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HomeMy WebLinkAbout1994-07-18 Water & Sewer Work Session NEW HANOVER COUNTY WATER AND SEWER DISTRICT BOOK 2 JOINT WORK SESSION WITH SEWER TASK FORCE, JULY 18, 1994 PAGE 175 ASSEMBLY The District Board of Commissioners of the New Hanover County Water & Sewer District held a Work Session with the Sewer Task Force on July 18, 1994, at 1:00 P.M. in Room 501 of the New Hanover County Administration Building, 320 Chestnut Street, Wilmington, North Carolina. Members present were: District Commissioners William A. Caster; William E. Sisson, Jr.; Vice-Chairman Sandra Barone; Chairman E. L. Mathews, Jr.; County Manager, Allen O'Neal; County Attorney, Wanda M. Copley; and Clerk to the District Board, Lucie F. Harrell. District Commissioner Robert G. Greer was absent due to his mother being scheduled for surgery. Chairman Mathews called the Work Session to order and announced the purpose of the meeting is to discuss the recommendations that were prepared by the Sewer Task for expansion of the County Sewer System. He welcomed the following members of the Task Force, who were able to attend the meeting, and expressed appreciation to them for the hard work given during the last three years for development of these recommendations: Mr. Dan Dawson Mr. Herb McKim, Jr. Mr. Dean Potter, Chairman of the Sewer Task Force DISCUSSION OF SEWER TASK FORCE RECOMMENDATIONS Assistant County Manager, Dave Weaver, expressed appreciation to the members of the Sewer Task Force for the cooperative manner in which they have worked with staff. He requested the County Engineer, Wyatt Blanchard, to discuss the draft plan. Discussion of Draft Sewer Plan and Financing County Engineer, Wyatt Blanchard, reported the consulting engineers divided the County into major drainage basins when originally developing the Sewer Plan. Each basin becomes an individual sewer system with pumping of waste from one basin to the next completed basin. This process will continue until the County- wide Sewer System is completed. Currently, there are 39 basins. The draft Sewer Plan and Schedule were presented outlining the phases of the Sewer System with the date of completion and cost for construction of each item. Emphasis was placed on the need to move forward with the first two items. 1. Construction of the Northside Waste Water Treatment Plant. 2. Ogden Interceptor: This interceptor will run from the Northside Waste Water Treatment Plant to the Ogden area. It NEW HANOVER COUNTY WATER AND SEWER DISTRICT BOOK 2 JOINT WORK SESSION WITH SEWER TASK FORCE, JULY 18, 1994 PAGE 176 is projected by late 1997, the County will not be able to accept sewer in this area without construction of the Ogden Interceptor. Both the Northside Waste Water Treatment Plant and Ogden Interceptor should be constructed simultaneously. 3. NorthChase Interceptor: This interceptor would take the NorthChase Waste Water Treatment Plant off line and provide access for sewer from NorthChase to Castle Hayne. 4. Middle Sound Interceptor: This interceptor will provide sewer to the entire Middle Sound area. 5. Castle Hayne Interceptor 6. Wrightsboro Interceptor 7. Mott's Creek Interceptor, southern end of the County 8. Kings Grant Interceptor 9. Silva Terra Interceptor 10. Gordon Road Interceptor 11. Brierwood Interceptor 12. Ness Creek Interceptor 13. Wrightsboro North Interceptor 14. Smith Creek East Interceptor 15. Porter's Neck Interceptor 16. Oyster Bay Interceptor 17. Channel Haven Interceptor 18. Myrtle Grove East Interceptor 19. Myrtle Grove Interceptor 20. Shannon Road Interceptor 21. Indian Cove Interceptor 22. Pilot's Ridge Interceptor 23. Everett's Creek Interceptor 24. Lord's Creek Interceptor 25. Snow's Cut East Interceptor 26. Futch Creek Interceptor 27. Island Creek Interceptor 28. Price George Estates Interceptor 29. Snow's Cut West Interceptor 30. Snow's Cut South Interceptor 31. US Highway 421 South Interceptor County Engineer Blanchard reported this is a recommended schedule; however, after construction of the Northside Waste Water Treatment Plant and the Ogden Interceptor, the proposed schedule can be modified without too much difficulty. Chairman Mathews inquired as to whether the Task Force considered the water study being performed by UNC-W on the waterway when making the recommendations? Assistant County Manager Weaver reported this study was discussed; however, it was felt that sewer should be provided more NEW HANOVER COUNTY WATER