Clean Water Report 99

7/30/2019 Clean Water Report 99

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WaterCleanOur Livelihood,Our Life

AReport

on the North Carolina

Water & Sewer Initiative

enterRural

CThe


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Water is life giving.

Since the beginning of time,

it has quenched our thirst

and cleansed the world around us.

It is the means by whichwe have nourished our crops,

powered our industries

and built our towns and cities.

Its influence is boundless.

It is by all accounts the most

precious of our natural resources.


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Kelly S. King, chairman

Valeria Lee, 1st vice chair

Willam Veeder, 2nd vice chair

Edmund Aycock, treasurer

E.H. Alexander

Charles W. Albertson

Andy Anderson

Alice Ballance

Freddie Barnes

Patricia O. Brinkley

Lois Britt

Eugene Bryant

Charles F. Buchanan

Velma Burnley

Donna F. Chavis

Joseph D. Crocker

Brian Crutchfield

Raeford Daughtry

Don Davis

Layten Davis

Marilyn Foote-Hudson

Sandra D. Gambill

Bill Gibson

Jim Graham

Ben Gray

Joseph W. Grimsley

Constance M. Haire

Samuel P. Hunter

James B. Hyler, Jr.

Thomas K. Jenkins

Luther H. Jordan, Jr.

Cathy A. Lawrence

Claude M. Odom

Allan Oocumma

Jon Ort

Jane Smith Patterson

Barry W. Russell

James Sears

Joseph Stanley

William W. Staton

Wilma M. Sherrill

William L. Snyder

Richard C. Webb

Patrick Woodie

Larry Wooten

Frederick Yates

Billy Ray Hall,president

Rural Center Board of Directors1997-98


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CleanWaterOur Livelihood,Our Life

AReport

on the North Carolina

Water & Sewer Initiative

Jean Crews-KleinPrincipal Investigator

October 1998

N.C. Rural Economic Development Center, Inc., Raleigh


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Initiative doubles previous estimates. The Water & Sewer Initiative revealed$11.34 billion in water and sewer needs across the state. This doubles the mostrecent estimates by the federal government.

Abundance of small water systems. Nearly 75 percent of North Carolinians areserved by small water systemssystems serving fewer than 3,300 people. Thiscompares to 10 percent nationally.

Old, deteriorating, leaking pipes. The single largest need is line rehabilitation.Many distribution systems are 40 years old, some more than 70. NorthCarolina has some of the oldest water systems in the Southeast.

Capacity for growth. More than 80 percent of water systems in the initiativerely on groundwater. Just over a quarter of these systems have the excesstreatment capacity needed for economic growth.

Aged, deteriorating pipes. Nearly 3,000 miles of pipe are made of vitrified clay,most of it installed during the 1930s. Clay pipe now lies beneath city and smalltown streets, crumbling and leaking. Replacement can cost as much as $75 perfoot.

Inflow and infiltration. More than half the systems have problems with inflowand infiltration (I & I)the intrusion of groundwater and storm water runoff.During a worst day, the amount of I & I can range from 1,000 to3,000,000 gallons.

Capacity for growth.Just over a quarter of the systems have 100,000 gallons ofexcess sewer capacity, the amount typically required for industrial locations. Mosthave no excess capacity at all.

Cost of regulation. Federal and state governments have continued to enactregulations to protect water resources. Most have been unfunded mandates.

Shrinking public funds. In 1981, the federal government contributed 43 cents ofevery dollar spent on water and sewer development in North Carolina. By 1997,that contribution had declined to 17 cents.

Many communities are not bank eligible. North Carolina has seen a dramaticgrowth in water and sewer financing by private financial institutions.Unfortunately, 375 out of 527 municipalities do not qualify.

Executive Summary

Clean Water: Our Livelihood, Our Life is a report on the North Carolina Water &Sewer Initiative launched in 1994 as a joint project of the N.C. Rural EconomicDevelopment Center and the N.C. Rural Development Council. The initiative includedan in-depth assessment of 659 water and sewer systems in 75 predominantly ruralcounties. It has resulted in the nations first comprehensive, standardized information

base on a states public community water and sewer systems. More importantly, it hasidentified serious needs for the future and provided a blueprint for state action.

Total State Water and Sewer Needs

Water System Concerns

Sewer System Concerns

Financial Concerns


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Recommended ActionsNorth Carolina must recognize the special challenges faced bysmall and rural systems in supplying safe drinking water andtreating wastewater. The report calls for the people of NorthCarolina and their leadership to:

Approve clean water bonds to meet the statesurgent water and sewer needs.

Set aside funds to rehabilitate collection systemsand prevent enforcement action.

Encourage regional water and sewer systemsto improve service and reduce costs.

Pursue wastewater treatment alternatives to

reduce costs and protect resources.

Make capital improvement plans a priority forguiding local investments.

Establish a cooperative technical assistanceprogram for small communities.

Create a dedicated source of funding for waterand sewer improvements.

Complete and maintain water and sewer datafor improved planning at all levels.

In addition to Clean Water: Our Livelihood, Our Life, theRural Center has produced a report called the CountyCatalogue, which includes extensive water and sewer dataon each of the 75 counties included in the North CarolinaWater & Sewer Initiative. The catalogue may be purchasedfrom the Rural Center for $10.00.

Sample of deteriorated clay pipe.

Asbestoes/concrete pipe with common stress fracture.

Cast iron sewage pipe with failing lead joint.


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Executive Summary

Introduction

The North Carolina Water & Sewer Initiative: How It Worked Initiative Yields Nations First Comprehensive Water & Sewer Database.

The North Carolina Water & Sewer Initiative: Findings

Systems Are Deteriorating, Lack Capacity for Growth.

Water System Needs

Sewer System Needs

Financially Strapped Communities Cannot Afford Improvements.

Regulatory Mandates

Shrinking Public Funds

Limits to the Private Market

The North Carolina Water & Sewer Initiative: Conclusions and Recommendations

Conclusion: What Does It All Mean?

Recommendations: A Time for Action

Special Recognitions

Appendix The New Deal: Investments in North Carolina Infrastructure

Contents

13

9

4

7

25

31


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Hardly a day passes without some disturbing report about water quality in North

Carolina.

Unfortunately, as we grow in this stateadding new people, industry, and jobswe also

create new threats to our water resources. Agricultural waste, residential waste, industrial

discharges, and construction runoff are the undesirable side effects of our economic and

population growth. The result is mounting pressure on our rivers, streams, sensitive estu-

arine waters, and groundwater.

To protect these resources, safeguard our health, and ensure the availability of water for

basic human needs and commerce, North Carolina communities began nearly 100 years

ago to install public water and sewer systems in the state. Today there are an estimated

4,000 of these systems statewide. Thousands of us depend on them every day to bring

clean water to our homes, businesses and institutionsand to transport wastewater away

and dispose of it safely.

Yet, we know that many of North Carolinas water and sewer systems are in jeopardy.

Stories of crumbling pipes, leaks, and infiltration abound. Dozens of communities,

including some of our larger cities, are under state-imposed moratoria, bringing popula-

tion and business growth to a standstill. In some cases, communities are losing industrial

prospects because they lack water and sewer capacity.

Local, state and federal leaders have made valiant efforts to respond to these needs over

the past four decades. The State of North Carolina alone has provided more than $700

million, beginning in the early 1970s, to fund public water and sewer improvements.

Local government water and sewer operators have struggled to meet tightening regulato-

ry requirements while keeping rates affordable to their customers.

Yet, like most states, North Carolina has never had an effective strategy for determiningwhere water and sewer systems are located, what condition they are in, exactly what the

needs are for the future, or how to develop and focus financial resources to repair and

build needed facilities.

