The legislature plans to spend $1.58 billion of American Rescue Plan money on water and sewer improvements, but only 14 of 115 communities designated as distressed would get funding earmarks under state House and Senate budget proposals.
By Greg Barnes
When the Johnston County town of Benson began replacing its sewer lines along Main Street two years ago, it found that some of the pipes date back 71 years, Mayor Jerry Medlin said.
Some of those pipes were made out of clay, and some weren’t even hooked up, Medlin said.
Benson got money to help replace the pipes through typical means, loans or grants from the state Department of Environmental Quality’s Division of Water Infrastructure Authority. The division carefully oversees requests for federal and state money for water and sewer improvement projects.
The problem has been that there is never enough money to go around.
That burden was lifted to a degree this year though, after passage of the American Rescue Plan Act, a $1.9 trillion relief package approved by the Biden administration in March that seeks to combat the health and economic impacts caused by the COVID-19 pandemic.
While much of the rescue money went to providing Americans with stimulus checks, it has also been doled out to states to help them recover from the pandemic. North Carolina is slated to receive $5.7 billion in ARP funding. State Senate and House budget proposals call for spending $1.58 billion of that money on water and sewer infrastructure projects.
The money will provide huge relief to many municipalities, said Shadi Eskaf, the Division of Water Infrastructure’s new director.
“There’s a significant need for investment, especially for smaller local governments that might have a harder time accessing funds on their own through bonds and other avenues,” Eskaf said. “So the $1.58 billion as budgeted so far would be a significant boost to a lot of local governments to invest in water and sewer that’s needed for economic development, for public safety, for public health.”
Overflows and health
It’s no secret that many of the municipal water and sewer systems in North Carolina are old and deteriorating.
In 2017, the Division of Water Infrastructure Authority drafted a master plan that said North Carolina would need as much as $26 billion over 20 years to resurrect or replace failing water and sewer systems, mostly those in small communities.
Those small communities are hit hardest partly because some of them struggle to make water and sewer services pay for themselves through their customers. Once upon a time, those smaller towns had one or two large mills or manufacturers that helped support infrastructure through taxes and fees. But with the loss of industry from many small North Carolina towns, tax coffers have been emptied.
One way to get around the service costs is to defer maintenance, which over time has led to leaking pipes, malfunctioning treatment plants and what the industry calls sewer overflows.
North Carolina regulations require municipalities to report sewer overflows whenever 1,000 gallons or more of untreated wastewater escapes from their sewer treatment plants, lift stations, manholes or clogged or broken sewer pipes. Last year alone, more than 74 million gallons of raw sewage gushed into the state’s surface waters, according to figures from the DEQ.
Was there a sewer overflow near you in 2020? You can search this database by town, water system, and address.
Those overflows — which are getting more common as the climate continues to change and sewer systems across the state continue to deteriorate — can lead to serious health and environmental problems.
According to Municipal Sewer and Water magazine, contact with or inhalation or ingestion of raw sewage “can cause diarrhea and nausea, as well as a variety of infections, including ear infections, respiratory infections and skin/wound infections. In worst-case scenarios, people exposed to these discharges can also contract life-threatening diseases, including cholera, dysentery, infectious hepatitis and severe gastroenteritis.”
Sewer overflows can also cause algal blooms, which produce toxins that can sicken or kill people and animals and create dead zones in water bodies.
Are funds spread equitably?
With so many smaller communities struggling mightily to maintain their water and sewer systems, how was the American Rescue Plan money earmarked in the House and Senate budget proposals?
Some money definitely is going to municipalities that may not be in desperate straits.
The Division of Water Infrastructure Authority and the Local Government Commission teamed up to create a system that ranks municipalities’ needs and eligibility for state and federal funding through a mechanism known as the Viable Utility Reserve.
The reserve was created last year to help fund water and sewer projects for municipalities designated as distressed. North Carolina has 496 municipalities with water or sewer systems, or both. Of those, 115 are listed in the Viable Utility Reserve, yet only 14 are proposed to receive earmarks totaling about $69 million.
|Municipalities designated as “distressed” by DEQ/ Local Govt Commission||Number of these municipalities receiving earmarks||Total amount for those earmarks||Total ARP funding for the Viable Utility Reserve|
|115||14||$69 million||$500 million|
That is $7 million less than the earmarks proposed for just three entities that didn’t make it into the Viable Utility Reserve — the Water and Sewer Authority of Cabarrus County and the towns of Benson and Clayton.
