For many years, the UNC School of Government’s Environmental Finance Center has worked with local governments exploring water and wastewater partnerships. Through facilitating partnership discussions, reviewing interlocal agreements from North Carolina and around the country, and talking with local officials about both successful and unsuccessful collaborations, we have seen certain themes emerge again and again. Many of those themes go beyond engineering, finance, or legal authority, even though those issues are often the starting point for partnership discussions. Some of the hardest questions usually involve governance, trust, and the practical realities of making a partnership work over time.
The observations in this post come mostly from water and wastewater partnerships, but many apply just as easily to other forms of interlocal collaboration. Similar issues often come up when local governments share staff, deliver services together, coordinate emergency response, or build regional facilities. They also arise across a wide range of partnership models. Interlocal collaboration can start with simple coordination, move into shared staffing or equipment, and in some cases grow into joint service delivery or even full consolidation. The details change depending on the type of partnership, but many of the same challenges show up no matter where local governments start.
For example, local officials often find that they are trying to solve different problems even when they support the same general idea. Discussions about cost can turn into discussions about governance. Concerns about infrastructure may really be concerns about trust. Sometimes, the number of issues on the table makes it hard for anyone to decide where to begin.
The issues discussed below are common in many partnership conversations. They often start with defining the problem and making sure the right people are involved. From there, discussions usually move into harder questions about trust, power, and governance. Along the way, communities also have to work through shared facts, political realities, and the practical details of making an agreement work over time. How those issues are handled often shapes whether a partnership moves forward or stalls.
Start by Building a Shared Understanding of the Problem(s)
A common challenge with regional partnership discussions is that local governments often start talking about solutions before they have fully talked through the problem(s). A local government may approach neighboring utilities about a merger, a regional authority, or a wholesale service agreement. At first, it may sound like everyone is discussing the same thing. But as the conversation continues, it often becomes clear that each participant is focused on something different. One utility may be struggling to keep certified operators. Another unit may be worried about future treatment capacity. A third may be focused on meeting regulations or keeping rates stable over time. When that happens, participants can spend months talking about governance or cost-sharing without ever making real progress because they are trying to solve different problems.
Some of the best early conversations start with simple questions: What brought you to the table? What problem are you hoping a partnership might solve? What happens if nothing changes over the next five or ten years? What would make this effort worthwhile? Those questions often reveal different priorities, but they also help identify where communities share common concerns. That creates a much stronger foundation for the work that comes next.
Bring the Right People into the Conversation
Regional partnerships often involve operations, finance, engineering, legal issues, and governance all at once, which means no single person usually has the full picture. Managers may be focused on organizational capacity. Utility directors may be focused on daily operations. Engineers may be looking at infrastructure needs. Finance officers may be focused on long-term costs. Attorneys may be thinking about legal authority or risk. If one of those perspectives is missing, important issues can surface late in the process. We have seen situations where communities thought they had agreement, only to learn later that key assumptions about operations or cost were unrealistic. In other cases, communities spent months discussing technical options before realizing that board members had serious concerns about decision-making authority or representation.
That does not mean everyone needs to be at every meeting. In fact, too many people at the wrong time can slow things down. The key is being thoughtful about who needs to be involved and when. A useful question to ask throughout the process is: Who is not in the room today whose support or approval we will eventually need? The answer frequently identifies people who should be engaged earlier rather than later.
Invest in Relationships and Trust
Many local governments assume that regional partnerships will rise or fall based mainly on technical or financial issues. In our experience, trust often matters just as much. Partnerships usually involve decisions that will affect service, infrastructure, and local control for years to come. In many cases, the people making those decisions are being asked to make commitments that may outlast current managers, board members, and even the immediate problem they are trying to solve. It is not surprising that participants want confidence those commitments will hold over time.
That can be especially important when neighboring communities have a long history together. In some places, that history includes successful collaboration. In others, it includes past disputes, failed negotiations, or competing priorities. Those experiences often shape how communities respond to new partnership proposals, even when they are not discussed openly. A difficult history does not necessarily prevent future collaboration, but it usually means trust must be built more intentionally. In those situations, it is often helpful to start smaller and create opportunities for communities to work together in lower-risk ways before taking on bigger commitments. That might mean sharing staff, coordinating emergency response, or working together on a specific operational issue. Small successes can help rebuild confidence over time. They also create a track record of follow-through, which is often one of the strongest foundations for trust.
Trust is also built through the process itself. Local officials are often more willing to work through difficult issues when they believe the process is fair, information is being shared openly, and concerns are being taken seriously.
At the same time, partnership discussions can become overwhelming. Once participants begin to see the number of issues involved, it can be difficult to decide where to start. Conversations may bounce between rates, staffing, infrastructure, and governance without making much progress. In many of our facilitation sessions, discussions became more productive once the group narrowed their focus. Not every partnership has to begin with a merger or full consolidation. Communities often can start with something smaller, such as shared staffing, mutual aid, or a limited service agreement. That approach can help build trust, create early successes, and make larger conversations easier over time.
