By Emily Ford
eford@salisburypost.com
SALISBURY — Salisbury did not breach a water agreement with Spencer when the city loaned money from the water-sewer reserve fund to Fibrant, an attorney said.
Salisbury took over Spencer’s water system in 2000.
Randy Tinsley, an attorney with Brooks Pierce and Salisbury’s water-sewer counsel, reviewed the document and “has shared that the agreement is not breached by the loan to the broadband utility during its start-up phase,” interim City Manager Doug Paris wrote to City Council in an email Wednesday afternoon.
Spencer Alderman Jeff Morris said he thinks Salisbury’s practice of loaning millions of dollars from the city’s water-sewer reserve to help cover operation costs for Fibrant breaches the agreement, which he called a “perpetual contract.” Morris is an attorney.
After a heated discussion Tuesday night, Spencer aldermen agreed to take bids from attorneys who specialize in contracts to look into the matter.
Paris told City Council $483,971 was transferred in this year’s budget for the purchase of vehicles, equipment and computers for the operation of the water-sewer utility.
“This is standard practice,” he said. “Those are items needed to operate the utility and provide service to our customers.”
Last year, Fibrant borrowed $1.23 million from the water and sewer capital reserve fund to help cover operating costs. This year, Fibrant will borrow $3.7 million from the fund.
Fibrant must repay the internal loans, which will total about $7.5 million, at 1 percent interest.
In the late 1990s, Spencer faced an estimated $3.6 million in upgrades on the town’s wastewater plant, Paris told City Council.
“They needed to do something about it, however their rates were already 19 percent higher than Salisbury’s rates and fixing the wastewater situation would have required that the rates go up even higher,” he said.
Salisbury stepped in and helped, Paris said.
Salisbury absorbed Spencer’s higher rates in 2000 and then invested more than $2 million in their system, Paris said.
The addition of Spencer’s system has been a net drain overall on Salisbury’s water-sewer utility since the consolidation took place, he said.
“It would be more accurate to say that Salisbury residents and residents of our client communities have been subsidizing Spencer since the consolidation,” Paris said.
He pointed out Spencer was the only town in the state that passed a resolution against broadband communities like Salisbury and Wilson as they fought a state law backed by big cable to restrict the operation of publicly-owned networks like Fibrant.
“I believe Mr. Morris led that effort,” Paris said.
Paris said he recommends the mayors and managers of Spencer and Salisbury meet and discuss any additional issues regarding water and sewer service, “instead of throwing money at attorneys.”
Spencer aldermen also were concerned about not receiving a $50,000 allotment for water-sewer projects within the town limits.
“I see no reason why that issue can’t be easily resolved,” Paris said.
Contact reporter Emily Ford at 704-797-4264.