BOONE — Watauga County sued the town of Boone on June 9 claiming a breach of contract by the town regarding a water allotment promised to the county in exchange for an easement for the town’s water intake transmission line.
The $42 million water intake project (which also included water treatment plant upgrades) was completed in February 2019 and had been planned by the town since 2004, when a study found that Boone’s water usage was approaching maximum capacity from existing sources. The intake was permitted to withdraw up to 4 million gallons per day from the South Fork New River near Todd. In September 2015, the county granted the town an easement allowing the intake’s water transmission line to pass through county property on Health Center Drive. As part of the agreement, the town agreed to provide and reserve 500,000 gallons per day for (the county’s) or its assigns’ future use.”
County attorney Anthony di Santi said that the county interpreted the allocation agreement to mean that in addition to Watauga officials being able to make water available for county uses, officials could also use the water through the sale of property to private developers in addition to encouraging business development within the county outside of the town of Boone.
According to the complaint, the county became aware in August 2018 that the town “was not inclined to honor the 500,000 gallon per day consideration” as agreed upon in the county’s deed of easement.
The complaint cites previous reporting from the Watauga Democrat that led the county to have “growing concerns that the town of Boone had no intentions of honor(ing) its obligations arising from the easement.” During an August 2018 meeting of Boone’s Water Committee, town attorney Allison Meade mentioned that she had an issue with the agreement, as it did not speak specifically about water allocations outside of town limits. She added that the town’s allocation process had changed from the one established under Water and Sewer Ordinance 11-01 — which was repealed and replaced by Chapter 50.
The complaint noted Meade’s published comment that, “It would be my position right now (that the agreement) doesn’t mean anything.”
The county was not aware of the town’s position until it was well into the development of the Watauga County Recreation Center, di Santi said.
The complaint states that the town amended its code of ordinances on June 19, 2018, which required an application for service to be completed, fees paid and deposits made prior to the provision of water or sewer service. The Boone Town Council approved changes to Town Code Chapter 50, which increased the town’s water development fee from $3.75 per gallon per day to $7.89 per gpd, and the wastewater fee from $4.50 per gpd to $7.99 per gpd.
The complaint alleges that the amendment of Town Code Chapter 50 caused the 500,000 gallon water allocation to the county to terminate, and that the county had not used any portion of its allotment.
“The town of Boone altered our Water and Sewer Ordinance in order to be in compliance with state law. During this change, the town of Boone altered how water allocation decisions were made,” Ward said. “Now Watauga County is not limited to the amount that was outlined in the easement agreement but, if and when they decide to make a water request, they could request more than the 500,000 per day.”
“The town of Boone’s intentional elimination of the 500,000 gallons per day consideration for the county’s easement has caused damage to Watauga County in an amount of $7,940,000,” the complaint states. “This amount is based on the town’s own per gallon valuation of $3,945,000 for the water allocation, and $3,945,000 for the town’s sewer allocation.”
“The county attempted to resolve the issue informally, as formal administrative remedies were not available to try and resolve the matter prior to filing the lawsuit,” di Santi said. “That process took time.”
In 2019, the county commissioners balked at a $495,305.13 bill from the town for water and sewer fees for the new recreation center, after receiving an initial estimate of $69,382.50. The town said the increase was due to the recent development fee increases and new methods of calculation for water uses.
Prior to filing the lawsuit, the county requested that the town allow for the county to have the ability to use its water allocation to offset usage fees charged in connection with the Watauga County Recreation Center, according to di Santi. Additionally, the county requested acknowledgement from the town that it would honor the contract.
“Those attempts were unsuccessful,” di Santi said.
Boone Town Manager John Ward said that the town did not know that Watauga County would be filing a lawsuit, and that to his knowledge the county had not requested any water service from the town of Boone that has been denied.
“The easement agreement states that any request by the county to the town is subject to the regulations, requirements and fees that are in effect at the time the request is made,” Ward said.
Ward said that the town of Boone stands ready and is willing to discuss any issue with Watauga County.
The easement agreement contains a reverter clause, which claims that Watauga is entitled to the return of its property in its “pre-deed condition” in the event the agreement terminates or lapses, according to the complaint. It also alleges that the county would be entitled to rents and interest of 8 percent for each year from the town for the occupancy of its land, although it is not specifically addressed in the reverter clause.
“Termination of the easement does not alone cure the harm visited upon the county by the town’s breach,” the complaint states.
The county’s lawsuit against the town comes at a time when the town itself has a lawsuit against the county on a separate matter. The town of Boone and former Boone Town Council member Marshall Ashcraft filed a lawsuit against the county on Feb. 20 in Watauga County Superior Court in an effort to stop the county from continuing to utilize the “ad valorem” local sales tax distribution method (based upon property tax values).
In town of Boone v. Watauga County, the town claimed that Boone had lost revenue since the county switched to “ad valorem” instead of the “per capita” method (based upon the total populations) for the 2013-2014 fiscal year. The town’s complaint also alleges that municipalities in the county other than the town of Boone agreed to pay back to the county a substantial percentage of the additional funds that each municipality received as a result of the “ad valorem” method, and that these “side payback agreements” were illegal.
The town of Boone filed an amended complaint on May 26. According to di Santi, the county has until June 29 to file a response.