Recognize and Manage Power Differences
Many regional partnerships involve some kind of power imbalance. One local government may own treatment capacity that another unit needs. One utility may have more staff, more money, or more technical expertise. One unit may have several options, while another has very few. Those differences often shape the conversation from the beginning, even if no one says so directly.
This is often most obvious in wholesale or bulk service arrangements. In those situations, one local government usually controls a key asset that another community needs to solve an immediate problem. That can create a difficult negotiating dynamic. The community seeking service may worry about future rate increases, service quality, or becoming too dependent on another provider. The community providing service may worry about preserving future capacity, taking on long-term obligations, or limiting its own flexibility. These arrangements can be especially difficult to negotiate. The concerns on both sides are usually legitimate. In many cases, the challenge is not eliminating the power imbalance, but managing it in a way that allows both sides to move forward.
In our experience, that usually means being very clear about expectations and building important protections directly into the agreement. That may include a clear rate-setting method, defined service standards, reporting requirements, and a workable process for resolving disputes. It may also mean identifying what decisions can be made unilaterally and what decisions require mutual agreement. The more these issues are addressed upfront, the less likely they are to become sources of conflict later.
Power differences are not limited to wholesale arrangements. In other partnerships, communities with more leverage may be tempted to focus on getting the best possible terms, while communities with less leverage may focus on holding onto complete control or avoiding every possible risk. Both reactions are understandable, but either can make agreement harder.
The most productive discussions usually focus less on leverage itself and more on identifying the interests each side needs to protect. In many cases, a well-structured agreement can address those concerns even when the bargaining positions are uneven. It is also worth remembering that leverage can shift over time. A local unit with more leverage today may find itself relying on regional partners tomorrow.
Build a Shared Foundation of Facts
Partnership discussions often involve a lot of uncertainty. Local officials may be trying to understand future growth, infrastructure needs, or operating costs, and it is common for people to come into those discussions with different assumptions. That is why many successful partnerships spend time building a shared understanding of the facts. This may involve engineering studies, financial reviews, or operational assessments. One approach that often works well is joint fact-finding. Instead of each community hiring separate consultants and defending separate reports, they work together to develop a common understanding of current conditions and future needs.
That does not eliminate disagreement, but it can make the conversation more productive because people are working from the same information. At the same time, not every disagreement can be solved with more data. Communities may look at the same report and still reach different conclusions. At some point, the discussion may shift from facts to questions of values, priorities, or risk. Recognizing that shift can be just as important as gathering the data itself.
Talk About Governance Earlier Than You Think You Need To
Governance issues often turn out to be just as hard as financial issues, and sometimes harder. Many local governments go into partnership discussions expecting cost to be the biggest challenge. In practice, communities often find ways to work through financial questions once they understand how decisions will be made.
Governance raises a different set of questions. Who makes decisions? How are the parties represented? What requires unanimous agreement? Who handles day-to-day operations? How are budgets and rates approved? What happens if someone wants to leave? These questions go directly to concerns about accountability and local control, which is why it is often better to discuss governance early in the process. Communities sometimes put it off because it is difficult or politically sensitive, but in our experience those questions rarely get easier later. In many ways, understanding the governance structure helps shape every other part of the deal.
Understand the Political Environment
Regional partnerships do not happen in a vacuum. Local government staff all report to governing boards. Those boards, in turn, answer to residents and customers. One thing we often see is that staff from different communities understand one another’s challenges fairly quickly, while elected officials may look at the same issues differently. Staff may focus on efficiency or infrastructure needs. Board members may be more concerned about accountability, affordability, or local control. Neither perspective is wrong. They simply reflect different responsibilities.
Communities sometimes treat board approval as the final step. In reality, governing boards often shape the negotiation from the beginning. A useful question to ask early is: What will our board have the hardest time accepting? It is just as important to ask: What will the other board have the hardest time accepting? Thinking about those questions early can help avoid spending time on ideas that were never likely to work politically.
Negotiate for Implementation, Not Just Agreement
Reaching agreement is only part of the challenge. Making the agreement work is often just as hard. Many interlocal agreements spend a lot of time describing how the partnership is created, but much less time explaining how it will work day to day. That is often where problems show up. Who is responsible for what? How will information be shared? How will rates be set? Who pays for work outside the original agreement? How will disputes be handled? These may sound like small operational details, but they often shape whether the partnership works well over time.
This becomes even more important as leadership changes. Managers retire. Board members leave office. Staff move on. The strongest agreements are written with that in mind. They are designed not just for the people negotiating today, but for the people who will be managing the partnership years from now. A useful question to ask is whether the agreement will still make sense to someone who was not part of the original negotiation. If the answer is no, it may need more work.
Recognize that Forming Regional Partnerships is Hard Work
North Carolina law gives local governments a great deal of flexibility to work together, but flexibility does not make collaboration easy. The strongest partnerships tend to share a few common traits. They start with a clear understanding of the problem. They involve the right people at the right time. They invest in trust. They build a shared understanding of the facts. They address governance directly. And they spend as much time thinking about implementation as they do about getting to agreement.
None of that guarantees success. Reasonable people can disagree about the best path forward. But successful interlocal agreements do more than divide costs or assign responsibilities. At their best, they create a framework for local governments to work together over many years, through changing conditions and changing leadership.
