Sunday, October 1, 2023

Study shows sewer merger with county cheaper for Southport residents

The City of Southport could possible merge its sewer system with Brunswick County in the near future. (Port City Daily/file photo)

SOUTHPORT — A feasibility study analyzing several options for sewer regionalization in Southport revealed a merger with Brunswick County could cut customer costs down by half the current rate. 

READ MORE: Southport sewer expansion to be paid with more customers, higher rates

Without a wastewater treatment facility, the City of Southport already relies on the county for wastewater disposal. Southport residents currently pay a base rate of $78 per 1,000 gallons; the expense could be $39 with Brunswick County, according to the study put together by Wooten Engineering.

“We understand that that would be a big change and, but if you’re looking at it from the lens of just financial information, we really thought that the cost could be lower per customer,” Wooten Engineering’s David Malinauskas said during the meeting. 

The city has been exploring partnering with the county in full, telling the commissioners the city was very interested in merging its assets, estimating at $15.3 million without accounting for future planned improvements. 

The study analyzed four options: Southport retaining its system, merging with Brunswick County, regionalization with Oak Island, and regionalization with Brunswick County Regional Water and Sewer H2Go. The latter two options were eliminated from the conversation, however, due to their higher costs and limited returns for customers. 

Between keeping or transferring the system, the board seemed more in favor of merging with the county, especially in light of another agenda item on Thursday.

The board of alderman approved an amendment outlining their agreement to share 60% of costs associated with the Mulberry Branch Wastewater Treatment Plant expansion project, proposed to supplement the county’s overall treatment capacity. In order for the county to move forward with issuing revenue bonds, it must gain Local Government Commission approval. 

According to city manager Bonnie Therrien, the LGC maintained the city must furnish a merger feasibility study and agree to an amendment to the agreement outlining their share in the facility cost. 

With both in hand, the amendment now goes to the Brunswick County commissioners. Therrien said the entities must submit the requested items by Sept. 19, when the bid for the project expires. 

According to the aldermen, moving forward in the Mulberry Branch project further stresses the need for the merger.

“If we agree to this, we’re going to merge,” Aldermen Karen Mosteller said on Thursday. “It wouldn’t be an option; we couldn’t dial that back.”

In February, Therrien reported residents would pay an additional $23 per 1,000 gallons on top of the current $77 rate if the city borrowed $15 million for the project. Borrowing $29 million would result in an increase of $44.58 per customer per month. 

To cover the costs, First Tryon Advisors recommended in March a 10% annual increase from 2024 to 2026, 3% annual increases through 2028, and 1% increases for 2029 and thereafter for residents within city limits.

The advisors also suggested Southport increase its customer base by 1.5% every year until 2028, then by 1% after.

Now that bids for the project are in — which place the price tag around $50 million— Southport has committed to providing $29.8 million, which is 60% of the total cost of the project, the city would be allocated 60% of the expansion capacity. Anything over that would incur commercial rates, which are higher than resident pricing.

Southport would also need to pay a county monthly service charge to cover its share of operating costs, as well as the cost of a new transmission line.

But if the county and city merge, Brunswick County would assume debts associated with the sewer system, customers would pay member rates, and the county would be responsible for capital improvements. The agreement would no longer be applicable.

Although, the merger is not without its drawbacks.

Some city public services employees would no longer have a job with Southport. There is a track record of Brunswick County hiring these workers to retain experienced and knowledgeable staff, but that would need to be outlined in an agreement. The city would also be without revenue from sewer rates to pay those employees, if they were to move to another department, and other costs covered by those monies.

The city would also surrender control over rates and system development planning to the county. Wooten recommends Southport only retain ownership if this aspect is crucial to the city. 

The aldermen did not make a decision on the merger at the Thursday meeting, though signing the merger indicated that is the most likely path. Upon a go-ahead, the city would start negotiations with Brunswick County.

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