Benson is in a second-tier of municipalities classified in the House and Senate budgets as “at-risk.” Clayton and the Water and Sewer Authority of Cabarrus County are in a third-tier referred to as “other directed projects.”
In the House budget, Benson is set to receive earmarks totaling more than $22 million, while Clayton would get $24 million and the Water and Sewer Authority of Cabarrus County $30 million. Other municipalities in the “other directed projects” classification would also get big earmarks under the budget proposals, including $39 million to King’s Mountain, Republican House Speaker Tim Moore’s hometown.
|Municipalities designated as “at risk” by the General Assembly||Number of these municipalities receiving earmarks||Total amount for those earmarks||Total ARP funding for those “at risk” systems|
|23||23||$107 million||$300 million|
|Municipalities designated as “other directed projects” by the General Assembly||Number of these municipalities receiving earmarks||Total amount for those earmarks||Total ARP funding for those “other” projects|
|57||57||$493 million||$600 million|
Another $34 million is targeted for Sanford, represented by Rep. John Sauls, who chairs the House Commerce Committee and sits on the Energy and Public Utilities Committee.
And $30 million would go to the South Granville Water and Sewer Authority, represented by Rep. Larry Yarborough, who chairs the House Environment Committee.
Two years ago, residents of South Granville appeared outside Town Hall to complain about tap water that was often brown and smelled of rotten eggs or vomit, according to WTVD-Channel 11.
In all, municipalities in the Viable Utility Reserve would get about $69 million in earmarks, while the “at-risk” communities would get $107 million and the “other directed projects” nearly $500 million.
As it stands now, the “at-risk” and “other directed projects” classifications don’t exist anywhere but in the House and Senate budget proposals.
“DEQ will develop a list of at-risk communities if/once a state budget passes that allocates funds to at-risk communities,” Cathy Akroyd, a spokeswoman for the DEQ, said in an email to NC Health News.
Municipalities that don’t qualify for the Viable Utility Reserve are eligible for funding allocated through two other pots of money, the Drinking Water State Reserve and the Wastewater State Reserve.
“The way the House budget is proposed, a portion of those funds are specifically designed to be used by “at risk” communities and the remainder can be used by all other local government utilities,” Akroyd wrote. “All of the funds that would go towards water and wastewater infrastructure, regardless of which specific Reserve or which category the local government is classified under, will be used for necessary infrastructure investments.
“There is a significant need for infrastructure investment among all types of local government utilities.”
Earmarks to growing towns
Medlin, Benson’s mayor, said his town is in dire need of the funding. Benson plans to expand its sewer plant, add a larger water storage tank and fix more deteriorated pipes and a couple of sewer lift stations.
“This is two and a half years, probably, of work that we’re going to be doing here to bring our infrastructure up to date,” he said.
Medlin said the town had been negotiating with Sen. Brent Jackson (R-Autryville) and Rep. Larry Strickland (R-Pine Level) for more than a year to get funding to help fix its water and sewer problems. He said the negotiations began before the Biden administration approved the American Rescue Plan Act of 2021.
“We’ve had a lot of meetings along the way to sell our story,” Medlin said. “And, you know, they took it to the legislature.”
Benson lies at the intersection of interstates 40 and 95, which is being expanded to eight lanes through the town. The town of fewer than 4,000 people is poised for growth as people seek alternatives to the higher costs of living in Raleigh, about 30 miles north on I-40, and industries look to locate on less expensive land.
As it stands now, Medlin said, Benson could not accommodate a new industry that employs 400 workers because its sewer system doesn’t have the capacity.
Just up I-40, the town of Clayton is experiencing even greater growing pains. Long before Clayton officials had known ARP money would exist, it began planning to build the Neuse River Reclamation Facility, a water treatment plant capable of treating 6 million gallons a day. The plant, estimated to cost $175 million, has been billed as the most expensive project in the town’s history. It will replace a treatment plant that was built in the 1960s.
