Thursday, May 26, 2022

Facing higher costs, requests for reevaluation, Brunswick County moves ahead with wastewater expansion plans

The planned Northeast Wastewater Treatment Plant expansion will move ahead without delays, according to Brunswick County. (Port City Daily photo/Johanna Ferebee)
The planned Northeast Wastewater Treatment Plant expansion will move ahead without delays, according to Brunswick County. (Port City Daily photo/Johanna Ferebee)

BRUNSWICK COUNTY — Brunswick County will proceed with financing plans to expand its Northeast Wastewater Treatment Plant, despite higher project costs.

The project will cost $12.8 million more than the county’s consultant estimate, originally projected at $39.1 million in total.

Related: Bid for Brunswick County sewer plant expansion $8 million over estimates, H2GO asks for analysis

Though bids to expand transmission mains came in $1.39 million less than estimates, the lowest bid to expand the plant was $10.26 million more. In total, the project will cost $51.9 million, 32% more than expected.

The expansion will double the plant’s wastewater treatment capacity from 2.475 million gallons a day (mgd) to 4.975 mgd.

$22.8 million jump for H2GO

The Northeast Wastewater Treatment Plant expansion project cost increase will be mean a bigger financial burden for Brunswick Regional Water and Sewer H2GO.

Currently in talks to absorb all of Leland’s utilities, a $66 million value, H2GO would soon be obligated to take on 79.4% of the total expansion project cost. If the tentative interlocal agreement is approved by all parties involved, H2GO will absorb $16 million in cash from Leland’s Utilities Enterprise Fund, which could help balance the impending debt.

Given the ongoing financial and local changes, H2GO Executive Director Bob Walker wrote a letter to County Manager Ann Hardy Sept. 23 requesting an outside value engineering team to lower the project’s overall cost.

“If the project is awarded as bid, our share of the projected debt service will significantly affect not only System Development Fees for new connections, but also sewer base rates charged to our customers,” Walker’s letter states.

In short, H2GO worries the increased cost will necessitate a wastewater rate increase, given its nearly 80% obligation of the total $51.9 million expansion project. At $41.21 million (including Leland’s obligation), H2GO’s new obligation is 124% higher than the $18.38 million cost it originally signed onto pay in its interlocal agreement with the county.

The outside value engineering team could focus on cost-reduction strategies, Walker wrote, and bring the project closer to budget. “… We believe it to be in the best interest for all sewer customers in [northeast] Brunswick County that the County take 60-90 days to perform a [value engineering] study of the project, then proceed accordingly after the VE study is complete,” Walker wrote in the letter.

This diagram (without the red highlight and note added by Port City Daily) is included in H2GO and Brunswick County’s interlocal agreement for funding the Northeast Wastewater Treatment Plant expansion. (Port City Daily/Courtesy Brunswick Regional Water and Sewer H2GO, edited by Port City Daily)
This diagram (sans edits) is included in H2GO and Brunswick County’s interlocal agreement for funding the Northeast Wastewater Treatment Plant expansion. In yellow, H2GO and Leland, which are in talks to combine utilities. Updated project costs shown on the right. (Port City Daily/Courtesy Brunswick Regional Water and Sewer H2GO, edited by Port City Daily to include updated project costs and highlight participants.)

County to move ahead

Monday, Brunswick County Board of Commissioners approved (via its consent agenda) moving ahead with the Northeast Wastewater Treatment Plant expansion with no delays.

Commissioners approved awarding the $51.9 million project to T.A. Loving, the lowest bidder on all three components of the expansion project, including the plant expansion and east and west transmission main improvements.

In an Oct. 3 memo to Hardy, Brunswick County Public Utilities Director John Nichols advised against conducting a value engineering study, as requested by H2GO. Nichols said this type of study would “result in considerable delays to the project, likely require re-permitting and a re-bidding of the project.”

After receiving the bids, Nichols said county staff immediately asked McKim & Creed (the engineering consultant driving the project) to discuss cost-reduction opportunities with T.A. Loving. McKim & Creed is in the best position to negotiate with T.A. Loving, according to Nichols, given the firm’s first-hand work on the expansion project.

“There was significant competition for the project with pricing in a relatively tight range so re-bidding the project is not warranted,” Nichols’ memo concludes.

H2GO will review the topic again at its regular meeting Monday, Oct. 15. In an Oct. 8 letter, Nichols informed Walker that McKim & Creed had identified and is evalutating cost-saving measures “to ensure they represent a fair value for the proposed change.”

No more moratorium, expansion

Expansion at the Northwest Wastewater Treatment Plant is long overdue.

The Department of Environmental Quality (DEQ) officially lifted its three-month-long new line extension moratorium Sept. 27 after the county obtained all permits necessary to expand the plant. In 2018, the plant operated on average at 92% of its permitted capacity, increased by complications in December, in violation of the state 80/90 rule. In early 2019, the county had none of the eight required permits necessary to operate at above 90% permitted capacity annually, though plans to expand had been underway for years.

Flows dipped in early 2019 and are averaging 80% permitted capacity this year, the county told the DEQ in September.

According to flow data between July 2018 and June 2019, Brunswick County, Leland, and the City of Northwest have never exceeded their assigned flow allocation at the plant. Brunswick and Northwest are well below flow allocations, averaging 44% and 15%. Leland has neared its flow allocation, reaching the 90th percentile in October and December 2018, but averages 84%.

Navassa and H2GO consistently exceed assigned flow allocations. Navassa averages 135% of its assigned allocation; H2GO averages 120%.

There are no fines or penalties for exceeding flow allocations. According to sewer agreements in place among participants to the northern system and the county, over-capacity service fees aren’t charged and under-capacity service fees don’t warrant refunding, according to Hardy. Hardy explained this dynamic in a June email to Port City Daily:

“That is one of the advantages of a regional system. Another advantage to the entities that are using under their capacity is that the entities using additional capacity are keeping the O&M rates lower for all participants in the plant. Since growth and weather are unpredictable, it assists all entities to work together on large infrastructure projects. While one entity may benefit in the short run, in the long run all entities usually benefit from the economies of scale of working together.”

Based on current flow allocations, both Brunswick County and Northwest are not financially responsible for funding the current expansion. Northwest has asked Brunswick County to consider absorbing its $7.7 million utility system by early 2020, a move the county is open to.

Navassa, now assigned a $10.68 million portion of the project cost, has yet to legally obligate itself to finance the expansion. The town’s mayor asserts Navassa’s low-income residents should not and cannot be expected to absorb a multi-million debt. Plus, the last plant expansion led to a yearslong private debt debate between the town and county, which has only recently neared resolution.

Director’s Memo Ref. NE WTP by Johanna Ferebee on Scribd

H2GO NEWWTP Expansion Project Letter by Johanna Ferebee on Scribd


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

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