AND SEWER DISTRICT BOOK 2 JOINT WORK SESSION WITH SEWER TASK FORCE, JULY 18, 1994 PAGE 176-A to the north with less emphasis on the collections systems already developed in areas along the waterway. However, during the study, the Task Force re-visited the schedule because of the environmental concerns relative to the waterway, and determined that sewer should be provided to the Middle Sound area, Porter's Neck, and past Monkey Junction along the waterway. Discussion was held on providing a County Water System. Mr. Dan Dawson, a member of the Task Force, reported the Task Force felt the Sewer System should be completed before considering a Water System. When determining the first step, it was felt the Northside Waste Water Treatment Plant and Ogden Interceptor had to be the first priority. As to the remainder of the schedule, the District Board of Commissioners will have to make these decisions. Assistant County Manager Weaver reported water will generate more revenue, but the initial cost of a water system will require a tremendous amount of capital money upfront. Discussion was held on funding, and the fact that interest rates have been projected based upon the assumption that interest rates will continue to rise in the future. The Northside Waste Water Treatment Plant will be financed with impact fees collected and an EPA loan. Impact fees in an estimated amount of $3,700,000 have been collected through April, 1994 and will be used for the construction of the Northside Waste Water Treatment Plant. The balance of $8,300,000 will be financed with an EPA loan at 3.035% for 20 years. By the year 2010, it is anticipated the Northside Waste Water Treatment Plant will have to be expanded at a cost of approximately $10,000,000. This project will be financed with a loan at a projected interest rate of 8% for 20 years. The Ogden Interceptor, NorthChase Interceptor, and Middle Sound Interceptor will be financed with Certificates of Participation at a projected interest rate of 6% for 20 years. The Castle Hayne Interceptor, Wrightsboro Interceptor, Mott's Creek Interceptor, Kings Grant Interceptor, Silva Terra Interceptor, Gordon Road Interceptor, Brierwood Interceptor, Ness Creek Interceptor, and Wrightsboro Interceptor North will be financed with Certificates of Participation at a projected interest rate of 8% for 20 years. The Smith Creek East Interceptor, Porter's Neck Interceptor, Oyster Bay Interceptor, Channel Haven Interceptor, Myrtle Grove East Interceptor, Shannon Road Interceptor, Indian Cove Interceptor, Pilot's Ridge Interceptor, Everett's Creek Interceptor, Lord's Creek Interceptor, Snow's Cut East Interceptor, Futch Creek Interceptor, Island Creek Interceptor, Prince George Estates Interceptor, Snow's Cut West Interceptor, Snow's Cut South Interceptor, and US Highway 421 South Interceptor will be financed NEW HANOVER COUNTY WATER AND SEWER DISTRICT BOOK 2 JOINT WORK SESSION WITH SEWER TASK FORCE, JULY 18, 1994 PAGE 176B with Certificates of Participation at a projected interest rate of 10% for 20 years. No general obligation bonds were considered, and revenue bonds cannot be considered due to the operating loss of the Water & Sewer District. Also, water and sewer rates would have to be raised drastically to produce the revenue base for revenue bonds. The 1/2 Cent Sales Tax is budgeted for FY 1994-95 in the amount of $4,092,989. It is anticipated this revenue will increase at 5% per year. If annexation occurs as proposed by the City, the County will suffer a loss of approximately $500,000 in sales tax revenue annually for the Water & Sewer District. After analyzing the debt service, less the 1/2 Cent Sales Tax, less funds collected from the impact fees, there will be a shortfall of approximately $500,000 per year. The question to be answered is how revenue will be generated to cover this shortfall. Mr. Dawson reported the Task Force tried to provide a sewer implementation schedule that would pay for itself. After realizing this would not be possible, the Task Force prepared a schedule that could be reasonably implemented over a period of time without moving too rapidly or experiencing a large annual shortfall. The proposed schedule is flexible and does not have to be completed in the year 2027 as projected. Mr. Potter stated if the City annexes as proposed, the County will lose the 1/2 Cent Sales Tax in these areas, which is the revenue source used to pay for the construction of the Sewer System in those sections. He