Sunday, January 23, 2022

In Brunswick County, closed-door meetings and private proposals are shaping the future of water and sewer utilities

A Leland-created proposal has quietly floated among northern Brunswick County leaders following a private regional meeting in June. The proposal asks the county to consider constructing H2GO's stalled reverse osmosis plant -- the same plant the town announced in May it wanted to construct.

Both Leland and Brunswick County have created preliminary documents that outline goals for the future of utility management in northern Brunswick County ahead of a public county meeting and amid a multi-million dollar multi-party lawsuit. (Port City Daily composite)
Both Leland and Brunswick County have created preliminary documents that outline goals for the future of utility management in northern Brunswick County ahead of a public county meeting and amid a multi-million dollar multi-party lawsuit. (Port City Daily composite)

BRUNSWICK COUNTY — Government leaders are privately working out the future of public utilities in northern Brunswick County.

Private talks are taking place as a lawsuit exceeding over $1 million in legal fees carries on, a state-imposed sewer moratorium slows new development, and this summer’s drought triggered new water demand records, averaging 92% of system capacity in June.

Related: By the numbers: Brunswick County’s northern sewer moratorium

With over a hundred thousand customers and hundreds of millions of dollars at stake, a previously undisclosed proposal document shows existing and future utility assets — not exclusive to the H2GO suit — are being negotiated.

What Leland is asking for

The document, created by Leland’s litigation attorney, shows what would happen if things go the town’s way. Boiled down, Leland proposes H2GO own, maintain, and be legally responsible for all water delivery and sewer collection in northern Brunswick County while the county handles all water and sewer treatment.

As part of a proposed interlocal agreement, the town’s regional pitch includes:

  • Brunswick County taking over H2GO’s partially-constructed reverse osmosis (RO) plant. Leland would lease the land to the county, after it is de-annexed out of Belville, where some infrastructure is already in place
  • Brunswick County to own H2GO’s Belville Wastewater Treatment Plant
  • Brunswick County gets the exclusive right to operate, at its discretion, water and sewer treatment facilities

For new utility lines:

  • Leland, Belville, and Navassa (the “Towns”) get the exclusive right to offer utility service to new developments in unincorporated areas — that developers must construct — while H2GO services and maintains utilities after annexation
  • The Towns get the right of first refusal, granted by the county, to provide utilities to unincorporated areas within an annexation agreement map
  • The Towns can provide new development “the right to connect” to H2GO’s utility system “in exchange for voluntary annexation” into the town and district.
  • Inside the towns’ limits, H2GO would convey leasehold interest (temporary ownership) of utilities to “facilitate a joint venture for economic development.”

For existing lines:

  • Leland would turn over all its utility lines to H2GO, except in Brunswick Forest
  • There, H2GO would pick up new utility lines, and get the entire development upon “complete buildout.”
  • H2GO would assume the “debts and liabilities related to all Towns’ water and sewer infrastructure and allocation within the County’s treatment plants.”

For the legal case:

  • Belville withdraw its pending notice of appeal
  • Belville pay Leland’s attorneys fees
  • Belville immediately return H2GO’s assets to H2GO
  • If Belville doesn’t agree to settle litigation, it will be excluded from the regional solution

The full proposal can be viewed at the bottom of this article.

Quick catch-up

Leland’s new plan differs from its announcement of a tentative “Regional Compromise Plan” shared on May 16, the same day it filed for a permanent injunction before all parties in the ongoing lawsuit over H2GO’s assets met in Brunswick County Superior Court on May 17. In that plan, Leland proposed to “immediately” finance and build the H2GO plant. The town’s announcement came after years of lobbying the state legislature to dissolve or disempower H2GO and suing the Department of Environmental Quality for issuing the utility a discharge permit for its RO plant.

In turn, Belville shared its own plan. The town agreed to give H2GO its titles back, called for H2GO to build the RO plant, including a stipulation that no other entity could accept H2GO’s assets.

All of H2GO’s $60 million assets are currently titled to the Town of Belville, following a November 2017 transfer Judge Henry recently ruled was illegal, null, and void. The judge also ruled H2GO’s majority board at the time and Belville’s Commissioners violated state ethics law in orchestrating the transfer. The week after Henry’s April 22 order, Belville announced it would appeal.

On June 11, Superior Court Judge Charles Henry issued a provisional ruling via email to the parties. Henry’s ruling asked the parties to produce filings for a stayed permanent injunction, pending the outcome of Belville’s appeal.

“With this arrangement, the Towns and Sanitary District [H2GO] are able to grow in concert with one another instead of competing with one another,” Leland’s June proposal states. “The economies of scale for proper allocation of financial resources and rate setting are realized both with the single retail provider of the Sanitary District and the single wholesale provider of the County.”

‘Regional solution’

On June 19, attorneys, staff members from Brunswick County and Leland, and two elected officials each from Brunswick Regional Water and Sewer H2GO, Navassa, and Belville, attended an impromptu meeting. An invitation was extended by the Town of Leland, according to Brunswick County Manager Ann Hardy.

The meeting was not open to the public. It was convened to discuss “water and sewer concerns” in the northern part of Brunswick County, according to a county press release issued after the meeting.

“There was a genuine spirit of cooperation and a common goal from all parties to provide high-quality water treated by reverse osmosis to the residents,” Brunswick County’s release states. “The group agreed to provide conceptual information for enhancing collaboration and achieving regionalization to their elected boards and plan to meet again in July.”

