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Questions On Giving Water To Walmart
Numbers Show Town Could Negotiate Better
November 1, 2013

he question for our little town right now is, how should Oriental negotiate with Walmart, which is seeking Town water for a planned store 255 feet outside of Town? Should the Town negotiate from a position of strength that leaders seem not to realize the Town has? Or capitulate and give Walmart special water treatment?

That is the central issue before the Board at its November 1 meeting.

Walmart Balks, Should Town Cave?

When the Board voted October 1, it said that to get town water, Walmart had to agree to be annexed in to Oriental after it built its store. In that, the town was already giving Walmart something: its store will be 12,000 square feet, 50% bigger than the 8,000 square foot maximum footprint allowed in Oriental’s Growth Management Ordinance. That larger-than-allowed building would be grandfathered in.

Walmart’s response: that’s not good enough. It balked at being annexed at any time because it told the Mayor and Town Manager, it didn’t want to be subject to the GMO in the future. In particular, it wanted the option to expand its store’s size.

Mayor Sage’s response: draw up a resolution to give Walmart the water without any conditions and put it before the Board at a special meeting he called for October 25. He told the Board that instead of annexation, Walmart told him they’d put LED lights in the parking lot and landscape the parking lot. That didn’t cut it with many in the audience at the meeting. The sense: the Town should be getting a lot more out of the deal. The town should be, speaker after speaker suggested, a tougher negotiator.

Two speakers in particular raised the issue of equal treatment and precedent. Their message: without requiring annexation, the Town was giving Walmart special treatment.

Special Treatment For Walmart?

Lili Stern held up a photo of four generations of Ruth Ireland’s family who’ve worked at the Town-n-Country grocery store, the business most likely to face the brunt of Walmart’s impact. Stern told the Board that 27 years ago, when Ruth Ireland built her store on land that was then outside of Town, she was told that in order to get on the Town’s water system, she had to annex. She did, and has been paying property tax and been subject to the GMO since it was put in place over a decade ago.

A few moments later, Pat Herlands told the Board that in recent years three homeowners on White Farm Road had to annex in to town in order to receive Town water.

In an interview in late August, when news of the Walmart plans first broke, Mayor Sage told TownDock.net that if Walmart wanted water, the town’s position had been that it would have to be annexed.

Since then, some who advocated a weaker negotiating position for Oriental – such as Commissioner Larry Summers — have said that since the Town let Dollar General tap on to Town water a half decade ago and didn’t require annexation at that time, then Walmart could sue the Town if it doesn’t get the same treatment.

At the Board’s October 25 meeting, however, another Commissioner, Barbara Venturi sought to dispel the notion of such a legal challenge. Venturi noted that “an administrative mistake” had been made when Dollar General sought water. Namely, the Town Hall office did not send Dollar General’s request for water to the Town Board as the Oriental water service policy calls for.

Venturi stressed that the Town didn’t give Dollar General water without annexation intentionally. It did so by mistake, she said. “Precedent,” Venturi said, “is not made by mistake.”

At that October 25 meeting, the Board declined to pass the Mayor’s resolution granting water without strings attached to annexation and instead set up a negotiating panel — the Mayor, Town Manager, and Commissioners Venturi and Johnson.

Oriental Water: Always Low Prices

One thing Oriental has going in its favor is just how cheap its water would be for Walmart compared to the costs it would incur — initially and on an recurring basis — if it got its water from Pamlico County.

Consider. The County water system stops at Straight Road. Pamlico Water director Al Gerrard says it’d cost $100,000 for Walmart to have a 6” pipe extended down Hwy 55 to its lot.

Then, once the pipe is there, there’s the cost of a 2” wide pipe going from that main to the store. The county charges both an impact fee (euphemistically called a Capital Reserve Fund) and a tap-on fee. Together they amount to more than $12,000 says Gerard.

Compare this to Oriental. The tap-on and impact fees combined are $5,700. Less than half of what the County’s fees are.

Oriental’s water is a bargain on an ongoing basis too. Walmart tells Oriental Town Manager Wyatt Cutler it needs 21,000 gallons a month. In Oriental, that would average out to $118 a month. In the County, $129.

These numbers are not insignificant. They point to Oriental being in a strong negotiating position.

The Arguments For Giving Water Without Annexation

But so far, the Town’s leaders – elected and appointed – have not played that to Oriental’s advantage. Several arguments for taking a weaker negotiating position have emerged at meetings.

For example, there’s the one that says Oriental is in the water selling business and Oriental’s water system will gain a water customer and that’s all that matters.

As shown, Walmart’s monthly bill would amount to $118. That’s what the water system would gross from Walmart.

That cost-benefit analysis should consider the possibility of losing Ruth Ireland’s Town-n-Country as a customer, if it is pushed out of business by Walmart. Town-n-Country currently uses about 9,200 gallons a month, says Cutler. That works out to $47 a month that the Town would no longer get. 

After the one-time tap-on/impact fee of $5,7000, the net gain in monthly water billings from Walmart, if Town-n-Country goes under, would be: $71

Some advocates of water-for-Walmart-without-annexation also say that Walmart laying a 6” wide pipeline along Hiway 55 would cost the Town future water customers.

This ignores the numbers, noted above. The County’s tap-on fees/impact fees cost twice as much as Oriental’s water. The monthly rates would also be higher each month.

“Don’t Require Annexation Now So Town Can Annex Later”?

But some advocates of water-without-annexation go on to say, if a county water pipeline becomes available to future developers between the Walmart site and Straight Road, and they opt for County water, the Town wouldn’t have much say in how that land is developed.

In other words, this argument goes, the Town shouldn’t press Walmart for annexation because then it will build a pipeline and the Town won’t get other properties to annex in the future.

But if Oriental intentionally grants Walmart water without annexation this time — not as an accident as happened with Dollar General — and no County water pipeline is built along Hwy 55, the question arises: isn’t Oriental setting a precedent? Won’t that precedent box the Town in to a corner in the future, when developers seek Town water but balk at annexation? Won’t they in the future simply point to the special – water-without-annexation treatment that Oriental gave to Walmart?

Update: Oriental’s Town Board voted on Friday November 1 to provide Oriental water service to Walmart and not require annexation. Walmart is to “donate” to the town the equivalent of what its property tax would be if it were annexed. It will not, however, be subject to any of Orientals’ GMO development standards which apply to all other businesses and homeowners in Oriental.

Posted Friday November 1, 2013 by Melinda Penkava

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