Monday, November 28, 2022

Brunswick County aims to issue $260 million in revenue bonds, water financing still not final

Brunswick County has an estimated $219 million in total infrastructure costs for planned projects it is still looking to finalize payment options to cover. (Port City Daily/File photo)
Brunswick County has an estimated $219 million in total infrastructure costs for planned projects it is still looking to finalize payment options to cover. (Port City Daily/File photo)

BRUNSWICK COUNTY — Brunswick County Commissioners unanimously approved seeking two series of revenue bonds totaling $260 million to fund various infrastructure projects and refund existing bonds.

The first series of bonds include the county’s plans to finance its much-needed expansion of the Northeast Wastewater Treatment Plant, a parallel raw water supply main (also much-needed, as this summer proved), and refund five previous bonds.

Related: Brunswick Commissioners ask local utilities to consider regionalization

This set of 2019 bonds, totaling $123 million, are set to be sold to underwriters in late October.

Robert W. Baird & Co., the county’s underwriter, will market its debt on the open market. Interest rates are subject to market fluctuation but are currently estimated at 2.7%. Specific terms of this financing arrangement are not immediately clear.

A second set of bonds could be issued sometime next year, possibly in January. The second set — the $137 million Series 2020 — would cover the county’s Northwest Water Treatment Plant low-pressure reverse osmosis treatment upgrade and plant expansion.

Financing for these water projects is at least a few months behind the Series 2019 bonds.

Originally, Brunswick County had plans to finance a portion of its water plans through a low-interest Water Infrastructure Finance and Innovation Act (WIFIA) loan. However, the county opted to forgo this financing method at its Commissioner’s meeting Monday. Though the state denied the county’s $27.7 million State Revolving Fund requests this spring, the county has plans to reapply.

Neither bond series can be issued without the Local Government Commission’s approval.

2019 Series

Brunswick County’s first set of revenue bonds, the $123 million 2019 Series, includes funding for the following projects:

  • Sewer plant: 2.5 million-gallon-a-day (mgd) expansion of the regional Northeast Wastewater Treatment Plant — $32.27 million
  • Sewer transmission mains: Eastern — $3.72 million — and western Transmission Main expansions of regional wastewater system –$3.32 million
  • Raw water supply line: Lower Cape Fear Water and Sewer Authority’s 54-inch parrallel water supply main — $45.97 million
  • Refunding old bonds: Series 2003 State Revolving Fund, Series 2004B, Series 2006 State Revolving Fund, Series 2006 State Revolving Fund, Taxable Series 2012 refunding 2004A — $28.8 million

Refunding old bonds at a lower interest rate could save the county $1.6 million, according to county estimates.

Funding for the Northeast Wastewater Treatment Plant 2.5 mgd expansion and associated eastern and western transmission main upgrades totaling $39.4 million will be partly reimbursed by the county’s regional wastewater participants.

Both Brunswick Regional Water and Sewer H2GO and the Town of Leland have signed interlocal agreements, obligating each entity to repay its portion of the project expansion costs associated with its respective allocations — $18.38 million and $12.67 million.

Though increased allocation has been designed and budgeted to be covered by Navassa, the town has not signed an interlocal agreement. This leaves an $8 million funding gap in the project. Navassa has objected to Brunswick County’s 2012 bonds used to fund the last expansion of the regional wastewater system, with officials alleging it received little to nothing for the expansion. A debt dispute carried on for years but could be solved as a result of a North Carolina Office of Resiliency and Recovery (NCORR) grant the town was recently approved for. The grant includes a line item to fund the town’s debt payoff figures as totaled by Brunswick County and reinforced in May by the Local Government Commission.

Navassa’s mayor, Eulis Willis, still contends his town shouldn’t be obligated to pay for the 2012 transmission bond, and that current expansion costs for the small rural town are unreasonable.

Asked if the county would cover for Navassa’s $8 million assigned costs, Brunswick County Manager Ann Hardy said: “The county will issue all the debt for the expansion, complete the construction, and will bill participants for their capacity allocations.”

The lack of a signed interlocal agreement from Navassa (which would obligate the town to pay $8 million for the expansion) is “not creating a delay” in bond approval, Hardy wrote in an email response in August. The Local Government Commission is “fully informed,” Hardy said.

The Northeast Wastewater Treatment Plant is currently under a state-mandated sewer line extension moratorium for exceeding treatment capacity in 2018. Issued in June, Brunswick County asked the Department of Environmental Quality to lift the moratorium in July. To date, the state has not yet lifted it.

Water supply

Also included in the 2019 Series is funding to accommodate increased water demand in the region. Brunswick County has agreed to fund 63.4% of the total design and construction cost of a 54-inch water supply main that Cape Fear Public Utility is charged with orchestrating.

A project that arose out of the Lower Cape Fear Water and Sewer Authority (LCFWASA), ownership and debt are being pursued by the individual entities rather than the regional partnership because of the partnership’s lack of extensive credit history for projects of this size, according to LCFWASA executive director Don Betz.

A county action item Monday included awarding McKim & Creed with an amended design contract, increasing the firm’s fees for the LCFWASA project from $1.56 million by $1.29 million, totaling $2,857,700. McKim & Creed initially estimated the total project cost at $62.5 million. However, the lowest project bidder, Garney Companies, Inc, submitted a construction estimate of $37,203,838 — substantially lower than estimated.

If both CFPUA and Brunswick County choose to engage with this bidder, Brunswick County’s cost share would equal an estimated $23.6 million, a full $22 million less than accounted for in the proposed 2019 Series revenue bonds. It is not immediately clear whether the total 2019 Series revenue bonds will reflect this lower project cost.

Big projects, big money

Though Brunswick County Commissioners approved seeking the proposed financing options through revenue bonds, the debt is not yet final. Each bond series requires Local Government Commission approval, and ultimately, investors to purchase the debts on the open market.

Below are all projects, with up-to-date cost estimates, Brunswick County is pursuing:

Project Est. construction start  Est. completion Est. cost
2.5 MGD expansion of Northeast Wastewater Treatment Plant December 2019 December 2021 $39.4 million
54-inch parallel raw water supply main (Brunswick pays 62% of total) December 2019 April 2022 $42.5 million
12 MGD expansion of Northwest Water Treatment Plant April 2020 September 2022 $47.5 million
Low-pressure reverse osmosis at Northwest Water Treatment Plant April 2020 December 2021 $89.5 million
Funding Est. issue date Term period Totals
Revenue bonds: 2019 Series  Oct. 24, 2019 N/A $123 million
Revenue bonds: Series 2020  January 2020 N/A $137 million
Federal WIFIA bond (approved) January 2020 30-year payback period $74 million
State revolving funds (denied, reapplying) N/A N/A $27.7 million last application cycle
Total project cost:  $218.9 million
Total new packaged debt, including refunded bonds: $260 million

Dates and costs are updated as of information available September 2019 and are subject to change.


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

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