BRUNSWICK COUNTY — The City of Northwest has asked Brunswick County to take over its utility system and the county is open to absorbing it.
With 301 water and 267 wastewater customers, Northwest’s utility system is valued at $7.7 million.
Brunswick County Board of Commissioners approved sending a draft agreement to the City at its regular meeting Monday. Northwest initiated the request, asking the county to put together a proposal that could go into effect on Jan. 1, 2020.
‘Unique situational dynamics’
The request comes two months after the county released its water and wastewater position statements, publicly requesting smaller utilities to consider regionalization. Since that time, Brunswick Regional Water and Sewer H2GO and the Town of Leland have announced tentative plans to merge systems, subject to court approval and intertwined with settling an ongoing multi-million lawsuit.
If that plan moves ahead, once Leland hands its utility system to H2GO and, as proposed under the settlement agreement, H2GO builds its long-planned reverse osmosis plant, water rates for the rest of Brunswick County’s customers will increase. Water rates will increase regardless of the northern merger; the county is preparing to take on an estimated $179 million in water debts to increase supply line capacity and expand and upgrade the Northwest Water Treatment Plant with reverse osmosis technology. To balance incoming debt, the county plans to raise rates in fiscal year 2022.
As a wholesale client, Northwest’s water rates (and all of the county’s wholesale customers), would increase by 89% by 2022, according to a September Raftelis Financial Consultant report. Northwest is not in the county’s top 10 water users; H2GO and Leland represent 17% of the county’s water use and nearly 12% of its revenues.
Direct county customers will also see an increase. An average residential county customer will see their monthly water bill increase by 37%, from $24.82 (today’s average) to $34 in 2022. The county’s rate calculations include the scenario of losing H2GO and Leland; its manager said the difference of losing these two wholesale clients could make as much as a $5.15 for direct county residential customers.
Though included in conversations, Brunswick County’s position statements (including that the county provide all treated water) have been cut out or unincorporated in the basic arrangements included in the proposed northern regional settlement agreement. After northern governments announced the tentative settlement stipulations, Brunswick County’s manager and Chairman said they were disappointed.
In its proposal request, Northwest asked the county to honor a 90-day first right of refusal should the county at a future date choose to transfer its utility system to a third-party. Bob Shaver, Brunswick County’s attorney, told Commissioners the city’s request derives from territorial concerns in the northern county region.
“I think they’re only concerned about the territory of their current system that they would be conveying to us,” Shaver said. “That they do not convey it to another authority without them having the ability to take it back over.”
Chairman Frank Williams added, light-heartedly, “I think there’s some unique situational dynamics up in that part of the county that make this a unique and likely solitary request.”
Northwest’s utiliy system is comprised of 12.6 miles of water distribution mains and 15.3 miles of wastewater collection mains. Assessed at $7.1 million, the Northwest system has a total debt of about $1.45 million.
After Commissioner Mike Forte calculated the county would be accepting a $5.7 million system including its debts, Manager Ann Hardy explained the assets come with responsibility, and with that responsibility, comes added expenses.
“I don’t know that you can really look abut it that way with government assets,” Hardy said. “You’re gaining about 300 customers.”
With depreciating infrastructure, repairs, and ongoing maintenance costs, Hardy said utility acquisitions aren’t a business deal. “We have not in the past looked at these acquisitions as anything other than taking over the responsibility for the customers and not necessarily looking at this as a business deal.”
If the county assumes Northwest’s utility system, it would agree to pay off the city’s remaining debts owed for the previous 2013 system expansion of the Northwest Wastewater Treatment Plant. It would also honor the city’s existing arrangement with vacant lot owners. In Northwest, vacant lot owners (59 for water, 56 for wastewater) who have paid “availability fees” for years. These availability fees (which the county does not charge) allow the city’s residents to pay monthly fees over time that would permit connection to the utility system without paying system development fees.
Brunswick County’s proposal would honor this arrangement through Jan. 1, 2030.
The proposed agreement is not final. It will head to the City of Northwest next, and if signed and completed, will return back before the County Board of Commissioners for further review at a later date before final approval.
[Editor’s note: At the request of Brunswick County, the word ‘charge’ was substituted for the word ‘offer’ in the last sentence of the third-to-last paragraph.]
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