1995-04-27 Work Session
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"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.
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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,
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Clerk to the Board
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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.
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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
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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.
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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.
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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
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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.
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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
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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.
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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.
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ADJOURNMENT
Chairman Greer adjourned the meeting at 12:10 P.M.
Respectfully submitted,
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Clerk to the Board
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