When asked for specifically what exactly the county meant by “enhancing collaboration and achieving regionalization,” Brunswick County Manager Hardy said: “Staff will be working to provide an update to our respective boards during the month of July so that we can each report back to the working group.”

After the meeting, Leland’s attorney, Joe Dowdy shared a document dated June 27 with “the governing boards” of Leland, Belville, Navassa and Brunswick County, and H2GO according to a Leland spokesperson.

Navassa Mayor Eulis Willis said the first time he saw the document was Tuesday after Hardy shared it with him via email. He said the intention behind the June 19 meeting was to cooperate on a solution based on the ongoing litigation. “How can we get rid of the egos and one-upmanship and actually make this thing work for everybody?” Willis asked.

After a cursory glance at Leland’s proposal, Willis said, “We’re going give a good, fair, honest look at it and see if we can participate.”

H2GO’s spokesperson, Tyler Wittkofsky, said the utility is in the process of evaluating the proposal.

A map of each group's political and service boundaries can explain why the H2GO case arose. In green, Belville's approximate corporate limits. In pink, Leland's approximate corporate limits. Shaded in grey, Brunswick Regional Water and Sewer H2GO's approximate service boundary. (Port City Daily graphic/ Johanna Ferebee, Courtesy Google Maps, Brunswick Regional Water and Sewer H2GO)
A map of each group’s political and service boundaries can explain why the H2GO case arose. In green, Belville’s approximate corporate limits. In pink, Leland’s approximate corporate limits. Shaded in grey, Brunswick Regional Water and Sewer H2GO’s approximate service boundary. (Port City Daily graphic/ Johanna Ferebee, Courtesy Google Maps, Brunswick Regional Water and Sewer H2GO)

County’s take

So far, Brunswick County does not endorse Leland’s proposal. Hardy, the county’s manager, said she informed Leland’s town manager, David Hollis, that after reviewing the proposal with staff that she does not plan to recommend it to Commissioners.

On July 23, the county’s board is hosting a specially-called public meeting to discuss water and sewer issues in northern Brunswick County. No elected county officials attended the June 19 meeting but will review the proposal at the planned public meeting.

“I appreciate the sincere discussions made by the regional group and am grateful to all the participants for their leadership,” Hardy said of the June 19 meeting.

On June 14, the Department of Environmental Quality (DEQ) issued a moratorium on new sewer lines connecting to the Northeast Water Treatment Plant. In 2018, the plant operated at 92% of its capacity — in violation of its permit. A planned expansion is expected to be completed by August 2021.

The state’s letter reached Hardy’s office on June 20, according to Hardy. She said the regional group did not discuss the moratorium at its meeting held earlier that week because the county was not yet aware of its existence. After it learned of the moratorium, the county and its regional Northeast Wastewater Treatment Plant participants convened for a meeting on June 24. The topic was not discussed at Brunswick County Commissioners meeting on July 1.

Hardy provided a document she created and shared at the June 19 meeting, which offers the county’s position statement on the future of potable water supply. Throughout the lawsuit, county officials have remained mum on their opinion.

In June 2017, Brunswick County asked H2GO to stop work on the plant until after the November election as a result of a resident-organized petition. H2GO is a water customer of Brunswick County, and if construction on the approximately $35 million aquifer-sourced RO plant moved forward, the county stands to lose business from its large wholesale customer.

Now, it appears the county is open to the idea of providing aquifer-sourced, RO treated water. The county’s position statement presents the option that the regional group engage firms with updated public studies on the proposed plant. A new, “unbiased report” produced by an independent professional engineering firm will help determine updated life-cycle operational and construction costs, according to the county’s plan.

The position statement suggests a rate study by Raftelis Financial Consultants could also be produced, to ensure stakeholders can weigh the costs and benefits of moving forward with the plant.

Raftelis Financial Consultants produced rate studies for the utility regarding the economic feasibility of building the plant in 2013 and 2016.

Meetings ahead

The document is a legal proposal that would be included in a forthcoming interlocal agreement between all five government entities. It’s subhead states, “Outlined at June 19, 2019 Meeting,” but according to Belville Mayor Allen, the proposal was not shared at the meeting. Allen said the town, through its representatives, did not verbally or through documentation share what is included in the proposal. He declined to discuss what the town did share.

“The document is part of an ongoing effort to reach a settlement in the lawsuit with Belville regarding the illegal transfer of H2GO in 2017,” Hilary Snow, Leland’s spokesperson said in a statement. Leland Town Council will discuss the proposal at its regular meeting Thursday during closed session, according to Snow.

“The reason the document has not been made public – and the reason it will be discussed by council in closed session – is because it is part of an ongoing legal matter,” Snow said.

Allen said Belville and its board does not support the town’s proposal. “This was not supposed to even happen,” Mayor Allen said. “This was a surprise to me. After seeing what the proposal stated, I don’t even see why they sent us a copy of it.”

He said the town is still willing to sit down at the table with Leland, but criticized the fact that elected Leland officials were not present at the June regional meeting. “To me, it’s useless, if you don’t have an elected official supporting the people of the town, why do you even have a meeting?” Allen asked.

The regional group is set to meet privately again next week. Brunswick County’s public special meeting will be held Tuesday, July 23. The board will meet at 3 p.m. in the Commissioners’ Chambers.

Read Leland’s proposal below: 

“2019-06-27 – Proposal for Northeast Brunswick County Water & Sewer Solution (Following 6-19-2019 Mtg) (Lel… by Johanna Ferebee on Scribd

Read Brunswick County’s position statement below: 

Brunswick County Position Statement on Water Treatment Services by Johanna Ferebee on Scribd


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

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