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HomeMy WebLinkAbout1995-04-27 Work Session .., "MI,NUTES OF STAFF MEETING & WORK SESSION, APRIL 27, 1995 PAGE 6'45 ASSEMBLY The New Hanover County Board of Commissioners held a Staff Meeting on Thursday, April 27, 1995, at 8:45 A.M. in Room 501 of the County Administration Building, 320 Chestnut Street, Wilmington, North Carolina. ,e Members present were: Commissioners Sandra Barone;' William A. Caster; William E. Sisson, Jr.; Vice-Chairman E. L. Mathews, Jr.; Chairman Robert G. Greer; County Manager, Allen 0' Neal; County Attorney, Wanda M. Copley; and Clerk to the Board, Lucie F. Harrell. Chairman Greer called the Staff meeting to order. Items on the Regular Agenda, Consent Agenda, and Water and Sewer Agenda were reviewed and discussed. No action was taken. ADJOURNMENT Chairman Greer adjourned the meeting at 10:20 A.M. Respectfully submitted, ~:<:~ Clerk to the Board e MINUTES OF WORK SESSION FOR DISCUSSION OF DEVELOPMENT AND FINANCING OF THE WATER AND SEWER INFRASTRUCTURE The New Hanover County Board of Commissioners held a Work Session on April 27, 1995, at 10:30 A.M. in Room 501 of the County Administration Building, 320 Chestnut Street, Wilmington, North Carolina. Members present were: Commissioners Sandra Barone; William A. Caster; William E. Sisson, Jr.; Vice-Chairman E. L. Mathews, Jr.; Chairman Robert G. Greer; County Manager, Allen O'Neal; County Attorney, Wanda M. Copley; and Clerk to the Board, Lucie F. Harrell. Chairman Greer called the Work Session to order and reported the purpose of the meeting was to discuss the expansion and financing of the water and sewer infrastructure. Finance Director, Bruce Shell, introduced Mr. John Barnes, a representative of Morgan and Keegan, Inc., and Mr. David Fischer, a representative of Craigie, Inc., and reported the County had worked with Mr. Barnes and Mr. Fischer in preparing financial arrangements for a number of years. - He noted the County had reached a critical point in the continued development of the Sewer System and explained that if the County does not expand the system within the next eighteen months, a moratorium will have to be placed on building permits because of no sewer availability. The Commissioners were requested to listen to the presentations by Staff and consider approving an expansion of the Water and Sewer System as well as financing the project through certificates of Participation. The following presentations were presented: PRESENTATION OF OBJECTIVES AND GOALS County Engineer, Wyatt Blanchard, reported since the Sewer System became operational in 1983, the number of customers had grown to more than 14,000 active accounts with approximately 200 miles of sewer lines and 100 pump stations. He presented a map identifying the following areas: (1) sewer systems constructed by the County, developers, or jointly constructed systems by the /' I ! lUNUTES OF STAFF MEETING & WORK SESSION, APRIL 27, 1995 PAGE' 64'6 that have been He presented a in the north and midway to Snow's County and developers; (2) water and sewer systems acquiret! by the County; and (3) water systems. chart ~eflecting the major growth areas as Ogden Highway 421 South from north of Monkey Junction Cut. County Engineer Blanchard explained that one pump station (the Westwood Pump Station) handled the sewer flow for the entire Ogden area. The Westwood Pump station controls the flow and by January 1, 1997, the pump station will have reached its maximum flow capacity; therefore, the Ogden area will not receive additional sewer services unless the County constructs the Northside Wastewater Treatment Plant and Ogden Interceptor. A chart was presented showing 10,270 preliminary approved lots in the Ogden area and 4,327 lots that have been recorded and are ready for construction. He stressed the importance of moving forward with the construction of the Ogden Interceptor and Northside Wastewater Treatment Plant because of the rapid growth in this area. commissioner Sisson inquired as to why the county had approved preliminary approved lots when the flow had exceeded the current capacity of the system? County Engineer. Blanchard responded that Staff had based its projections on final recorded lots, not preliminary approved lots. Also, approximately 3,000 preliminary approved lots were purchased at least ten years ago. commissioner Sisson expressed concern for Staff using this approach because preliminary approved lots can be financed and building permits can be obtained. He commented on the importance of coordination among the departments and reported this is an example of where one area of government is not aware of what the other area is doing" which leads to problems and is not cost- effective. Further discussion was held on the composition of the 10,270 preliminary approved lots. Assistant County Manager, Dave Weaver, reported this figure was inclusive of all existing houses that are presently connected to the system plus all existing preliminary approved lots that have been plotted, but not recorded. The figure also includes residents within Middle Sound and other areas where sewer is not available, which removes a considerable number of lots from being able to connect to the system. He reported that actual flow and projected flow increases were used to show the need for constructing the Northside Wastewater Treatment Plant and Ogden Interceptor instead of preliminary approved lots. County Engineer Blanchard reported the other area of rapid growth was north of Monkey Junction down Highway 421 South toward Snow's Cut. The Engineering Department has received numerous calls from companies interested in developing the land. If the county allows for development in this area, the County should connect the private systems into the County Sewer System which will require construction of a trunk line in the area. commissioner