Monday, September 26, 2022

Future of New Hanover development: Funding water and sewer infrastructure

From heavy industry along 421 to a coming residential boom in the northeast part of the county, sewer and water infrastructure upgrades are needed. Some of it is already being built, while some is the planning stage. Here's a snapshot of what's going on now, and how it's being paid for.

Installation of new water and sewer lines along Highway 421. (Port City Daily photo / Cape Fear Public Utility Authority)
Installation of new water and sewer lines along Highway 421. (Port City Daily photo / Cape Fear Public Utility Authority)

NEW HANOVER COUNTY — The county’s new Unified Development Ordinance will attempt to use new zoning maps and regulations to steer the path of industrial, commercial, and residential development. Each of these requires higher capacity water and sewer service, so how will CFPUA get ahead of development — and how will that new infrastructure be funded?

Related: The future of New Hanover development: Roads, traffic, and ‘getting it right from scratch’

New Hanover County’s Planning and Land Use Director Wayne Clark said he and the UDO team has been in contact with the Cape Fear Public Utility Authority (CFPUA), to make sure the utility knows where development may be headed. The county, of course, cannot mandate where and when development occurs, but it can help steer it, and thus help CFPUA predict where it will need new infrastructure.

So, how will CFPUA pay for the new infrastructure it needs to keep up with demand from new development? That depends in part on where that development occurs.

Along Highway 421, where the county has long sought to establish an industrial corridor, funding came in part quite literally from ashes of Duke Energy’s Sutton coal power plant. In the northeast of the county, where nearly 2,000 acres of residential land owned by the Cameron family could see development in the coming years, CFPUA is considering a “cost recovery project,” with developers helping to fund infrastructure. Elsewhere in the county, CFPUA has already begun building out infrastructure.

Highway 421

The Highway 421 industrial corridor is zoned for heavy industrial use, but didn't have the necessary water and sewer connection. (Port City Daily photo / File)
The Highway 421 industrial corridor is zoned for heavy industrial use, but didn’t have the necessary water and sewer connection. (Port City Daily photo / File)

In 2015, the state’s environmental agency, then known as Department of Environment and Natural Resources (DENR) fined Duke Energy $25 million dollars – the largest environmental fine ever issued in the state – for contamination stemming from the Sutton Power Plant’s ash pits.

Two years earlier, Duke had already acknowledged that inadequately lined pits holding the ash from its coal-fired power plant had allowed toxins, including heavy metals, to leach into the groundwater. Because these toxins were “blooming” towards groundwater wells in the Flemington neighborhood, Duke agreed to pay up $1.8 million dollars to help construct new water lines to the area.

Duke’s amount increased to $3.175 million by 2015 — by that time, CFPUA had turned the settlement into a springboard to bring water and sewer service to the entire Highway 421 area, from the Isabel Holmes bridge to the Pender County border.

Ultimately, the Duke agreement to provide water to the Flemington neighborhood grew into a $12.8 million economic development project, with the New Hanover County contributing over $1.5 million.

New Hanover County Commissioner Jonathan Barfield said in 2015, “These projects will give the residents of Flemington the comfort of knowing their drinking water will remain safe while creating important infrastructure.”

While CFPUA initially shouldered much of the cost, a year later North Carolina voters passed the $2 billion Connect NC Bond, out of which CFPUA received a $16 million grant, which freed up capital for the project.

Construction began in 2018, installing over six and a half miles each of water main and sewer force main and nearly two miles of low-pressure sewer pipes. Expected to be completed in fall of 2019, the project will create 982 acres of developable land zoned for heavy industry.

Developing the rest of the northern county, however, will likely take different approaches.

Residential developers and “cost recovery projects”

In the northeast of the county, the Cameron family’s Sidbury Land & Timber LLC company owns nearly 2,000 acres of residentially zoned land along Sidbury Road. Development appears to have been held up for nearly five years by the NCDOT’s planning process for the Hampstead bypass (which will cut through the northeast of the county).

Now, the area is likely to development — a lot of it, and in the near future. According to Clark, the county’s new UDO process is looking at a possible “mini-downtown” in the area, essentially a mixed-use commercial and residential center along Sidbury Road.

According to spokesperson Vaughn Hagerty, CFPUA is “planning with New Hanover County on how best to extend water and sewer lines along Sidbury Road to serve the larger tracts of available land remaining in this area.”

The next steps for CFPUA, according to Hagerty, will be to prepare a preliminary engineering report to ensure extending water and sewer to the area is feasible, as well as to work out technical details and – of course – cost.

Funding a water and sewer project of that size would be addressed next. One possible option is a cost-recovery project.

“Recently, CFPUA has funded some major growth-related capital investments using cost-recovery projects. Under cost-recovery, new developments and industries benefitting from this work reimburse CFPUA a proportionate share of the cost to construct the infrastructure based on their capacity when they connect,” Hagerty said.

“One example of a cost-recovery project is the water main along Castle Hayne Road to Hermitage Road and the New Hanover County Jail. Extending water and sewer utilities along Sidbury Road in the future may be a cost-recovery project, if CFPUA funds the project,” Hagerty said.

Cost-recovery projects are separate from “system development fees” — a fee paid by all new CFPUA customers that goes towards infrastructure development (and has occasionally led to lawsuits). Cost-recovery projects are paid only by a developer that is benefiting from new infrastructure — the projects are for specific developments and go towards growth-related costs born by CFPUA. Any cost-recovery project would have to be approved by CFPUA’s board, Hagerty noted.

Other development in northern New Hanover County

Aside from industrial development along the northern edge of the county, there are several other potential residential or mixed-use clusters that could require increased sewer and water capacity.

According to Hagerty, a number of infrastructure projects that could support the Sidbury Road area and other development in the northern part of the county have recently been completed or under construction. These developments are paid for by ratepayers as well as system impact fees, the “buy-in” for new customers that helps offset infrastructure improvements paid for by customers in the past.

Completed projects include a sewer force main along Blue Clay Road to the Cape Fear Community College North Campus. Finished in 2018, the sewer main is important because it was positioned to accept sewer flow from the northern part of the county, including potential Sidbury Road developments.

CFPUA is also currently constructing a water-transmission main along Castle Hayne Road from North Kerr Avenue to the area near the GE Campus; the water main also travels east along Hermitage Road to connect with existing systems near the county jail. This main, according to Hagerty, is positioned to support future growth in the Sidbury Road area, with construction expected to be completed in summer of 2020.


Send comments and tips to Benjamin Schachtman at ben@localvoicemedia.com, @pcdben on Twitter, and (910) 538-2001.

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