Wednesday, July 24, 2024

Commissioners frustrated at $16M cost increase on northern NHC infrastructure project

Commissioner Rob Zapple expressed frustration with rising costs of the “last frontier” infrastructure project at a Cape Fear Public Utility Authority Finance Committee Meeting Wednesday.

NEW HANOVER COUNTY — The Cape Fear Public Utility Authority projected an initiative to extend water and sewer services in northern New Hanover County to cost $23 million in 2021. Two years later, the price has risen by $16 million.

Commissioner Rob Zapple voiced frustrations with the CFPUA finance committee at a meeting Wednesday morning. New Hanover County is paying $23.5 million for seven projects within the initiative; the county gave a separate $3 million to CFPUA for infrastructure design.

“What I’m hearing from my fellow commissioners is we feel like we’re in freefall,” Zapple said. “And we’re just pulling out the wall and throwing money out and we have no control.”

The commissioner said he would remain in support of the project but cast doubt about the positions of fellow board members.

“I think we’re ahead of my skis on this. Not a nose count,” Zapple said. “I think we’ve got three solid votes to move forward. But you’re going to hear some serious pushback from at least two of the commissioners.”

Commissioner Jonathan Barfield told Port City Daily he was in favor of moving forward with the project, despite also feeling frustrated with cost increases.

“Definitely would like the price to be close to what we had before,” Barfield said Tuesday. “But that’s not going to happen. So the next question is do we want to make the investment?”

The water and sewer infrastructure expansion is essential to develop northern New Hanover, according to Barfield. The infrastructure is a public investment, he said, because over time new development will bring in more tax revenue.

“Other projects are going to benefit from this as well, it will allow growth to take place in that part of the county,” Barfield said.

Vice-Chair LeAnn Pierce told Port City Daily she was surprised by the cost increase and would need more information before supporting the project.

“It is a huge difference,” she said.

CFPUA staff gave a presentation at the New Hanover Board of Commissioners agenda review meeting Thursday afternoon to answer questions about the cost increase. Staff will also attend Monday’s commissioner’s meeting.

Thursday, Commissioner Dane Scalise advocated a full review of approved county projects to avoid being caught off guard on similar cost increases.

“So if there are other items like this that mean a fair amount and we determine we’re off base — I want to do that now,” he said.

CFPUA has described northern New Hanover as “the last frontier” because it remains relatively undeveloped compared to the rest of the county. Connecting the area to public water and sewer infrastructure allows developers to avoid the costs of installing private septic pump systems.

In March this year, the CFPUA long-range planning committee highlighted development projects that would benefit from the infrastructure expansion. 

  • Holly Shelter Industrial Development
  • Cameron Tracts
  • Sidbury Crossing
  • Sidbury Farms
  • Corbett Tracts
  • NHC Blue Clay Industrial Park
  • Trask Farms
  • Black Tracts
  • Hanover Reserve
  • Cedarbrook Farms
  • Airport Development

Six months earlier, commissioners unanimously approved $23.5 million for an interlocal agreement with CFPUA to expand water and sewer in the “last frontier.” The county agreed to cover the projected tens of millions for planning and construction, with CFPUA then overseeing the area’s management and maintenance.

CFPUA public information officer Cammie Bellamy told Port City Daily the agreement covers seven projects in northern New Hanover County; force mains refer to sewer pipeline infrastructure. 

  • Greenview East Area force main
  • Greenview West Area force main
  • Sidbury Road force main
  • Holly Shelter Road force main
  • Holly Shelter Road water main
  • North College Road water main
  • Blue Clay Road water main

The CFPUA board approved a design contract for $1.5 million with McKim & Creed in February. Engineering design on the projects reached 60% completion last month, according to Bellamy.

Construction contractor bids will go out by summer 2024.

It’s not the only project that has risen in cost recently. CFPUA received construction bids on other projects that were 50% higher than estimates 18 months ago.

The utility authority is funding several “last frontier” projects outside of the interlocal agreement — force mains at the airport, South Castle Hayne Road and Northern Regional Pump Stations.

In March 2023, the pump stations were estimated to cost $49.5 million; it will be supported by a $30-million American Rescue Plan grant. South Castle Hayne is projected to be $5.5 million, while the airport project will run $1.5 million.

Bellamy said the estimates were outdated since receiving new bids in October.

Zapple expressed concerns that CFPUA didn’t adequately communicate the need for more funds on the interlocal agreement and would have appreciated “a heads-up along the way.”

Pierce corroborated the sentiment: “Quite honestly, we have not been briefed. I just got an email the other day — about two days ago — about the increase in cost,” she told Port City Daily Wednesday.

Executive director Kenneth Waldroup told Zapple the utility authority gave the county notice on anticipated price increases over the past year but acknowledged “missed opportunities at various levels to continue to telegraph these increases.”

“But this is a perfect example of, we need to over-communicate, as soon as we assume what we’re saying isn’t actually registering,” Waldroup said. “For that we will accept responsibility, but we did communicate.”

Finance Committee Chairman and CFPUA Board Treasurer Wes Corder advocated employing a liaison to better share information among the project partners.

Corder attributed inflation of material and labor costs as the primary source of the $16 million increase.

“It’s crazy,” he said. “It’s 35% to 42%, roughly — that’s just the material. Then you factor in the labor and the equipment costs and all that. So I mean, that is reasonable.”

Bellamy told Port City Daily CFPUA staff looked at their Sweeney Water Treatment Plant project costs to inform the financial analysis of the northern New Hanover County project; they found from 2020 to 2022, construction inflation was estimated at 30%.

She also cited two water and wastewater industry publications to support Corder’s comments on inflation issues across the sector; water news outlet Circle of Blue reported operational costs for utilities have increased nationwide.

According to Water Finance & Management, utilities have reported 50% to 60% increases in steel costs over the last year; rebar and concrete prices have increased by 10% to 35% over the same period. 

Labor has become more expensive alongside the rising cost of living and increased energy costs; supply-chain disruptions also have contributed to widespread inflation.

“We got to get this project done,” Zapple said on Wednesday. “It is critical in my mind for the future of New Hanover County.

CFPUA assistant engineering director Gary McSmith emphasized to Port City Daily the $16 million figure is subject to change. Commissioners will vote on the project’s final determined cost increase next March.

[Ed. note: The article was updated after the agenda review meeting Thursday.]


Tips or comments? Email journalist Peter Castagno at peter@localdailymedia.com.

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