SC Supreme Court to decide how Columbia can use its water money

Debate over whether city of Columbia elected officials can use revenues from the city’s profitable water and sewage utilities for other needs has gone on for years.

On Tuesday, the S.C. Supreme Court has allotted 35 minutes to hear arguments for and against the practice.

“Expenditure of water and sewer fees for purposes other than the water and sewer system are illegal and a violation of established S.C. statutory and case law,” say lawyers representing community activist Joseph Azar, Frank Cumberland Jr. and Michael Letts.

They contend that for years the city diverted utility funds for purposes such as non-utility city endeavors including its public relations and economic development departments. Between 1999 and 2010, the city transferred $78.6 million from the water and sewage fund to use for other purposes and currently transfers some $4 million plus a year, their lawsuit contends.

Moreover, while the city was siphoning money out of the water and sewage fund, it was “neglecting badly needed repairs and upgrades to its water and sewer system,” the plaintiffs’ legal briefs say.

But lawyers for the city assert the law allows cities to charge utility rates that generate a profit.

“Cities may use that profit for any lawful purpose within the discretion of their governing bodies,” city lawyers say in their brief.

In “dictating that this money should then be used specifically for improvements instead of for other equally important uses, appellants are in effect seeking to impose their own personal views on how the city’s utility ought to be managed, and in the process, significantly disrupt the city’s financial condition,” the city’s attorneys argue.

The Environmental Protection Agency has threatened the city with fines and a possible takeover of the water and sewage system because unlawful polluted overflow from the city’s wastewater plant and sewage lines periodically has spilled into area streams and rivers, creating a public health threat. Bacteria from raw sewage can make people sick. The city is under court order to pay for upgrades.

Under threat from EPA, the city recently has raised water and sewage rates and will likely be raising them again. The city also has embarked on a multi-year, $600 million-plus upgrade to the systems.

The plaintiffs are not seeking to be awarded damages. They want the court to order the city to stop the practice and return three years’ worth of money transfers back to the utility fund. That amount is estimated to be from about $12 million to $22 million, according to legal papers.

However, lawyers for the Columbia contend that if the Supreme Court requires the city to repay the money, “the city would likely be forced to significantly raise property taxes,” the city’s lawyers contend in briefs.

The city has operated a water and sewage system for more than a century. It consists of 1,053 miles of sewage lines, a sewage treatment plant, two water treatment plants and about 1,966 miles of water lines, according to legal papers in the case.

Some 140,000 water customers and 70,000 sewage customers pay monthly fees to the city. A majority live outside city limits.

The case, which was brought in Richland County in 2011, is being appealed by the plaintiffs directly to the S.C. Supreme Court from adverse rulings from Circuit Judges G. Thomas Cooper and J. Ernest Kinard.

This story was originally published April 5, 2015 at 8:08 PM with the headline "SC Supreme Court to decide how Columbia can use its water money."