Tuesday, June 28, 2022

In proposed agreements with developers, Leland is promising utility service despite having no infrastructure

The battle over sewer customers along Highway 17, which translates to a stable revenue stream for a town, is just getting started.

This 17.18-acre tract on Hazels Branch Road could be annexed by the town of Leland. (Port City Daily photo/Johanna Ferebee)
Proximity to the federal floodplain is not the only issue in Leland’s proposed agreement with the developer of property off Hazels Branch Road near Stoney Creek. (Port City Daily photo/Johanna Ferebee)

LELAND — Leland appears to be negotiating deals with developers without the current ability to follow through on the offers of utility service it has made.

This week, for the second time, the town put forth an agreement promising utility service to future development that would be annexed ito the town. The agreement, if signed, would require Leland to connect to another utility service – H2GO – in order to provide service, as the town has no infrastructure – that is, physical pipes in the ground – of its own in the area.

RELATED: Leland could pay developer $100,000 to build near Stoney Creek, just feet from FEMA floodplain

Leland has also asked H2GO to turn its customers in the area over to the town, which would eventually allow Leland to make good on its promises — and bring in both taxpaying property and utility revenue to the town.

The only catch? Signing such an agreement would likely violate a court order in a high-profile battle over $60 million in water and utility assets.

Another issue is redundant infrastructure: if Leland and H2GO don’t come to an agreement, both may end up constructing and/or upgrading expensive water and sewer hardware to serve the exact same area.

Frozen assets

Last year, the outgoing board of Brunswick Regional Water and Sewer H2GO signed away its assets to the town of Belville, in a move that effectively dissolved the sanitary district. Answering only to the General Assembly, H2GO is stuck between municipalities that appear to want its assets for themselves. A January court order froze H2GO’s assets, meaning Belville technically still owns the utility. Leland is still suing Belville over the move and is currently aligned as H2GO’s co-plaintiff in the case.

Regardless, in between court proceedings, developers still want to develop. While courting new developers, Leland has negotiated a deal with Bishops Ridge LLC as part of a voluntary annexation agreement off Hazels Branch Road.

The development agreement hinges on the town’s ability to provide sewer service. Right now, Leland has no infrastructure in the ground in that area — but H2GO does.

With no agreement between H2GO and Leland signed, all Leland has to offer at this point is its plans — its $303,500 design plans, that rely on connecting to sewer infrastructure that isn’t (yet) theirs. Despite this, the town has been making promises, ones it can’t guarantee.

Ghost agreement

On Monday, a revised version of Leland’s proposed development agreement with Bishops Ridge LLC appeared on its agenda packet for its regular Council meeting Thursday. As a condition for the voluntary annexation request, the town has negotiated what it could offer the developer.

The town is offering Bishops Ridge a $100,000 incentive to develop near Stoney Creek, an area that experienced devastating flooding during Hurricane Florence last month.

As part of the agreement, the developer wanted a guarantee of sewer service. H2GO currently services the area and is constructing an update to its system. The $3.2 million system upgrade is 120 days from completion and is sized to handle 3,600 additional homes.

This summer, Leland initiated design plans to construct a sewer system of its own — in the exact same area. With nothing in the ground yet, and March 2019 as the earliest start date for construction, the developer wanted to move ahead long before Leland will complete the system.

Bishops Ridge told the town it wanted to begin development before their new sewer system was completed, a now deleted town summary of the agreement shows.

(On the left, Leland’s developer agreement as of Monday. On the right, Leland’s developer agreement as of Wednesday. Click to enlarge.)

Though the town added an agreement with H2GO as a contingency for its development agreement Monday, it has since been removed. (Port City Daily photo/Johanna Ferebee)
Though the town added an agreement with H2GO as a contingency for its development agreement Monday, it has since been removed. (Port City Daily photo/Johanna Ferebee)

To tap into H2GO’s existing infrastructure and guarantee sewer service for the developer, Leland added a separate, “Sewer Agreement” to its agenda Monday. The agreement laid out the terms of H2GO’s cooperation with Leland to provide H2GO utility service to the developer and eventually transfer the development onto Leland’s utility grid, once it is built out.