To lay the groundwork for effective planning in the future, the N.C. Rural Economic

Development Center and the N.C. Rural Development Council joined forces with the

State of North Carolina and the U.S. Department of Agriculture in 1994 to launch the

North Carolina Water and Sewer Initiative. Its purpose was to provide the state with its

first comprehensive database on water and sewer systems. The initiative consisted of

several components, the chief of which was an in-depth needs assessment of community

water and sewer systems.As of October 1997, 75 counties in North Carolina were included in the assessment.

Clean Water: Our Livelihood, Our Life presents the results of the needs assessment and

other analyses undertaken as part of the North Carolina Water & Sewer Initiative. It is

IntroductionWater Quality, Economic Progress ... Can Our Water and Sewer Systems Meet the Test?


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designed to give North Carolina citizens and decision makers at all levels an accurate

view of water and sewer systemswith a projection of needs over a 20-year horizon. In

addition to a description of findings, the report recommends several steps that should be

taken now to secure a safe and viable water resource future for North Carolina.

It should be noted that the original goal of the initiative was to study the states 85 ruralcounties to determine the unique water and sewer needs of communities with small

population bases, small tax bases, and special geographical and environmental

considerations. Of the 75 counties included in the study so far, 73 are rural. The assess-

ment included two urban counties, made possible by special funding provisions. Plans

call for three additional rural counties to be included in the fall of 1998 and if funds

become available, the remaining rural counties by the end of 1999.

While the county-by-county assessments are not yet complete, the data collected is so

compelling that the Rural Center has decided to share it now. North Carolina has urgent

water and sewer needs. It is the hope of all those who have contributed to this report

that it may somehow serve as a catalyst toward decisive, timely action by leadership in

North Carolina. In the words of Ben Franklin:

We believe that North Carolinians already know the worth of water. And we believe they

understand the importance of taking action nowbefore an irreversible environmental

crisis occurs, before large numbers of water and sewer systems fail, before our health is

put at serious risk, and before we lose jobs in communities that need them most.

When the wells dry, we know the worth of water.


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The North CarolinaWater & Sewer Initiative

How It WorkedHow It Worked


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The Center for Geographic Information andAnalysis makes use of a high-tech concept inventedin the 1960s which draws information from a vari-ety of sources, including aerial photographs, sur-veys, and Census Bureau files. The information isthen digitized and combined with other data layersto provide a view of the complex factors at work ina given location at a given time. This treatment ofinformation is referred to as a geographical infor-

mation system (GIS). Both public and private use of this systemhas increased dramatically in recent yearsbecause it can con-vert data into maps, making it easy for anyone to see the typesof facilities that exist in a given community.

One of the first steps taken by the Center for GeographicInformation and Analysis was the development of a GIS stan-dard, which would serve as a guide for collecting data in a uni-form manner. This standard includes more than 150 indicatorsfor water and sewer systems, including age of systems, line

diameters, construction materials, plant capacities and thefinancial situation of system operators.

Collecting the County Data.Phase I. The process of data col-lection and analysis began in September 1995 in the 30 western-most counties of the state. The decision to begin in the west wasdetermined by the availability of financial support from severalorganizations that fund western projects only. Selected to carryout the western project was the engineering firm McGillAssociates, P.A., of Asheville. The project was completed over an18-month period ending in March 1997.

Initiative Yields Nations First Comprehensive Water & Sewer Database

In the spring of 1994, the U.S. Department of Agriculture

and the Office of Governor Jim Hunt agreed to support an

initiative in North Carolina that would produce the nations

first comprehensive, standardized information base on astates public community water and sewer systems.

The purpose of the information base would be to fosterneeds-based economic planning at the state level. It alsowould serve as an effective planning tool for small ruralcommunities that lack the resources necessary to supportdata collection and analysis. Since this would be the firsteffort of this magnitude ever launched, initiative creatorshoped that once it was completed it would serve as a modelfor other states across the nation.

Co-sponsors of the North Carolina Water & Sewer Initiativewere the N.C. Rural Economic Development Center and theN.C. Rural Development Council. The U.S. Department ofAgriculture assigned a career staff member in the area ofwater and sewer development to serve as project director.

The initiative began with two goals: 1) to determine NorthCarolinas water and sewer needs and 2) to document ruralcommunities ability to pay for water and sewer improve-ments. The first part of the effort was to include a detailedinventory of existing water and sewer systems, an in-depthassessment of actions needed to bring systems up tostandards and to plan for the future, and development ofa statewide data set. The second part was to look at all localgovernments fiscal capacityspecifically at their ability tofinance needed water and sewer projects and to make rec-ommendations for changes in funding policies.

Inventory, Assessment andData Development

Testing the Model. Before beginning the full-scale effort,initiative leaders decided to test out the data collectionprocess to ensure its validity. Burke County, in the NorthCarolina foothills, volunteered to serve as the test site.Information gathered from the Burke County test helpedto shape the water and sewer data parameters of the larger

study and led to a decision to focus the study on publiccommunity systems, those containing 15 or moreconnections.

Forging New Ground: Developing a Water/SewerStandard. Recognizing the need for technical guidanceand coordination of the data once collected, project leadersentered into a contract with the North Carolina Center forGeographic Information and Analysis (CGIA). CGIA ishoused in the Office of State Planning and is charged withmanaging the states corporate database.

Town of FranklinSewer Distribution System

Little Tennessee Riv

Sewer Treatment PlantSewer DischargeSewer PumpSewer PipeType A Sewer System


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This was not easy to do, Karen Siderelis said as sthought back on the three-year effort to develop thestatewide water and sewer database. But the hard worhas paid off.

Just to have this kind of data available has made big difference in the states ability to develop policy,said Siderelis, executive director of the N.C. Center foGeographic Information and Analysis (CGIA), one ofthe major partners in the project. Previous estimateswater and sewer needs in the state were off by a mea-sure of magnitude. You cant put a dollar figure on thvalue of that information.

The benefits, she said, have exceeded expectationsWe got into it thinking wed inventory water andsewer systems so wed know what we needed to do wiregard to extensions and maintenance, she said. Nowere seeing the importance for economic developmeand we have used it in responding to emergencies, su

as Hurricane Bonnie. Were starting to use the data ovand over. The uses have just begun to unfold.As preparation got under way for Hurricane Bonni

for example, the CGIA staff was called over to theEmergency Management Center. They wanted to knowhich systems were subject to flooding, where the vunerabilities were, Siderelis said. Because the water ansewer systems mapped were on GIS, her staff could caup those maps and overlay them with maps of flood-plains and of predicted storm surgesgiving theresponse team immediate access to vital information.

Calls come in daily from other states and from fedal groups interested in what North Carolina has done

Theres a lot of recognition nationally, she said. Mguess is that were the only state in the country to hathis level of detailed information available.

Although the job isnt complete, its close enoughfor a sense of satisfaction. This is a North Carolinastory, she said. It was a team effort from the verybeginning. We didnt walk into this with big bucks, bNorth Carolina put together the resources and ingenuto get it done. And its already paying off in a big wayOf all the projects weve worked on since Ive been atCGIA, this is one Im really proud of, and I see it as amodel for how we can get other things done as well.

Phase II. The eastern phase of the initiative was conducted overa 15-month period from October 1996 to December 1997. Theengineering firm Hobbs, Upchurch & Associates, P.A., ofSouthern Pines conducted the inventory and assessment in 45eastern counties. Funds were provided by a combination of stateand regional organizations and the 45 participating counties.

The engineering firms were charged to complete three tasks intheir designated counties:

Inventory. Working hand-in-hand with utility directors,system managers, and other personnel, the engineering teamscollected data on all public community water and sewersystems in the counties in their areas.

