(Raleigh, N.C.) – Following the lead of State Treasurer Dale R. Folwell, CPA, the Local Government Commission (LGC) delayed a vote on approving grant applications from a state fund created to solve drinking water and wastewater woes throughout North Carolina until more information is available.
“Nobody is denying there is a need to fix these problems that have been decades in the making,” Treasurer Folwell said. “We know that more towns, cities, utility districts and counties will come before the Local Government Commission seeking grant applications in the future, so it is vital that we get the process right from the start.”
Recognizing the failing infrastructure problem the LGC has sounded the alarm on, the General Assembly created the Viable Utility Reserve (VUR) in 2020 with a one-time, nonrecurring allocation of $9 million. The money is to be used to conduct asset inventory assessments and merger/regionalization feasibility studies to improve the viability of distressed water and wastewater systems.
An additional $456 million was appropriated to the VUR in the current state budget from federal American Recovery Plan funds. Of that amount, $90 million was earmarked by legislators for specific projects, and the balance is to be used for other studies.
“Failing water and sewage systems pose serious financial, environmental and public health hazards, especially for small towns and unincorporated areas whose utility fees don’t cover expenses,” Treasurer Folwell said.
“The General Assembly has stepped up to fund the VUR and this commission is under great pressure to show positive results,” Treasurer Folwell said. “Before we begin approving these grants, we must make certain these limited financial resources won’t be devoured by studies that don’t result in replacing leaking pipes and antiquated equipment. At the end of the day it’s about providing a clean glass of water and the ability to flush a toilet.”
LGC members voted to postpone approving more than $3 million in grants for studies until their March meeting in order to gather more information. The State Water Infrastructure Authority created under the auspices of the N.C. Department of Environmental Quality will vote on the grants next week. Both entities must approve the grant applications.
The LGC, chaired by Treasurer Folwell and staffed by the Department of State Treasurer (DST), had other items on Tuesday’s agenda related to its statutory duty to monitor the financial well-being of more than 1,100 local government units. The commission also examines whether the amount of money that units borrow is adequate and reasonable for proposed projects and confirms the governmental units can reasonably afford to repay the debt.
The LGC approved a $28.5 million private installment contract for Dare County for beach renourishment totaling 2.2 million cubic yards of sand in the unincorporated areas of Avon and Buxton. The work is necessary for storm damage mitigation and to protect infrastructure and property values. The financing would be paid back over time and no tax increase is expected. The town of North Topsail Beach (Onslow County) received approval for $9.5 million in special obligation bonds to restore beaches that incurred damage from Hurricanes Florence (2018) and Dorian (2019).
The Federal Emergency Management Agency will reimburse a substantial portion of the funding for both beach renourishment projects.
The LGC signed off on a private $15.1 million installment contract for Franklin County to improve spotty coverage and reliability of the public radio system used by law enforcement, fire, emergency and other agencies, and to expand its penetration. No tax increase is expected for this project. County Commissioners also received approval for a separate $4.5 million private installment contract to install new water/sewer meter equipment and for new billing system software.
Cleveland County was granted approval of its request for $8.5 million in private financing to erect a ready-to-occupy shell building that would be sold to an interested company. The county has used this approach three times in the past as part of its economic development expansion. No tax increase is anticipated.
The city of Hendersonville (Henderson County) received approval of a nearly $9.4 million increase on a state revolving loan that would raise the loan total to $23.5 million. The increase would pay for construction of new water intake and pump stations along the French Broad and Mills rivers. The city also secured LGC approval of $7.1 million in private revenue bonds to replace aging water and sewer lines.
LGC members also approved several cost-saving refunding proposals at lower interest rates, as well as increases in revolving loans, including: