The Atlanta and Sandy Springs feud over the water system continues, as Atlanta says the latest Sandy Springs’ analysis of the operation is “misleading” and “inaccurate.” Sandy Springs plans to challenge the water rates based on that analysis, which alleged Atlanta incorrectly allocates funds and arbitrarily sets water rates.
The Sandy Springs city attorney alleged at the Oct. 2 City Council meeting that Atlanta has artificially inflated its water rates, contributing to an 81 percent increase, and plans to challenge the rates as part of the city’s ongoing mission to get control of the water system or improve its service.
Atlanta may also be using bond funds earmarked for local water system improvements for other purposes, attorney Dan Lee said.
Lee said the city sent a letter to Atlanta Mayor Keisha Lance Bottoms Oct. 4 requesting the rates be corrected. If that fails, the next step is seeking a legal resolution under a state utility law.
A city of Atlanta spokesperson said that the accusations are untrue and the conclusions drawn by Sandy Springs legal staff and consultants are “incorrect and irresponsible.”
“A narrative of poor service on hydrant leaks and water main breaks is being peddled as a basis for purchasing the water system the city of Atlanta owns outright,” city of Atlanta spokesperson Michael Smith said in a written statement. “To disparage and make inaccurate assumptions regarding the use of water and sewer revenues based upon information obtained in open records requests, without a clear understanding of the business operations of the utility, is an obvious attempt to lay a misleading foundation for an argument to challenge the Atlanta rate structure and ownership of the system.”
Smith also said, “The city has used revenues appropriately and any assertions to the contrary are both unfounded and reckless. The presentations, assessments and conclusions drawn by consultants retained by Sandy Springs are incorrect and irresponsible. Their assertions, as presented to Sandy Springs officials, demonstrate a lack of expertise in water utility finance, a lack of understanding of the material they have requested and are an obvious attempt to continue a false narrative.”
Sandy Springs spokesperson Dan Coffer said in response to Atlanta’s statement that it is “unfortunate” the city of Atlanta has responded to the media rather than providing the documents and records that Sandy Springs requested in January.
“A letter outlining our specific concerns and requesting corrective action was delivered to the City of Atlanta on September 5, 2018. To date, we have not received a direct response,” Coffer said in a written statement.
“Rather than replying directly to the media, Sandy Springs encourages transparency and compliance as outlined in Atlanta’s recently adopted public records request reform ordinance and the Georgia Open Records Act,” Coffer said.
Sandy Springs stood by the consulting firm’s initial conclusions.
“Based on initial conclusions from a third-party forensic accounting firm to appraise the value and condition of the water system in Sandy Springs, ‘The current water system is operated in nor managed in a cost-effective fashion, creating base rates which are over-recovering revenues from all water customers,’” Coffer said.
Last month, the City Council tabled a proposal to begin charging Atlanta a water fee, fearing it would backfire. The proposal was not reintroduced at the meeting, but instead council approved a plan to send the city of Atlanta a letter requesting the rates be “corrected.” If a response is not “immediate and appropriate,” Sandy Springs plans to take a legal route to get the rates changed under the state’s Service Delivery Strategy law, which the city believes Atlanta to be violating.
The “alternative resolution,” or mediation, process is “not unlike a lawsuit,” Lee said. “It’s an attempt to get both sides to a happy medium,” he said.
“As I presented to you, the [city of Sandy Springs] is willing to partner with the [city of Atlanta], but in the end, citizens of Sandy Springs require a better and improved water operation, with legitimate water rates,” the letter stated, which was signed by Sandy Springs Mayor Rusty Paul.
If Lee does not receive a response to the letter from Atlanta by Oct. 14, he will send a second before moving forward with mediation.
The battle over control of the water system is one of the city’s long-standing issues. The city launched a new priority in January this year to seek improvements to the Atlanta-run water system or sue to seize control of it. Sandy Springs claims the system is aging and leaky.
Since early this year, the city has been asking Atlanta for records to use for an appraisal for the water system, including what rates the city charges Sandy Springs customers. Atlanta was slow to respond to Sandy Springs’ requests, and has so far fulfilled 30 percent of them, Lee said. In Paul’s “State of the City” address, he said the city was considering trying to purchase the system from Atlanta.
Lee said the city is considering any options that would improve the service for Sandy Springs residents.
“I think the goal of the council was to gain water reliability,” Lee said. “And if that means better service from Atlanta, Fulton County’s intervention, buying it from Atlanta, having to condemn it and take it from Atlanta to protect the people of Sandy Springs today and going forward, that would be the goal,” he said, listing some of the routes Sandy Springs may take.
The analysis of water system documents is being done by Hartman Consultants, LLC, a specialist in water service studies. The city is charged an hourly rate for the consulting work, and the city has budgeted up to $260,000, according to the contract.
The city entered into the agreement on Sept. 26, following indirect City Council approval at a Sept. 4 work session when it instructed Lee and staff to continue on water service research, Kraun said. The council did not vote specifically to approve the contract.
In response to an open records request, the city initially claimed the contract was a private document between Lee’s law firm and the consultant, but later provided the Reporter with a copy.
Lee said Atlanta is using the water service system to subsidize increased of wastewater system. Documents Sandy Springs has received show Atlanta is using some of the water revenues improperly, including diverting Watershed Department funds to the city’s general fund, Lee said.
“I hope that the current administration didn’t know about how all this, and will learn about and fix it,” Lee said.
“It wouldn’t be hard job” to stop commingling to funds and correct the rates, he said.
Atlanta charges a 21 percent surcharge to Sandy Springs, which is “erroneous,” Lee said. Atlanta has also inflated the base rate charge by 81 percent between 2010 and 2014, contributing to the water bills being among the highest in country, Lee said.
“It appears that over 15 percent of the current water bill in Sandy Springs is attributable to these bogus charges,” the presentation says.
Lee said Atlanta has not done the required studies to justify the rates, making the rates “arbituary.”
Atlanta has sought bonds based on proposals for $45 million of water system improvements, but the city has not produced any documents showing improvements that have been done in Sandy Springs, Lee said.
“So they’ve asked the bond market for system improvements they’ve stated are going to occur in Sandy Springs, but, to our knowledge, have not actually been done?” Paul asked, which Lee confirmed.
Paul said he wants to know if Sandy Springs has any standing to challenge future bonds Atlanta may seek for the water system.
Update: This article was updated with comments from Sandy Springs in response to the city of Atlanta’s statement.