Assessment of the Systems. The teams then analyzed thewater and sewer needs of each system, including identificationof problems and recommendations for bringing the systeminto compliance with state and federal standards. They alsoprojected the systems needs for expansion over the next 20years, including costs of construction, legal assistance, techni-cal and administrative assistance and property acquisitions.In areas where public water and sewer systems did not exist,the engineering teams projected future service areas based ongrowth projections.

Developing the Data Set. Finally, the engineering teamstranslated all the information they had gathered into anelectronic data set and created a digital map of each system.The data set and maps were then converted into computersoftware programs, Arc-View and Arc-Info, so that theinformation would be accessible to any individual ororganization for use on personal computers.

It is important to note that the engineers reviewed thecompleted information with system owners for approval priorto submitting the data for use.

Three categories were used by the engineers for classifying waterand sewer systems:

Type A Systems. Larger publicly owned systems with signifi-cant potential impact on future economic development.

Type B Systems. Small, private mobile home or single subdivi-sion systems with limited potential impact on future eco-nomic development.

Type P Systems. Areas not currently being served by public

water systems but identified for potential system expansionbetween now and 2020.

The most extensive data was collected for Type A systems, typi-cally municipal or county-owned water or sewer systems.

Its already paying off in a big way, saysKaren Siderelis of the water-sewer database

Data valuable for policy, planning


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Results of the Pioneering Project. As a result of the $1.8million inventory and needs assessment, North Carolinanow has an unprecedented depth and breadth of informa-tion about its public community water and sewer systems.The database has been designed so that it can be stored,updated, and manipulated electronically for statewide andregion-wide analysis. It also can be produced in hard copyform for those who cannot or do not wish to access it bycomputer.

The chief benefits of North Carolinas new water and sewerdatabase:

All stakeholders in water and sewer developmentregulatory agencies, grant-in-aid agencies, economicdevelopers, local governments, conservation groups,and otherscan now make decisions based on commoninformation.

New and expanding businesses can minimize their guesswork. For example, a business can determine exactlywhich systems have enough capacity to meet its needsand where pipes are located for connections.

Small local governments and system owners now havefull information on the needs of their systems, what itwould cost to bring each system up to current standards,

and what is needed to serve their communities for thenext 20 years. Local governments also have the informa-tion on which to develop and maintain state-mandatedwater supply plans and other plans, such as those forcapital improvements and growth management.

Local and regional partnerships have the informationnecessary to improve water and sewer managementthrough mergers, consolidations, interconnections andother cost-effective arrangements.

UNION

PENDER

ONSLOW

DARE

STOKESSURRY

WILKESWATAUGA

CALDWELL

BURKE

BUNCOMBE

MACON

HENDERSON

POLK

LINCOLN

YADKIN

IREDELL

DAVIE

STANLY MOORE

LEE

PITT

FRANKLIN

FORSYTH

RANDOLPH

GATES

BLADEN

COLUMBUS

JONES

BERTIE

HERTFORD

ASHE

HAYWOODSWAIN

GRAHAM

CHEROKEE

CLAY

JACKSON

RUTHERFORD

McDOWELL

CLEVELAND

SAMPSON

DUPLIN

LENOIR

GREENE

MADISON

BRUNSWICK

TYRRELL

HYDE

BEAUFORT

MARTIN

WILSON

NORTHAMPTON

HALIFAX

WARRENCASWELL

RICHMOND HOKE

HARNETT

ROBESON

VANCE

AVERY

YANCEY

GRANVILLE

CAMDEN

ALLEGHANY

CHATHAM

CARTERET

PAMLICOCRAVEN

NASH

JOHNSTON

WAYNE

EDGECOMBE

PERSONROCKINGHAM

ANSON

CHOWAN

PERQUIMANS

PASQUOTANK

CURRITUCK

WASHINGTON

TRANSYLVANIA

MITCHELL

ALEXANDER

SCOTLAND

MONTGOMERY

CUMBERLAND

GASTON

CATAWBAROWAN

CABARRUS

WAKE

GUILFORD

DAVIDSON

MECKLENBURG

DURHAM

NEWHANOVER

ORANGE

ALAMANCE

State planners and policymakers can now review anddevelop funding programs based on comprehensiveinformation on water and sewer needs.

Plus the GIS water and sewer standard developed for usein this project has been adopted by the North Carolina GISCoordinating Council as the official standard for the state.The standard also has been shared with other states, whichare now adopting it as their own.

Documenting Local Financial Capacity

Water and sewer improvements are extremely costly invest-

mentsbeyond the means of many rural communities.Therefore, as part of the North Carolina Water & SewerInitiative, project leaders examined the financial capacity ofrural communities (in all 100 counties) and the sources offinancial assistance available to them. They compiled theinformation they gathered into two reports, which are beingpublished annually by the Rural Economic DevelopmentCenter:

Funding Resource Guide: A Quick Reference to Sourcesof Water & Sewer Funding in North Carolina. Thisreport is a summary of all known financial resources avail-able to local officials wishing to apply for assistance withwater and waste disposal projects. It includes federal, state,non-profit, and private funders.

Project Tracking Report: Funds for Water & SewerProjects in North Carolina. This report is a summary offunds made available for water and sanitary sewer projectsby nine state and federal agencies during the year. It includesnames of counties and communities that received grant andloan awards and the amount of the funds allocated.

North Carolina Water & Sewer Initiative

Counties in the Initiative


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FindingsFindings


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The North Carolina Water & Sewer Initiative needs assessmentrevealed three critical problems among the 405 systems inven-toried.

Replacement of deteriorating water pipes. The singlelargest need for water systems is line rehabilitation, whichincludes replacement of old, deteriorating or leaking pipes andthe replacement of water pipe that is severely undersized. Lessthan 6 percent of the water systems have undergone major

renovations of their distribution systemsreplacement or sub-stantial repair of at least 400 linear feet of pipesince theiroriginal installation. Until these systems can be repaired, treat-ed drinking water will continue to leak from the damaged pipesand counties and municipalities will continue to lose money.273 systems have line replacement needs.

Extension of lines within current boundaries. The secondlargest need is for the extension of new lines to unserved cus-tomers. In addition, 40 percent of the systems need line exten-sions to connect them with neighboring systems. Such inter-connections are important as a means to provide increasedhydraulic capacity and to provide back-up water sources. 199systems need to extend lines.

Additional storage capacity. The third largest need is foradditional storage capacityeither new ground or elevatedwater storage tanks. As a general rule, public community watersystems are required to have at least one days supply of storedwater on hand. 185 systems need additional storage capacity.

Other needs, in order of importance:

Additional water sources Expansion of the system (outside current boundaries) Repair and rehabilitation of storage facilities Rehabilitation and upgrading of intakes Renovation and upgrading of treatment plants Additional fire hydrants Expansion of treatment facilities

EPA Study Reinforces Top Water Needs

The Environmental Protection Agency (EPA) released a nation-wide survey of drinking water systems in 1997. The report wasused to support EPAs request to Congress for additional finan-cial resources for drinking water systems. In the report, EPArevealed that the single largest category of need in the nationswater systems was the installation of new water lines and therehabilitation of existing water lines. Second on EPAs list wereupgrades to water treatment processes. Third was additionalwater storage capacity. The EPA study suggests that NorthCarolinas water system needs are identical to water systemneeds throughout the country and validates the conclusions ofthe North Carolina Water & Sewer Initiative.

Initiative Identifies Top Water System Needs

Major Water System Needs1997

As part of the North Carolina Water & Sewer Initiative,engineering teams conducted an inventory of 405 publiccommunity water systems in 75 counties, working

extensively with local officials. Here is what they found.

North Carolina is a state of smalland very small water systems.

North Carolina has an abundance of small and very smallwater systemsthose that serve, by EPA definition, fewerthan 3,300 customers. Of the 405 systems included in theNorth Carolina Water & Sewer Initiative, 310 are small. Infact, state officials estimate that small systems representmore than 90 percent of total systems in operation in NorthCarolina.

These small systems serve about three-quarters of the states

population. In comparison, only 10 percent of the popula-tion nationwide is dependent on small systems. Being a cus-tomer of a small system can be costly. Lacking the economyof scale of larger systems, small systems must require fewerpeople to pay more, sometimes much more, for systemimprovements. (EPA Drinking Water Report to Congress,page xii).

Of the water treatment and distribution systems invento-ried, more than half are 40 years old or more. Many ofthese water systems are 60 to 70 years of age, makingNorth Carolinas systems among the oldest in theSoutheast. North Carolinas first recorded public watersystems were installed in the 1870s in the cities ofAsheville and Winston-Salem. Other early systems includethose in Black Mountain (1927), Biltmore Forest (1923),Andrews (1913) and Hot Springs (1930). Many of thesesystems were financed privately and were installed wellbefore any regulations governing drinking water qualitywere in place.

Water and Sewer Systems Are Deteri

North Carolinas water systems areamong the oldest in the Southeast.

80%70%60%50%40%30%20%10%0%

67%

49% 46%

Line Line Additional

Replacement/Rehab Extensions Storage Capacity

Water System NeedsWater System Needs


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64%

15%

12%

5%

2%

1%

15

Water pipes out of sight, out of mind.

While most water treatment plants have been upgraded overthe years to meet both state and federal regulations, thewater distribution systemsthe pipes in the groundhavenot. Buried out-of-sight, out-of-mind, many of the

states distribution systems have outlived their usefulness.

Current-day problems with leaking water lines are wide-spread. Of the systems inventoried, more than 67 percentreported the need to replace or repair leaking water lines.Only 23 systems, 6 percent, reported having ever undertakena significant waterline replacement project.

Early water distribution systems were made of wood, steeland cast iron pipe. In the 1960s, due to its lower cost,asbestos concrete pipe became widely used. Nearly 200 watersystems (48 percent) in the inventory contain asbestos con-crete pipe. Most of this pipe was installed between 1960 and1970. At that time, it was the most cost-effective pipe avail-

able. While its risks to human health have not been firmlydocumented, the pipe has other significant problems.Primary among these is its predisposition to cracking. Manyof the water systems currently involved in line replacementprojects are removing asbestos concrete pipe and replacing itwith either polyvinyl chloride or ductile iron. Since the1970s, due to its resilience and longevity, polyvinyl chloride(PVC) pipe has become the pipe of choice.

Water System Pipe Types, 1997

Lack Capacity for Growth

PVC

Asbestos Concrete

Cast Iron

Ductile Iron

Galvanized Steel

Other0% 10% 20% 30% 40% 50% 60% 70%

Around Spruce Pine, things are starting to look up.Two new prisons will be opening this fall, creatinghundreds of jobs. The towns longtime stalwartsafurniture plant and two silica mineshave expanded.And new homes are going up all around town.

The economic growth hasnt just happened.Weve been forced into planning, said town managerRobert Wiseman.

Five years ago, the town opened a new water treat-ment plant capable of treating 1.6 million gallons aday. A new 2 million gallon sewage treatment plantwill come on line shortly. The town also ran water andsewer lines to the prison sites.

This is no time for Spruce Pine (population 2,000)to rest on its laurels, however. Water usage already hasreached 1.3 million gallons. By the time the two pris-ons are running at full capacity, the water plant will

have reached its capacity. To be ready, the town isdrawing up plans to expand the plant.At the same time, Spruce Pine is looking to replace

and extend a 30-year-old pipe that runs beside a majorhighway. The vibration of heavy truck traffic creates arepair nightmare, Wiseman said. And while the pipepresents no immediate health hazard, he said, thisconcrete-and-asbestos construction has since been out-lawed. The extension will run to one of the mines andto a potential industrial park site near a new bypass.

Progress doesnt come cheap. Existing infrastruc-ture improvements cost more than $5 million. Becauseit sits in one of the states most economically dis-

tressed areas, Spruce Pine has been able to obtainenough grants and low-interest loans to make the pro-jects affordable. Rapid growth also enabled it to avoidrate increases.

If it can obtain similar help with its futureimprovements, Wiseman said, Spruce Pine will meetits share of the commitment. Obviously, we cantprogress without the [outside] financial resources, hesaid. Were counting on that.

Forced planning pays off

Frequent breaks tell Robert Wiseman, left, and Al Lomanicthat asbestos-and-concrete water pipes must be replaced.


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UNION

PENDER

ONSLOW CARTERET

PAMLICOCRAVEN

DARE

STOKESSURRY

WATAUGA

CALDWELL

BURKE

BUNCOMBE

MACON

HENDERSON

POLK

LINCOLN

YADKIN

DAVIE

STANLYMOORE

LEE

NASH

FRANKLIN

J OHNSTON

FORSYTH

RANDOLPH

CURRITUCK

GATES

BLADEN

COLUMBUS

JONES

BERTIE

ASHE

HAYWOODSWAIN

GRAHAM

CHEROKEE

CLAY

JACKSON

RUTHERFORD

Mc DOWELL

CLEVELAND

SAMPSON

DUPLIN

WAYNE

MADISON

BRUNSWICK

TYRRELL

HYDE

BEAUFORT

MARTIN

EDGECOMB E

WILSON

NORTHAMPTON

HALIFAX

WARRENPERSONCASWELL

ROCKINGHAM

RICHMOND HOKE

HARNETT

ROBESON

ANSON

VANCE

AVERY

YANCEY

GRANVILLE

CHOWAN

CAMDEN

PERQUIMANS

WASHINGTON

ALLEGHANY

CHATHAM

ALEXANDER

MONTGOMERY

CUMBERLAND

GASTON

CATAWBAROWAN

CABARRUS

WAKE

GUILFORD

DAVIDSON

MECKLENBURG

DURHAM

NEWHANOVER

ORANGE

ALAMANCE

MITCHELL

TRANSYLVANIA

SCOTLAND

HERTFORD

PASQUOTANKWILKES

IREDELL

LENOIR

GREENE

PITT

Most systems rely on groundwater, posingserious economic concerns.

Groundwater, which lies in acquifers beneath the earthssurface, is the source of approximately 40 percent of allwater used for public water supply. Nationally, it is estimat-

ed to supply 97 percent of the rural water needs (UnitedStates Geological Survey, 1996). In North Carolina, theN.C. Department of Environment and Natural Resourcesestimates that more than half of the population in the staterelies on groundwater from both public and private sourcesas their only source of potable drinking water.

Of the 405 water systems in the North Carolina Water &Sewer Initiative, 84 percent secure their drinking water fromgroundwater through deep wells. The concentration of thesegroundwater systems is in the eastern portion of the state, insmall and rural communities. An estimated 2 million peopleare served by public groundwater sources in the systems

inventoried.Adequate water capacity is critical to the economic future ofNorth Carolinas communities. Industries desiring to locateor expand depend on the ability of municipal and countywater systems to serve their needs. This means that the watersystems must have available excess capacity to meet thedemand for water beyond the systems maximum dailyrequirements.

Unfortunately, groundwater systems generally have lessexcess capacity than systems that rely on surface water. Ofthe groundwater treatment plants in the initiative, only 28percent had any excess capacity. This compares to 87 per-cent of surface water systems with excess capacity.

To acquire the capacity needed for economic growth, com-munities with groundwater systems must invest in addi-tional wells, water treatment facilities and storage capacity.While these investments represent significant costs, theyare considerably less than investments in new surfacewater treatment systems, which can cost 10 times more.Due to cost considerations, many North Carolina commu-nities are likely to remain dependent on groundwater foryears to come. For these communities, particularly thosein the eastern part of the state, effective management ofgroundwater resources will be critical to prevent depletionof local supplies and to support growth in the future.

According to the N.C. Department of Commerce, industrieslocating or expanding in North Carolina require about100,000 gallons per day of both water and sewer capacity.

Locations of Public Ground Water Wells in North Carolina

Groundwater Well


18/3718

When the N.C. Division of Water Quality visited thetown of Andrews in May, it left behind a five-page list ofproblems with the water and sewer systems.

Take the water system as an example:

The intake valve from one reservoir has been shutdown until the reservoir can be cleaned and dredged. Thisleaves the town dependent upon a single source of water.

The treatment plant, which has design problems, hashad neither routine maintenance nor the improvementsrequired to meet updated drinking water regulations.Although it was designed to treat 2 million gallons ofwater a day, today it is limited to roughly half a milliongallons. The town consumes all that the plant can pro-duce, leaving no capacity for growth.

Of the towns three storage tanks, only one isapproved for use. It can hold one days supply of water.One local industry alone needs that much again for fireprotection.

Many of the towns water lines date back to the early1900s, and theyre leakingbadly.

Where do you start?

Jim Dailey, mayor and town manager, feels the pressure.Andrews is applying for about $500,000 in grants and loans tobring a second storage tank on line and to improve the watertreatment plant, he said, but it will just be a Band-Aid fix.

The full list of repairs for the water system will likely total$1.5 million. For a town of 1,700 in Cherokee County, whereone person in five lives in poverty, this is a stiff bill. And when

the water system is finally fixed, the sewer system awaits. Thoserepairs and improvements are expected to total $3 million.

Local governments in Region N (Bladen, Hoke,Scotland, and Robeson counties) know not to take a goodthing for granted. Theyve spent the past six years learningabout the groundwater supply in their area: how muchthey use, its source, how their usage affects the water table.

They want to know much more. For example,

explained Jim Perry, executive director of the Region NCouncil of Governments, Right now we pull out maybe30 million gallons a day. What part of the pie is that?

The answers will come through the COGs new com-prehensive management plan. The plan will include long-term studies of the quantity and quality of the groundwa-ter supply and information from sources not covered inthe original data, such as agricultural and commercialwater users.

The governments also want to learn more about the layof the land (and rocks and water) beneath their feet. Afterall, theyve heard the news about shrinking aquifers innearby areas of North and South Carolina. We have only

a vague picture of whats underground, Perry said. Wewant a 3D picture of it. We need to be able to predict andmodel different scenarios, to be able to ask what wouldhappen if.

The project has been a large undertaking for the coun-ties and towns of Region N, in southeastern NorthCarolina. The four counties are among the poorest in thestate. Although they encompass a large land mass, thepopulation numbers only 200,000 people. Nonetheless,these localities have invested nearly $300,000 as a partnerwith the U.S. Geological Survey on the groundwater study.

Early findings indicate some stress on the water supply.The aquifer under the Carolina Foods Processors plant has

Finding answers now to avoid problems later

dropped 150 feet since the facility opened, and theres eviden

of leakage from one aquifer to another. We have a plentifsupply in some areas, Perry said, but it only takes one or twexamples to show that problems could develop quickly.

And because theyve learned that the recharge area for thmajor aquifer is in the western part of the region, where it ruclose to the surface, they know thats an area to protect fromheavy development.

The water study has dovetailed with a separate exploratioof the potential for regional wastewater treatment systems. both cases, were preparing for the future more than we areanswering current questions, Perry said. We realize we havresource that many dontplentiful waterand we need toprotect it.

It only takes one or two examples to show that [groundwater]problems could develop quickly, Jim Perry says.

Aging water storage facilities are one reason Andrews needs $4.5million to cover water and sewer needs, says Mayor Jim Dailey.


19/37

Included in the North Carolina Water & Sewer Initiativeinventory were 254 public community sewer systems in 75counties. Following are the results.

Wastewater treatment plants are aging, butmost have undergone renovations.

The average age of wastewater treatment plants in the inven-tory is 43 years. Most of these plants have been renovated tocomply with both state and federal regulations. Of the 254sewer systems in the inventory, 229 (89 percent) have per-formed major treatment plant upgrades since the installationof the original treatment system. About half of these renova-tions were made after the enactment of the Federal CleanWater Act Amendments in 1987.

Clay pipe still accounts for morethan a third of sewer pipe in use.

More than 7,500 miles of sewer pipe were included in the

inventory most of which was made of either vitrified clayor polyvinyl chloride.

The most significant sewer collection problems were foundin systems containing pipe of vitrified clay. According tostate regulators and engineers, vitrified clay pipe is stillaccepted by the state, but not preferred. Most of this claypipe is 60-70 years old; it has more joints to leak becausepipe segments are shorter; it is often improperly bedded(installed), causing pipes to sag over time; and the pipe issusceptible to intrusion by tree roots. All of the sewer sys-tems having vitrified clay pipe reported problems frominflow and infiltration. Sewer collection systems that con-

tain vitreous clay pipe face major expenses in repair andreplacements projects. Replacement costs range from $50to $75 per linear foot factoring in costs for street and side-walk repair. Of the 254 sewer systems in the inventory, 39percent have clay pipe.

Polyvinyl chloride pipe (PVC), which gained popularity inthe 1970s, is still the pipe of choice for sewer systemsbecause it is relatively cheap, durable and easy to install.PVC joints are glued, which reduces the potential forinflow and infiltration from groundwater and storm waterrunoff. Due to construction standards since the 1970s,PVC pipe is generally bedded correctly, which also con-

tributes to its extended life. Forty percent of all sewer pipeidentified in the inventory is of PVC.

Almost no communities haveundertaken line replacement projects.

While most of North Carolinas wastewater treatment plantshave been upgraded over time, the sewer lines remain in useas originally installed. Less than 5 percent of the systems inthe inventory have made major improvements to sewerlinesrepaired or replaced more than 400 linear feet ofsewer linesince installation.

The North Carolina Water & Sewer Initiative needs assessmentrevealed three critical problems among the 254 systemsinventoried.

Replacement of deteriorating sewer pipes. The inventorydocumented more than 39 million linear feetover 7,500milesof sewer pipe in the 75 counties. It is hardly surprising,then, that the major category of need among sewer systems

is for line rehabilitation and the replacement of failed sectionsof pipe. 159 systems need to replace lines.

Correction of inflow and infiltration problems. More thanhalf the sewer systems have problems with inflow and infiltra-tion (I & I)the intrusion of groundwater and storm waterrunoff. Old, deteriorated or cracked sewer pipes and man-holes are the leading causes of I & I. During periods of heavyrain, inflow and infiltration can cause wastewater treatmentplants to treat more storm water than actual sewage. Of thesystems in the inventory, the amount of I & I at the waste-water treatment plant can range from 1,000 to 3,000,000 gal-lons during a 24-hour worst day period. For some communi-

ties, I & I amounts to as much as 200 percent of plant capaci-ty. This means that the excess capacity needed by communi-ties to accommodate growth and development is no longeravailable. 140 systems need to address I & I problems.

Expansion or upgrading of treatment plants. The thirdlargest need is for expansion or improvements to existingwastewater treatment plants. The reasons for the upgradesvary, ranging from the need to add capacity to the need tomore effectively meet state permit limits for treated waste-water. State environmental regulators are actively addressingsystems with permit violations. Currently, the State of NorthCarolina has 92 systems under orders; of these, 78 are located

in rural counties. 101 systems need to expand or upgradetreatment plants.

Other needs, in order of importance:

Extension of lines Rehabilitation and replacement of pumping stations Rehabilitation of manholes Additional backup power Expansion of spray fields New pumping stations Additional sludge handling

Major Sewer System Needs

199770%60%

50%

40%

30%

20%

10%

0%

62%55%

39%

Line Inflow/Infiltration Expand/UpgradeReplacement/Rehab Treatment

Initiative Identifies Top Sewer System Needs Sewer System NeedsSewer System Needs

18


20/37

40%

39%

7%

5%

4%

3%

2%

19

Economic development concerns:turning business away.

For many North Carolina communities, having adequatewastewater capacity to take on additional residential, busi-ness or industrial users is critical to their economic survival.By having this excess capacityor the financial ability tosecure the needed additional capacitya community has thepotential for economic improvements.

Just over 25 percent of the community sewer systems in theinitiative had available 100,000 gallons or more of excesssewer capacity. The overwhelming majority of communitieshad no excess capacity.

Lack of adequate sewer capacity can have devastating effectson the local economy. In the Town of Red Springs, CroftMetals, which maintains and operates its own package treat-ment plant, sought public sewer service to address a growingtoxicity problem in its wastewater effluent. The town,already burdened with significant infrastructure debt, couldnot fund the additional capacity needed. Responding, the

firm closed a part of its operations.In late 1997, the Town of Leland in Brunswick County wasin competition for Otsuka Chemical, a large overseas chemi-cal manufacturing operation. The company was interested inlocating in the towns industrial park. The investment by thefirm was to be $22 million, generating 60 high skill jobs. Thecompany discovered, however, that the towns sewer capaci-ty was inadequate, and it was forced to locate in Virginia,third on its list of location preferences.

Town manager Tom Barnes provides a quick sum-mary of the latest happenings in Fremont: Not mucof anything.

Since the 1980s, the town has been under a state-imposed moratorium forbidding new connections tothe towns sanitary sewer system. This has meant nonew industry moving in, no new storefronts openingno new homes going up.

For as long as theres been a moratorium, the towhas been correcting one set of problems while strug-gling to find solutions to others. Now at last the end in sight, with just one hurdle to be cleared: a $6.5 milion price tag.

Were facing an impossible situation with the cowere looking at, Barnes said. Our citizens are certaly not in a position to pay extremely high bills.

In many ways, this Wayne County community hafew options. The towns treatment plant was originalpermitted to handle 246,000 gallons of sewage a day

through a land application system. The state now saythe original calculations were seriously flawed and thplant is capable of handling only 33,000 gallons a daThis means the town currently exceeds its capacity bya factor of fiveon a good day.

On a bad day, another set of problems emerge.Referred to as infiltration and inflow, these problemsinvolve breaks and crumbling lines that allow groundwater to flood into the sewage collection lines. Afterone 3-inch rainfall, Barnes said, more than 700,000 glons poured through the main pumping station. LastFebruarys heavy rains resulted in nine or 10 spills ofraw sewage from pumping stations and lagoons.

Already, the town has replaced two-thirds of its colection lines to reduce infiltration and inflow. Now iton the verge of signing an agreement to pipe its sewato Goldsboro for treatment. It also needs to replace thlast third of the old, crumbling collection system.

If it can clear the financial hurdle, Barnes said, gothings can finally happen. With a location on U.S. 11in northern Wayne County, he said, Fremont ispositioned to provide homes for workers in Wilsonor Goldsboro who prefer small town life. Severalhomesites have interested buyers, but sewer servicehas to come first.It can be very discouraging, he sai

PVC

Vitreous Clay

Ductile Iron

Asbestos Concrete

Concrete

Cast Iron

Other

0% 10% 20% 30% 40% 50%

Sewer System Pipe Types, 1997

Slow times in Fremont

The sewage meter topped out at 700,000gallons after a 3-inch rainfall, Tom Barnes says.


21/37

Financially Strapped Communities Cannot Afford Improvements.

21

Tougher standards and increased enforcementmean major new costs.

The history of water protection both nationally and in NorthCarolina is one of increasing regulations and more strictenforcement. Over the past 30 years, the number and com-plexity of water regulations have grown dramatically torespond to encroachments on the environment.

The first major effort to protect the nations water was theClean Water Act of 1948. For nearly 20 years there were noadditional regulations passed. Then, with the adoption ofthe National Environmental Policy Act (NEPA) in 1967, adramatic increase in state and federal laws and regulationsbegan and has continued until the present.

For owners and operators of wastewater and drinking watersystems, these laws and regulations have meant major newcosts. While sound in policy, many of the laws and regula-tions were adopted as unfunded mandatesnew require-ments to be met without a corresponding increase in publicfunding to support the necessary improvements. System

ownerssmall and large, urban and ruralhave had theawesome task of adhering to the regulations while keepingwater and sewer rates affordable for their users.

On July 1, 1999, system owners will have yet another set ofrequirements to respond to. On that date, the states newCompliance and Enforcement Policy for Water Quality takeseffect, representing a significant new emphasis on collectionsystem violations. The program will require separate permitsfor collection systems, will require that collection systemshave a certified operator and will impose a broader and moreexpensive system of permit violations and penalties.

1950 1960 1970 1980

State and Federal Regulatory Mandates for Water Protection, 1948-2003

State

Federal

1967NC Dam Safety ActRegulates withdrawals fromreservoirs and locations ofwater intakes

NC Water Use ActEnables capacity useareas for surface andgroundwater

1969 National EnvironmentalPolicy Act (NEPA)Basic national charter forenvironmental protection

1972Coastal ZoneManagement Act (CZMA)Establishes coastal countiesplanning and protection

Federal Water PollutionControl Act of 1972Sets basic structure for regulatingpollutants to watersNDPES permits established

1976NC Well Construction ActSets standards for drinking

water wellsNC enacts surface watermonitoring standards

NC adopts wastewatereffluent limits

1977NC Drinking Water Actcodifies drinking water standards

1984 Federal Hazardous aSolid Waste AmendmRequires the phaseout osludge to landfills

1986Amendments to theSafe Drinking WaterAmended to regulate 25additional contaminant

1987Federal Clean WaterAct AmendmentsTightens effluent limitsfor wastewater dischargand capitalizes the SRF

1989 Pollution PreventionRequires reduction in lepollutants at the source

Phase I Stormwater Applied to cities of 50,0

1987Solid wasteNC enacts controls onsludge handling

NC Phosphate BanRequires the removal ofphosphate from the wastream

1989 NC Water Supply WProtection ActEnables State Water Sup

NC EnvironmentalPolicy Act (NCNEPARequires preparation ofEIS on certain projects

48 Federal Water PollutionControl Act (Clean Water Act)Nations first anti-pollution law

1974 Safe Drinking WaterAct (SDWA)Establishes nationaldrinking water standards

1976 Resource Conservationand Recovery Act (RCRA)Gives EPA authority to controlhazardous waste cradle to grave

1977 Cleanwater ActAmendments

Regulatory MandatesRegulatory Mandates


22/3722

In addition, EPA may revise safety standards for additionalcontaminants, particularly for radon, arsenic, and sulfate.Anticipated new regulations include the enhanced surfacewater treatment rule, the disinfectants and disinfectionbyproducts rule and the information collection ruleallparts of the Safe Drinking Water Act.

The chart below illustrates the variety and number of bothstate and federal regulations in effect in North Carolinatoday. It should be noted that as many regulations havebeen passed since 1989 as in the 40 years prior.

1990 2000

1990Lead & Copper RuleEnforces new drinking water standards

1993 NC municipalities required to submitwater supply protection ordinances

1994 NC counties required to submitwater supply protection ordinances

NC adopts rules for localwastewater pretreatment programs

NC surface watertreatment rules adapted

NC adopts 80-90 rulegoverning wastewater

1996

NC Clean Water Responsibility ActEstablishes direction for reduction inwastewater discharges in the Neuse Riverbasin and institutes planning component

1998 DENR enacts phase-in of sewer collectionsystem enforcement program

1999 DENR enacts phase II of the sewercompliance enforcement program

2000ConsumerConfidenceReportsrequired forwater systems

2003 Neuse Rulesbecomeeffective

1996Safe Drinking Water ActReauthorizationEPA redefines and adds contaminantsfor testing and capitalizes for drinking

water SRF

1999 Phase II stormwater regulationsbecome effective

Winfall may soon pump its sewage across the riverto Hertford for treatment, Mayor Fred Yates says.

Sewage system almost realityPerhaps good things really do come to those who

wait. For 10 years, townspeople in Winfall have stud-ied, searched, and planned for a sanitary sewer systemto replace failing septic tanks. A little over a year fromnow, they expect those plans to become reality.

Its not coming a moment too soon, according toMayor Fred Yates. Failing septic systems are [in dangof] contaminating our drinking water, he said. Wevhad to increase the amount of chlorination in thewater in some parts of town.

The town actually has two options before it. Winfhas been approved for $3.65 million in grants fromUSDA Rural Development, the CommunityDevelopment Block Grant program, and the RuralCenter. By a margin of 3 to 1, townspeople passed a$500,000 bond issue to cover the remaining cost ofconstructing a collection system and treatment facilitThe grants made the project feasible. The town has

fewer than 1,000 people, and about 65 percent aresenior citizens on fixed incomes.

Now an even more favorable possibility has openeup: collaboration with the town of Hertford, which lijust across the Perquimans River. Hertford had initiallrejected a proposal to treat Winfalls sewage, but condtions have become more favorable. The town needs toupgrade its existing sewage treatment plant to serve anew, 450-acre industrial park. If Winfall contributes tothe upgrade, Hertford is now willing to reserve 100,00gallons of daily treatment capacity for its neighbor.Winfall still will have to install and maintain a collection system, which includes piping the sewage acrossthe river, but will be spared the cost of building a separate treatment facility.

The deal isnt quite sealed. Hertford is making granapplications and must pass a local bond issue for itsshare of the costs. Should those fall through, Winfallwill revert to option one. By one means or another,Yates said, Winfall should have sewer service by late1999.

With the industrial park outside Hertford, local jobwill offer young people an alternative to commuting Norfolk. Yates looks forward to that and to seeing newhouses go up in Winfall once the sewer system is ope

ating.


23/37

W

BUNCOMBE

MACON

HENDERSON

POLK

HAYWOODSWAIN

GRAHAM

CHEROKEE

CLAY

J ACKSON

RUTHERFOR

McDOWELL

MADISON

AVERY

YANCEY

M ITCHELL

TRANSYLVANIA

22

The history of water and sewer financing has been dominat-ed by two major funding sourcesthe EnvironmentalProtection Agency (EPA) and the U.S. Department ofAgriculture (USDA). The State of North Carolina, along withthe Appalachian Regional Commission and the EconomicDevelopment Administration, also have made significant

investments in water and sewer infrastructure.

EPA. The U.S. Clean Water Act of 1972 heralded the startof the Construction Grants Program in the EnvironmentalProtection Agency. The program provided funds to publiclyowned wastewater systems for planning, design and con-struction, primarily for new or upgraded treatment plants.EPA funded up to 75 percent of a projects total cost. Underthis arrangement, between 1972 and 1984, EPA providedmore than $696 million in grant funds to North Carolina.To relieve the burden on local governments, the State ofNorth Carolina paid for half of the 25 percent local share.

The Polk County town of Saluda (population 624)ts atop its own mountain in the southernppalachians, but sometimes all you can see from heretrouble. Trouble with a crumbling sewer system,hich is further stressed when the population doubles

ach summer. Trouble with environmental groupsressing for improvements. Trouble looming in unreg-lated subdivisions springing up outside of town.

Saludas immediate challenge is to repair andpgrade its sewer system, built during the 1920s and0s. A treatment plant built in the 80s should haveelped, but the contractor failed to operate and main-in the plant properly. To help fix the problems, aew contractor is being brought in. In addition, an180,000 emergency loan from the state enabled theown to replace two crumbling collection lines.

The state has remarked on the towns progress, cit-ng only five clean water violations last year. Someroups arent so patient. Two years ago, the Americananoe Association sued the town for failing to complyith the Clean Water Act. It won, and the town paid80,000 in fines and legal fees. The Pacolet Areaonservancy, an environmental group based down-ream in South Carolina, also is pressing the town toean up its act and to extend sewer service to olderomes outside of town. Some of those homes haveiling septic tanks. Others pipe sewage straight into

he creek.Thats where the water quality problem really is,

aid Rodney Gibson, town council member and acting

own manager. The Pacolet Area Conservancy wouldke for us to take [those houses] in, but its difficult.heyre downhill from us. Wed have to put in a pumpation.

Besides, Saluda hasnt finished repairing its ownwer system, especially the leaky pipes that let rainwa-r flood the system. Needed repairs will cost $1.5 mil-on. We have a capital improvement plan and noay of funding it, Gibson said. Average water andwer rates currently run $40 to $50 a monthalreadyfficult for some older residents to payand homes

nd small retail shops make for a small tax base.

Leaky sewer pipes, left, createheadaches for Mayor Kim Talbotand others in Saluda.

rouble on the mountaintop

Shrinking Public FundsShrinking Public Funds

Communities with bond rankings

Counties with bond rankings less


24/37

PENDER

ONSLOW

BLADEN

COLUMBUS

BRUNSWICK

ROBESON

CUMBERLAND

N

BAROWAN

CABARRUS

WAKE

GUILFORD

DAVIDSON

MECKLENBURG

DURHAM

NEWHANOVER

ORANGE

ALAMANCE

UNION

CARTERET

PAMLICOCRAVEN

DARE

STOKESSURRY

ES

N

YADKIN

DAVIE

STANLYMOORE

LEE

PITT

NASH

FRANKLIN

J OHNSTON

FORSYTH

RANDOLPH

CURRITUCK

GATES

JONES

BERTIE

HERTFORD

SAMPSON

DUPLIN

WAYNELENOIR

GREENE

TYRRELL

HYDE

BEAUFORT

MARTIN

EDGECOMBE

WILSON

NORTHAMPTON

HALIFAX

WARRENPERSONCASWELL

ROCKINGHAM

RICHMOND HOKE

HARNETT

ANSON

VANCE

GRANVILLE

CHOWAN

PASQUO

TANK

CAMDEN

PERQ

UIMANS

WASHINGTON

GHANY

CHATHAM

SCOTLAND

DER

MONTGOMERY

23

10 years of grant funding) to North Carolina under therevolving fund program. The state has matched this figurewith $56 million in appropriations.

Recognizing that some local governments could not meetall of their water and sewer needs through loans, the N.C.General Assembly also has funded a program of grants calledthe High Unit Cost Program through issues of state bondfunds in 1987 and again in 1993. This grants program,

however, has never been sufficiently capitalized to providethe deeper subsidies often required by small and rural sys-tems with limited debt capacity.

The USDA water and sewer grants program has experienceda decline in the total grant dollars available and in thepercentage of cost share allowed. From FY 1996 to 1997,the USDA allocation to North Carolina was reduced by 22percent, from $68 million to $53 million. Currently,communities generally qualify for no more than 55 percentof a projects cost in grant funds.