expressed concern for this being unfair, and asked if there is a way to receive compensation for this loss of revenue? Deputy County Manager Atkinson, reported the County will probably continue to operate the Sewer System and collect the fees; however, the County will suffer a loss in the sales tax revenue which cannot be recovered. District Commissioner Sisson reported annexation is a "no win" situation for the County. Mr. Dan Dawson stated, in his opinion, the City would not be annexing these areas if the County had not already provided sewer to these areas. In summary, it is imperative that construction of the Northside Waste Water Treatment Plant and Ogden Interceptor begin within the next year in order to expand the Sewer System. NEW HANOVER COUNTY WATER AND SEWER DISTRICT BOOK 2 JOINT WORK SESSION WITH SEWER TASK FORCE, JULY 18, 1994 PAGE 177 Alternative Revenues Mr. Dan Dawson reported the Task Force discussed many revenue sources for addressing the annual $500,000 shortfall. Among those discussed were increasing the Room Occupancy Tax and implementing a Land Transfer Fee; however, none of these options were feasible. The Sewer Task Force has prepared an implementation schedule that is manageable with only $500,000 needed annually for expanding the Sewer System. The proposal to increase the Room Occupancy Tax resulted from the Task Force desiring to see tourism pay for the Northside Waste Water Treatment Plant and the necessary interceptors. It was felt this burden should not be placed on the taxpayers since the number of persons visiting New Hanover County has created the need for more services. Vice-Chairman Barone, a member of the Sewer Task Force, commented on the need to consider the ability of the Engineering Staff to operate and maintain an expanded Sewer System and stated if the system is expanded too rapidly, additional engineering staff will have to be hired. This along with trying to provide a manageable schedule as to funding was the reason for the various phases of the system. Vice-Chairman Mathews asked how much of an increase in the Room Occupancy Tax can the hotel industry absorb? Vice-Chairman Barone reported the Convention & Visitors Bureau classifies the Wilmington market as a "moderate" market; therefore, if the Room Occupancy Tax increases to a double digit, it would negatively affect the organized large group tours. Emphasis was placed on the fact that last year the tourist industry brought in $200 million to the local economy. After further discussion, the following funding sources were presented: 1. Adopt a Water and Sewer District Tax: If a 1 cent tax per $100 property valuation was assessed, the estimated revenue generated annually would be $350,000. 2. Increase the Facility Impact Fee: The present Facility Impact Fee is $475 per house constructed. If the fee increased to $750, a conservative estimate of additional revenue generated per year would be $375,000. 3. Increase User Rates for Sewer: A 10% increase in monthly user fees would generate an estimated $320,000 additional revenue per year. 4. Adopt an Additional 1/2 Cent Sales Tax: This option would generate approximately $4.1 million per year. NEW HANOVER COUNTY WATER AND SEWER DISTRICT BOOK 2 JOINT WORK SESSION WITH SEWER TASK FORCE, JULY 18, 1994 PAGE 178 5. Fund the District Through the General Fund: A 1 cent per $100 property valuation would generate revenue in the amount of $786,825. In summary, the Task Force working with staff has developed a plan to expand the Sewer System with a $500,000 shortfall per year. To move forward with the expansion, a revenue source will have to be selected. Staff feels the best way to address this shortfall is through a combination of increasing the facility impact fee and user fees. This combination will increase the user fees by 5-10% to persons already receiving sewer service, and the increased facility impact fee will be charged to new housing, which has created the need for expanding the sewer system. County Engineer Blanchard commented on a plan in the southern portion of the County that has approximately 500 to 700 lots. Currently, if this land is developed, there is no way to get the waste water back to the Waste Water Treatment Plant. It appears the lots will be developed and in the future the County will have to build an interceptor system that will cost at least $1 million. In order to have funds available at this time, the County should consider implementing some form of a