Now, the agreement is gone.

The entire “Sewer Agreement” (available at the bottom of this article) and revised material referencing the agreement has since been removed from town documents.

“Anything that referenced that sewer agreement previously has been changed to delete that reference,” Leland’s economic and community development director, Gary Vidmar, said Wednesday.

Though Vidmar said there had been discussions between H2GO and the town about the agreement, a final draft has not been presented. “It’s an agreement to my knowledge that has not been presented to H2GO for consideration,” Vidmar said. “It’s kind of been put aside for the time being.”

Even the public hearings regarding the development agreement and annexation requests now show suggestions to delay any Council action.

When the development agreement first appeared on Leland’s agenda on Oct. 12, it appeared alongside a staff recommendation to approve. As of Thursday, staff now recommends continuing the public meeting into next month as they are “continuing to study the factors associated” with the actions.

Second time around

This isn’t the first time Leland has attempted to tap into H2GO’s infrastructure near its municipal limits south of Highway 17 in Brunswick County. And it isn’t the first time Belville questioned the legality of such an attempt.

In July, Leland sent H2GO’s executive director, Bob Walker, an unsigned agreement entitled “Agreement Regarding South 17 Corridor Sewer.” This agreement was more aggressive than the later proposed agreement: the original propsoal asked H2GO to stop providing sewer service to an area it already serves, including Stoney Creek and its surrounding neighborhoods, as well as to pay Leland fees in the process.

RELATED STORY: Leland asks H2GO to curtail future growth, hand over hundreds of customers, and pay fees

The agreement appeared on H2GO’s Aug. 27 agenda packet, under an item entitled “Cooperation between H2GO and the Town of Leland” introduced by Chairman Jeff Gerken.

Before H2GO’s meeting, Belville sent letters opposing the agreement to both Leland and H2GO attorneys. According to Belville spokesperson Mike McGill, the letters state the agreement clearly violates the standing court order.

When it came time for the meeting, Gerken removed the item from the agenda, citing the topic was not “ripe for discussion.”

Leland’s sewer expansion plans include the exact same service area as H2GO’s $3.2 million interceptor sewer system, currently under construction, with 120 days until completion. (Port City Daily graphic/Courtesy Town of Leland)

After the less aggressive second proposal, the “Sewer Agreement” between H2GO and Leland, briefly appeared in public documents, this time on Leland’s agenda for a day or two, Belville sent new letters to H2GO and Leland.

Because H2GO is technically Belville’s property, the town is concerned about the legality of the agreement.

“Obviously we have questions about the agreement,” McGill said. “That’s why we sent the letter asking for more information.”

Redundant infrastructure

Though Leland’s development agreement was at one point contingent on H2GO signing a sewer agreement, this contingency has since been removed. The development agreement now promises the town “will take the necessary steps to provide sewer service to the property.”

Without a solid guarantee to provide service — and nothing in the ground — it’s possible the developer could be left hanging.

H2GO’s executive director, Bob Walker, said the utility’s upgrade project is designed to service projects like Bishops Ridge.

“The current H2GO interceptor project along US 17 (over $3M) was the first phase to extend and upgrade sewer services to the south US 17 corridor,” Walker wrote in an email.

“In addition to relieving existing daisy-chained lift stations along Lanvale Road, and providing available service to the US-17 corridor northeast of the [Military Ocean Terminal at Sunny Point railroad], the current US-17 interceptor project was designed and sized to regionally serve undeveloped areas southwest of the [Military Ocean Terminal at Sunny Point railroad] including areas near the US-17 and Hewett Burton/Goodman Road intersection,” Walker wrote.

When asked whether Leland’s plans would install duplicate sewer infrastructure, thus duplicating taxpayer and ratepayer investments, Walker provided the following statement:

“Should Leland move forward with sewer extensions to Hazel Branch Rd, there may be overlapping sewer infrastructure,” he said.

Proposed agreement between Leland, H2GO, Bishops Ridge LLC by Johanna Ferebee on Scribd


Send tips and comments to Johanna Ferebee at johanna@localvoicemedia.com

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