After learning about the American Rescue Plan money for water and sewer improvements, Clayton officials reached out to state Sen. Lisa Barnes (R-Spring Hope), according to an email from Nathanael Shelton, the town’s spokesman.
Negotiations led to the $24 million earmark, of which $20 million would be used to defray costs of the new water treatment plant and $4 million would be used to provide more water storage, according to the Senate’s budget proposal.
In Cabarrus County, officials said they plan to use the $30 million in rescue plan money to help expand the Rocky River Regional Wastewater Treatment Plant at an estimated total cost of $120 million.
Mount Olive gets left out
The town of Mount Olive in Wayne County is among the 115 municipalities designated as distressed in the Viable Utility Reserve. The town is not among the 14 communities in the reserve that would get an earmark under the House and Senate budget proposals.
Jammie Royall, Mount Olive’s town manager, didn’t know about the large earmarks for other communities before he was contacted by NC Health News.
Sewer capacity is so limited in Mount Olive that the state in 2015 slapped it with a moratorium that essentially prohibits the town from taking on any new commercial or residential development. The town is among 32 that were hit with moratoriums between 2003 and February 2019, according to a document from the DEQ.
Around 2017, Royall said, the town received a $5.5 million grant for its sewer system and has just started a project that is expected to one day lift the state’s moratorium. But Royall said the town needs at least $10 million to $15 million more to completely fix its sewer system, which was further damaged by Hurricane Matthew in 2016 and Hurricane Florence in 2018.
Sewer overflows in Mount Olive last year resulted in more than 4 million gallons of raw sewage spilling into the state’s surface waters, DEQ records show.
Royall laughed when told about the earmarks that other communities are expected to get.
“I will be glad to apply,” he said. “We do need every penny that we could possibly get for it.”
House and Senate leaders continue working to mold their separate budget proposals into a single document to present to Gov. Roy Cooper.
Rep. Dean Arp defends earmarks
State Rep. Dean Arp, (R-Monroe) helped draft the proposed House budget as a lead budget writer. Arp defends the earmarks, saying every municipality can benefit from American Rescue Plan funding through the grant process.
Arp noted that only $69 million of the $500 million in ARP funding set aside in the Viable Utility Reserve has been earmarked.
“You’ve got 86 percent of it still available for grants,” he said.
The “at-risk” category would get $300 million, so about two-thirds of that money remains available for grants. But only about 20 percent of the $600 million in “other directed projects” remains unspent in the proposed House budget.
The remainder of the earmarked ARP money has been designated to a stormwater fund totaling $100 million and a training and assessments fund containing $80 million.
Arp said the American Rescue Plan money should go a long way to solving the state’s water and infrastructure needs. He said it has been estimated that municipalities in the Viable Utility Reserve need $600 million to significantly reduce their water and sewer infrastructure problems.
“We’re funding $500 (million) of that through this money,” he said.
Arp said House leaders had considered putting $600 million into the Viable Utility Reserve but were concerned about municipalities being able to spend the money within the time constraints. Under the rescue plan funding guidelines, the money must be allocated by Dec. 31, 2024, and spent by the end of 2026.
DEQ says it will monitor communities
Eskaf, director of the state Division of Water Infrastructure , said his office has been checking with communities designated to receive earmarks to learn how they plan to spend the money and to ensure that they are following federal statutes and requirements under the American Rescue Plan Act.
“Even with all this funding that’s available through this budget, it doesn’t cover all the local governments’ infrastructure needs,” Eskaf said. “This will still be, you know, a significant boost to a lot of local governments to work on their water and sewer systems that they need to do, but there’s going to be further needs going forward, as well.
“So I’m not concerned, as far as finding appropriate projects. There’s definitely a significant need out there for all of the funds, and we will be working with local governments to make sure that all the projects meet their requirements.”
Eskaf said he also isn’t concerned that the municipalities getting the earmarks through the “other directed projects” funds are truly deserving of them when so many smaller communities are struggling.
“If the system doesn’t have an earmark in the budget, they still have access to the funds,” he said. “They just have to go through our usual process.”
Arp dismissed any notion that the budget-writing process was not transparent or lacked public input.
“It troubles me that some are saying a lack of transparency when this is a grant program with a huge pot of money that they just have to apply for,” he said.