transportation impact fee on this development in order to pay for the interceptor. A lengthy discussion was held on the impact of an additional transportation fee and increasing the present facility impact fee on new homes being constructed. Mr. Dawson expressed concern for this type of fee negatively impacting affordable and moderately priced homes as well as the impact on developers who now pay 100% of the cost for placing sewer lines in subdivisions that will be serviced by the Sewer System. Also, what happens to the taxpayer who voted for the bond issue and now that person will have to pay a transportation facility fee because he is not located in an area that is already receiving sewer. Assistant County Manager Weaver reported to include an additional $375 impact fee in a monthly payment over a period of $30 per month will not increase the monthly mortgage payment more than $3.00 per month, which should not keep people from qualifying for a loan. Discussion was held on the sales tax and the amount of revenue generated. Vice-Chairman Barone reported revenue generated from the sales tax increased approximately 11% for the current year; therefore, if the sales tax increases at 10% until 2005, instead of the $4.1 million projected, the Sewer District would be receiving $12.7 million. This would be an excellent way to fund the projected shortfall. NEW HANOVER COUNTY WATER AND SEWER DISTRICT BOOK 2 JOINT WORK SESSION WITH SEWER TASK FORCE, JULY 18, 1994 PAGE 179 Assistant County Manager Weaver reported the projected figures on the proposed revenue sources did not contain an inflation factor for the cost of the project. Vice-Chairman Barone commented on discussion held last year with U. S. Congressman Rose and reported at that time he offered to apply for federal funds to assist with expansion of the Sewer System if preliminary plans are already in place. She stressed the importance of keeping this in mind and recommended adding this as another funding source. After further discussion, Chairman Mathews requested the members of the Sewer Task Force to select the option they would use to address the annual $500,000 shortfall. Mr. Dean Potter reported the Sewer Task Force voted not to include increasing the facility impact fee; and it was generally concluded that the funding mechanism would be selected by the District Board of Commissioners. Vice-Chairman Barone reported as a member of the Task Force, she feels the Task Force would select a 5% increase in the user fees and allow the difference to come from the general fund with the anticipation that the sales tax revenue would continue to increase. Mr. Herb McKim reported, in his opinion, the Task Force felt the additional revenue should come from the sales tax general fund, not through a funding mechanism that will place an additional burden on new home construction. District Commissioner Caster commented on the 6% sales tax being regressive and stated this tax is paid by everyone and could be used for other essential needs; therefore, he would have a difficult time supporting an increase in sales tax. Deputy County Manager Atkinson reported the draft plan presented is a projected budget that is within $500,000 annually which makes it feasible to move forward. It is impossible to account for every dollar at this stage, but once the design and construction phases are approached, the exact amount needed can be addressed at that time. Discussion was held on the next step to be taken by the District Board of Commissioners. District Commissioner Sisson reported the phases can be developed on a pay as you go basis. If the County has to move forward more quickly, then the combined recommendation of increasing the user fees and facility impact fee can be considered. County Engineer, Wyatt Blanchard, requested the District Board to move forward as quickly as possible in making a decision on NEW HANOVER COUNTY WATER AND SEWER DISTRICT BOOK 2 JOINT WORK SESSION WITH SEWER TASK FORCE, JULY 18, 1994 PAGE 180 construction of the Ogden Interceptor so staff can begin selecting an engineer. It was agreed to discuss these recommendations at the next regular meeting of the District Board. ADJOURNMENT Chairman Mathews expressed appreciation to the members of the Sewer Task Force and Deputy Finance Director, Julie Griffin, for the time and effort given to prepare the recommendations. Chairman Mathews adjourned the meeting at 2:45 P.M. Respectfully submitted, Lucie F. Harrell Clerk to the Board