Hartsell seconded the motion, which passed by a 4-1 vote, with Cohen dissenting.

Other items of business included:

• Estimates are being accepted on repair to the Lions Club Shelter at Darrell Almond Park, which was damaged by a wind storm, and for construction of a food pantry for Stanly Community Christian Ministry to be located at the Norwood Community Building;

• Mullis reported that approximately 2,000 Norwood residents have received letters advising them that surveying crews may cross their land in locating future water lines for the Union County-Norwood Inter-basin water transfer project;

• A report to commissioners on the first ruling in the lawsuit brought by Montgomery County and the Yadkin Riverkeeper in opposition to the inter-basin transfer;
The commission will next meet at 6 p.m. Sept. 17.

Toby Thorpe is a freelance contributor for The Stanly News & Press.