BRUNSWICK COUNTY — The North Carolina Department of Transportation’s (NCDOT) recent cash flow crisis has had a trickle-down impact on the Cape Fear region.
In the case of a road project in Shallotte, planning for a Brunswick County water main was done in coordination with an NCDOT road project. When NCDOT budget woes put the road on hold, the county faced paying for a redesign. That means when the road project is resumed, the state would also have to pay for its own redesign to relocate the county’s water main, which will likely be installed by then.
Bottom line: taxpayers could end up on the hook for both redesign and relocation — public costs that show how NCDOT’s financial troubles can have a domino effect at the local level.
Redesign costs
Brunswick County is gearing up to construct a water transmission main in Shallotte on Smith Avenue. Local water main design plans approved in December 2018 incorporated NCDOT’s new alignment for Smith Road so that both infrastructure projects would be developed in concert.
But with NCDOT’s $7.8 million Smith Avenue project now on permanent hold due to budget shortfalls, a redesign will likely cost Brunswick County nearly $40,000. The extra funds are needed so the county can amend its original water design contract for a “substantial redesign” to account for Smith Avenue as it is (as opposed to its planned realignment).
NCDOT would be responsible for reimbursing the county for the unexpected expense, and down the line, would also pick up the tab to reroute the new water main once the road realignment actually gets built — public costs that would have been avoided by coordinated the project.
Commissioners approved the contract amendment last week, but according to an NCDOT spokesperson, the money hasn’t yet been spent.
“I’m not saying they won’t have to spend it,” Lauren Haviland, NCDOT spokesperson said Monday. “But we’re doing everything we can to make sure they won’t have to.”
Cashflow problems
With total revenues of about $5 billion (nearly 75% comes from state-level taxes), NCDOT is required to keep a minimum cash balance of $292 million at the end of every month. This represents 7.5% of total revenues and, in recent months, NCDOT has neared its cash floor, with $402 million in combined cash at the end of January (about 9% of revenues).
This comes after the General Assembly bailed out the department mid-November with Senate Bill 356. The bill authorized NCDOT to borrow $100 million for road construction projects, removed a requirement for the department to pay back an earlier $90 million loan from the state in May 2019 to cover storm expenses, and provided $100 million for storm expenses.
It also required the department to release weekly cash flow reports and capped Map Act settlement payouts to $150 million per fiscal year.
Years of lawsuits related to the Map Act continue to roll in, following a June 2016 N.C. Supreme Court case that ruled the department’s practice of indefinitely taking private land for public and unfunded road projects unconstitutional. So far this month, according to recent cash flow reports, the department has paid out a combined $6.8 million in related settlements.
Total liabilities related to the lawsuits totaled $311 million in August 2019. Also, storm-related reimbursements are years behind, according to NCDOT’s spokesperson. Over the past few years, storm expenses are three times higher than what the department averaged previously, costing NCDOT $222 million over Hurricanes Matthew, Florence, Michael, and Dorian.
“We are waiting for money from hurricanes that happened several years ago,” Haviland said. The department has no indication of when federal reimbursement payments may roll in.
Statewide, the funding issues halted pre-construction work on nearly 1,000 projects. In September 2019, the local NCDOT Division 3 let go of 54 temporary and consultant employees to reckon with its cash-strapped status.
Shallotte road project
Meanwhile, Brunswick County’s engineering consultant, Cape Fear Engineering, was preparing to put the county’s 24-inch water transmission main project in Shallotte out to bid.
Since NCDOT put the Smith Avenue realignment project on hold, that left Brunswick County with design plans that include privately-owned land.
“What that means is that they did not acquire the right-of-way that we would use for the waterline,” John Nichols, Brunswick Public Utilities director told Commissioners Jan. 21.
The $40,000 contract amendment was approved so that the county’s consultant could instead design the water main closer to the existing road, requiring substantial redesign of about one half-mile of water main. The redesign will also delay construction by another 100 days.
Worst of all, when NCDOT picks back up on the Smith Avenue project, it would have to pay to have the water main redesigned and relocated around the planned interchange. As of last week, NCDOT Division 3 has asked the county to delay redesigning the waterline as long as it can manage.
“We’re telling them to hold off so we can do this project simultaneously,” Haviland said. “There’s no sense in spending more money when we don’t have to.”
The Smith Avenue project is a high-priority for Division 3, Haviland said. Asked generally whether NCDOT is keeping track of double-billing issues like the Shallotte project, Haviland said no. So far, NCDOT officials are not aware of other similar situations in light of recent funding issues.
“Nothing has come to their attention. It doesn’t mean it hasn’t happened,” Haviland said. “We all are trying to work together to avoid disruption or spending when it’s not necessary. This specific project is no different.”
Send tips and comments to Johanna Ferebee Still at johanna@localvoicemedia.com
