Monday, May 2, 2022 - 00:00

Local Governments Struggling with Water, Sewer Woes Could Get Grants Local Government Commission Votes to Designate More Units as Distressed

Local Government Commission Votes to Designate More Units as Distressed
Raleigh, NC
May 2, 2022

(Raleigh, N.C.) – State Treasurer Dale R. Folwell, CPA, has announced that the Local Government Commission (LGC) continued its efforts to help struggling counties and municipalities fix failing water and sewer infrastructure with a series of actions at a specially called meeting on Tuesday, April 26.

The LGC voted to commit the towns of Eureka (Wayne County), Kingstown (Cleveland County), Robersonville (Martin County) and Spring Lake (Cumberland County), and the Cliffside Sanitary District (Rutherford County) to completing statutory requirements for units designated as distressed under Viable Utility Reserve (VUR) legislation. The LGC adopted a similar resolution for Pikeville (Wayne County) previously. All of those entities are under the financial control of the LGC.

Under the approved resolutions, Eureka, Kingstown, Robersonville, Spring Lake and the Cliffside Sanitary District are committed to complete actions required under statute that include conducting an asset assessment and rate study, and participating in a training and educational program. They also are required to develop short-term and long-term action plans for infrastructure repair, maintenance and management; continuing education of the governing board and system operating staff; and long-term financial management. As distressed units, they may apply for VUR funding to help pay for construction needs identified in their short- and long-term action plans.

In a separate action, the LGC voted to authorize Eureka, Kingstown, Robersonville, Pikeville and the Cliffside Sanitary District to apply for project grant money from the state Department of Environmental Quality through the Viable Utility Reserve fund.

The LGC also passed resolutions to designate an additional seven counties, 15 towns and one sanitary district as distressed local government units under VUR legislation. The action falls under Session Law 2020-79 that went into effect in 2020. The legislation created a Viable Utility Reserve fund to improve and sustain water and wastewater systems, and required the LGC and State Water Infrastructure Authority (SWIA) to develop criteria to identify distressed units.

“North Carolina is home to some of the finest universities, research centers, vibrant multimodal transportation networks, and modern and growing metropolitan areas. World-renown business and industry increasingly seek to expand or relocate here,” Treasurer Folwell said.

“But it also is a state where some geographic regions face the stress of depopulation, loss of businesses and declining tax bases that make it difficult for local governments to upgrade or replace deteriorating infrastructure and still provide other basic services. Failing water and sewer systems pose financial, environmental and public health risks to a community,” Treasurer Folwell said.

“People have a right to clean, accessible and affordable water and sewer services. We are doing our best to assist these local governments, and this latest action by the LGC to identify local governments with distressed water and wastewater systems under the VUR legislation is one more example of that. But the list is long and getting longer,” Treasurer Folwell said.

Under the legislation, both the LGC and SWIA are responsible for assessing water and wastewater systems in the state and identifying those units determined to be distressed.

In addition to its role in identifying distressed units under VUR legislation, the LGC, chaired by Treasurer Folwell and staffed by the Department of State Treasurer (DST), also maintains a Unit Assistance List (UAL) that is used by LGC staff to identify local governments in need of additional support and guidance to address governance and fiscal management issues. Treasurer Folwell said his goal is to help struggling local government units to avoid being placed on the UAL by providing the support and oversight needed on the front end to fix their problems before they wind up on the UAL.

LGC members also voted to designate seven counties and five municipalities as distressed units under the VUR legislation because they have exceeded thresholds for two consecutive years for scores adopted by the LGC and SWIA to assess the infrastructure, organizational and financial components of drinking or wastewater systems. They are Beaufort, Carteret, Edgecombe, Gates, Nash, Stanly and Vance counties, and Edenton (Chowan County), Granite Falls (Caldwell County), Madison (Rockingham County), Rutherfordton (Rutherford County), and Stovall (Granville County).  

As of March 1, 10 other towns and one sanitary district have not submitted a required annual audit for two consecutive years. Based on the criteria adopted by both the SWIA and the LGC in 2020, the LGC voted to add these units as distressed. They are Belmont (Gaston County), Black Creek (Wilson County), Chimney Rock (Rutherford County), Green Level (Alamance County), Jackson (Northampton County), Lucama (Wilson County), Micro (Johnston County), Newport (Carteret County), Ramseur (Randolph County), Roxboro (Person County) and the Swan Quarter Sanitary District (Hyde County).

The LGC collaborates with local governments to offer expert assistance and find solutions. It has a statutory duty to monitor the financial well-being of more than 1,100 local government units. When local governments seek tax-free financing for projects, the commission examines whether the amount of money to be borrowed is adequate and reasonable, and confirms the governmental units can reasonably afford to repay the debt.