CAROLINA BEACH — Last week, Carolina Beach Town Council unveiled its 20-year infrastructure funding plan for $70 million worth of projects.
At the council’s regular meeting, First Tryon Advisors, hired by the town, presented a financial plan for the project; the main funding source comes from revenue bonds initiated every three years from 2025 to 2033. The plan also includes built-in rate increases.
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It includes projects such as improved water storage and capacity, a new water treatment facility and stormwater improvements.
“This should be one of the happiest days in the town,” Mayor Lynn Barbee said. “And let me tell you why: We have punted infrastructure around from council to council to council … when I ran for council, one of the things was we have to stop kicking things around and put a plan together.”
The plan would need utility rate hikes to fund its projects. Barbee posed to his council members whether they would want to impose a rate increase every year or go a different route.
“I’m not proposing one better than the other, I just think that’s a discussion item,” Barbee said. “We’ve done the annual increases, and from the political side, it’s a drain on the public.”
The annual increase of 3% was brought up as an example, the same number staff budgeted into the infrastructure plan for inflation over the next decade.
Council member Mike Hoffer said he didn’t think that percentage was unreasonable.
“It’s comforting to know that it can be done with, I think, rate increases people can handle,” Hoffer said. “Heck, everything goes up 3% a year. Not to diminish it or belittle it, but point out anything in your life that doesn’t seem to go up 3% a year.”
Barbee said he would also like to see Canal Drive improvements, which he said has been put off his whole life. He said having a plan would “stop the chatter” about both the super-flooded thoroughfare and infrastructure needs.
According to assistant town manager Ed Parvin, it is the first time the town devised a financial plan for its capital improvement goals in his 20-year tenure.
This year project funding includes engineering and permitting for the first phase of a water system expansion ($250,000), north end sewer repairs ($20,000), a stormwater station installation at Alabama Avenue ($80,000), marina backflow improvements ($75,000), Starfish Lane stormwater street end improvements ($75,000), among other projects.
Two 2025 revenue bonds, totaling more than $19 million, calls for $4.7 million for a 1-million-gallon tank and repair and rebuilds to the wastewater treatment plant for more than $9 million.
In November, Parvin told Port City Daily the town’s water supply is in good shape, except for a few times when tourists flock to the area during the summer. In peak summer months, the town runs close to the 2 million gallons per day its system is rated for. The more immediate projects could help alleviate that strain, while projects further down the pipeline will also support Carolina Beach’s growing population.
For the two 2028 bonds totaling $10.7 million, plus $3.2 million in installment financing for phase C of sewer replacements, water lines replacements and wastewater treatment plant upgrades.
The 3031 revenue bonds ($23.7 million) will fund a new $4.8 million wastewater treatment plant, another $1 million gallon tank for $5.7 million. Phase D of sewer replacements will also commence for $5.1 million, plus more water system upgrades, new wells and raw water lines.
Finally, in 2033, the plan includes water, sewer and stormwater repairs in the north end for $6.5 million, plus the last phase of stormwater replacements for $4.4 million. Nearly $3 million installment financing will also supplement the plan’s projects.
First Tryon built in an additional $350,000 every year starting in 2024 to cover unforeseen costs or emergency expenses.
Each bond would carry an interest rate of either 4.5% or 5% and have a max term of 25 years, typically the highest term approved by the Local Government Commission, who will need to sign-off on bonds.
According to the First Tryon representatives, the advisors see no need to make the interest rates higher due to current rising trends and market volatility because long-range projections are expected to level out.
The revenue bonds will add on to Carolina Beach’s current utility debt of $23 million, $21 million of which was incurred from the 2016 enterprise system revenue bonds. The debt is expected to be paid by 2042.
With that deal, the town agreed to a rate covenant that mandates it will raise utility rates to meet 1.2 times the needed amount to cover its debt (1 represents a town is bringing just enough revenue to cover its debt). First Tryon expects the town to exceed the mandate 1.2 times under its proposed plan.
Town manager Bruce Oakley pointed out the financing structure does not include state or federal grants to help offset infrastructure costs. Achieving grants can be hard because Carolina Beach’s income bracket disqualifies it from monies geared toward lower income municipalities, according to Barbee.
“I hate to tell you this bad news, but we’re rich, compared to most people,” Hoffer said.
Healy chimed in with a correction that they were well-off, not rich.
Under this arrangement, the council has some time before the first revenue bond is planned to kick in so it can evaluate its rate structure. First Tryon recommended a larger rate increase go into effect in 2024 to help store up revenue and keep future increases less steep.
While the plan was presented to council for information purposes, it will help inform Carolina Beach’s next budget cycle.
Reach journalist Brenna Flanagan at brenna@localdailymedia.com.
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