Barone commented on the expiration of the one million gallon discharge permit into the Northeast Cape Fear River and emphasized the importance of not losing this permit when it expires. County Manager O'Neal agreed and reported he would be glad to write a letter to Raleigh to ensure this discharge permit was renewed. A list of small priority projects was presented and discussion was held on the importance of establishing reserve funds. County Engineer Blanchard requested the Commissioners to establish a reserve fund in order to maintain and replace the system as it begins to age. o o o """'Ill ~:* or M~NUTES OF STAFF MEETING & WORK SESSION, APRIL 27, 1995 PAGE 647 commissioner sisson expressed concern for not being ready to deal with the projected growth and for the financial demands that will be placed on the County with expansion of the sewer system, such as new schools, fire protection, the public safety infrastructure and roads. He questioned whether New Hanover County was ready financially to handle these expenses with its present obligations. e Assistant Finance Director, Julie Griffin, presented a Fund Balance statement and Debt Payment Schedule of the Water & Sewer District. She reported the Northside Wastewater Treatment Plant would be financed by collected impact fees. It is estimated that approximately $5,500,000 in impact fees will be collected through June 30, 1996. The balance of the Northside Wastewater Treatment Plant will be financed with certificates of Participation at 6% for 20 years. A capital project in the amount of $794,407 was approved in FY 1994-95 for construction of the new plant. The following rate increases were presented and discussed: Sewer: An increase in sewer rates of 10% would generate approximately $360,000 additional revenue (based on 1994-95 annualized revenues of $3,600,000). This would represent an increase of $2.10 per month for sewer services. Water: An increase in water rates of approximately $75,000 additional revenue annualized revenues of $298,000). This would of $2.44 per month for water services. 25% would (based on represent an generate 1994-95 increase e Impact Fee: Based on an average 1,200 new customers each year, increas1ng the impact fee from $360 to $735 would generate additional revenue in the amount of $432,000 per year. Discussion was held on the impact fee being low compared to other areas. Commissioner Sisson requested Staff to furnish a list of impact fees charged by other cities and counties. In summary, Assistant Finance Director Griffin, stressed the importance of establishing a reserve account to maintain the present Sewer System regardless of whether or not the current system is expanded. DISCUSSION OF CERTIFICATES OF PARTICIPATION FINANCING Mr. David Fischer, a representative of Craigie, Inc., reported certificates of Participation had become a popular method of financing and was simply an installment purchase contract. The security for the loan would be the Northside Wastewater Treatment Plant with no revenues, general obligation bonds, or taxes pledged by the County. The certificates of Participation would be set up as 15, 20, and 3D-year contracts with the contracts being renewed annually. He reported this method of financing would afford the County flexibility, such as wrap around financing that would allow the debt payments to remain the same. Very simply, Certificates of Participation would create a financial plan specifically for New Hanover County and its needs. e Chairman Greer inquired as to whether a bill had been introduced in the N. C. General Assembly that would contest the certificates of Participation method of financing? Mr. Fischer responded there was a bill in the General Assembly; however, no action had been taken. Discussion was held on the interest rate that would be received under certificates of Participation. Mr. Fischer responded the current interest rate was around 6 percent. Deputy County Manager, Andrew J. Atkinson, explained that certificates of Participation could not be issued by the New ~ M;[NUTES OF STAFF MEETING &, WORK ,SESSION, APRIL 27, 1995 PAGE'.'6:4'8' Hanover County Water & Sewer District; therefore, the certificates would have to be issued by the New Hanover County General Fund. . Mr. Fischer reported in summary this method of financing had been used successfully by schools and jails. Chairman Greer expressed appreciation to Mr. Fischer for an informative presentation. County Manager O'Neal requested the Commissioners to review the information presented and consider taking action on this matter at the regular meeting scheduled for May 1, 1995. o commissioner Sisson expressed concern for deciding on an issue of this importance as an additional item on May 1, and he requested placing this item on the agenda for May 15, 1995. He reported the future impact of expanding the sewer system will greatly affect the financial position of the County in the provision of future schools and other needs as development continues in the northern end of the County. In his opinion, the citizens should be provided an opportunity to comment on the proposed expansion, and the Commissioners should have time to thoroughly study the issue. commissioner Caster agreed and reported the financial impact would be costly, particularly in the area of schools; therefore, time was needed to thoroughly study whether or not to raise the impact fee. After further discussion, it was decided to briefly discuss this item on May 1, 1995, and place this item on the Regular Agenda for May 15, 1995, for consideration by the Board at that time. Staff was requested to provide figures comparing the County's impact fee to other municipalities and counties as well as how these local governments calculated the fee charged. o ADJOURNMENT Chairman Greer adjourned the meeting at 12:10 P.M. Respectfully submitted, ~~~ . < <" Clerk to the Board o