USDA. Until 1996, the U.S. Department of AgriculturesFarmers Home Administration (now Rural Development)provided $70-80 million per year for water and sewer grantsand loans to North Carolinas rural communities. In its hey-day in the 1970s, the program provided grants for 75 percentof total project costs. Most local governments relied on debtfinancing or local contribution to cover the remaining portionof their projects.

Changing Times. Since the late 1980s, the financing picturehas changed.

In 1985, the Environmental Protection Agency reduced itsmaximum grant award from 75 to 55 percent of total projectcost. Then, with the enactment of the Federal Water QualityAct of 1987, EPA dissolved the grants program altogether andinstituted a system of state revolving loan fund programs.Loans are made available at half the market interest rate for upto 20 years. The revolving local program requires a 20 percentmatch from the state, which has been appropriated each yearby the General Assembly. During the last 10 years, EPA hasallocated about $280 million (half the amount of the first

o ranking

Communities & Counties with LimitedAccess to Private Market Funds


25/37

24

In 1981, the federal government contributed, on average,43 cents of every dollar spent on public works in NorthCarolina. By 1997, that contribution had declined to anestimated 17 cents on the dollar. (Financing RuralInfrastructure in North Carolina, 1997).

Financial institutions are taking upthe slack in some communities.

The steady decline in grant dollars has been accompaniedby a shift to private financing in communities that canqualify. In fiscal year 1997, $235 million (68 percent) ofwater and sewer infrastructure financed in the state wasdone through financial institutions. More than $135 mil-lion of this amount was issued to the states urban coun-ties. In other words, the 15 urban counties outsold thecombined 85 rural counties by two to one.

North Carolina has historically used general obligationbonds to finance infrastructure improvements. This trend

reversed, however, in 1997. For the first time, the sale ofrevenue bonds outdistanced general obligation bonds,reflecting trends nationwide.

A method of financing called installment purchase alsohas increased in use since its introduction in the early1980s. Installment purchase (lease purchase) debt financ-ing allows local governments to make lease payments overtime on large purchases such as trucks and equipment,then to buy out the lease at the end of the financing peri-od. The piece of equipment serves as security. Use ofinstallment purchase debt to finance water and sewer debtaccelerated in 1995 following a precedent-setting court

case in Wayne County. The case held that investment ininfrastructurepipes in the ground and publicly ownedtreatment facilitiesconstituted suitable fixed asset securi-ty. North Carolina is one of only a handful of states using

installment purchase to finance infrastructure debt. (N.C.Institute of Government)

Many North Carolina communitiesare not bank eligible.

For communities considered non bank-eligible, the financ-ing options are significantly more limited. These communi-ties tend to rely on grant funds, when they are available, to

finance needed improvements. With grant funds declining,many are forced to defer needed projects or simply not pur-sue them at all.

The measurement used to quantify a local governmentscapacity to assume debt is a bond rating. It is a numeric fig-ure assigned to a local government by the N.C. MunicipalCouncil as a result of a community risk analysis. A riskanalysis includes an evaluation of a communitys financialcapacity, its demographics, its industrial and business base,and other indicators of financial health and stability. Localgovernments with bond ratings less than 75 on a scale of 0 -100 are assessed as more risky for investment and therefore

have limited, if any, access to the private market for financ-ing. Most of these are small to very small local govern-ments, located in rural counties.

Based on information from the North Carolina LocalGovernment Commission, the regulator of local governmentdebt in the state, and the North Carolina Municipal Council,a private bond-rating company with headquarters in NorthCarolina, 61 percent of local governments have limited or noaccess to bank capital to finance needed water and sewerimprovements. Of North Carolinas 527 municipalities, 375are communities that are non bank-eligible. These communi-ties are typically smaller, have lower median householdincomes and have limited resource bases. Many rely on a sin-gle industry for most employment. Of the 375 non-bank eli-gible communities, 343 (91 percent) have populations lessthan 5,000. (1997)

Water and Sewer Grants and Loans1995-1997

$600,000,000

$500,000,000

$400,000,000

$300,000,000

$200,000,000

$100,000,000

$0

$63,794,291

1995 1996 1997

$281,661,879

$32,478,299

$532,375,596

$50,269,001

$295,186,963

Grants

Loans

Limits to the Private MarketLimits to the Private Market


26/37

25


Conclusions andRecommendationsConclusions andRecommendations


27/3726

Two of the states 15 urban countiesBuncombe and Forsythwere included inPhase I of the North Carolina Water & Sewer Initiative. The initiative projected totawater and sewer needs for the two counties to be more than $958 million, about aseventh of the states $7 billion in urban needs. Between them, Buncombe and

Forsyth contain three sewer and seven water systems.

Conditions of Water and Sewer Systems. Like the rural systems inventoried in the initia-tive, these two urban systems are in need of major line replacement, with manylines that are old, failing and too small. Because of their need to respond to seriousgrowth pressures, the two urban counties also have urgent needs for expansion ofwater and sewer capacity and expansion of service areas.

Financial Condition. The Buncombe and Forsyth systems have much larger customerbases than most rural systems in the initiative. Asheville (36,232 customers) andWinston-Salem (73,720) have two of the largest systems in the state. Rate structuresin these two systems appear to be adequate to generate significant cash reserves tofinance future system improvements. In 1997, the 10 urban systems accounted for$131 million in cash reserves compared to 373 rural systems that reported $189 mil-

lion. Each of the 10 urban systems had bond ratings of 85 or above, making themeligible for financing water and sewer improvements through the private market.

Conclusion: With their larger customer bases and greater concentration of higher pay-ing jobs, the two urban counties appear to be better positioned than most ruralcounties to address their water and sewer needs. Economies of scale will help theselarger systems handle the complexity and escalating nature of regulatory require-ments, budgeting and staffing requirements, and the education and training nowrequired to operate a sound water or sewer system.

The looming issue facing the states urban areas in light of their phenomenal popu-lation and economic growth is the issue of capacityboth for water and wastewaterAs growth occurs, demands for capacity increase as do threats to the water suppliesfrom agricultural, residential and industrial sources. Clearly, the challenge in urban

areas is effective management of growthto ensure sufficient water and sewer ser-vices and the availability of clean water for the future.

For many communities in the states 85 rural counties, the need for improvementsto water and sewer systems is a matter of survival. These communities account for39 percent or $4.38 billion of the states $11.34 billion water and sewer need.Seventy-three of the states 85 rural counties were included in the North CarolinaWater & Sewer Initiative inventory.

Demographics. Rural communities have less dense populations and smaller numbersof water and sewer customers than their urban counterparts. They tend to havefewer businesses and industries and lower paying jobs, resulting in lower median

household incomes.Condition of Water and Sewer Systems. The water and sewer initiative revealed some sig-nificant and widespread problems in the states rural water and sewer systems. Manyof the water and sewer systems are old, some approaching nearly a century in exis-tence. While water and wastewater treatment plants have been improved over timeto comply with federal and state regulations, the original pipe lines remain.Cracked, broken and leaking, these pipes are the source of revenue loss and permitviolations. For water systems, the condition of distribution lines causes many sys-tems to lose as much water as they sell. For sewer systems, the condition of pipes

Conclusion: What Does It All Mean?

Rural Areas

Urban Areas


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and the problems caused by inflow and infiltration are par-ticularly troublesome. Not only are inflow and infiltration asource of permit violations but also a barrier to growth. Inmany rural areas, inflow and infiltration absorb excess

capacity that would otherwise be available to accommodatenew connections. For both water and sewer systems, regula-tions governing drinking water and wastewater disposal willrequire significant additional investments in treatmenttechnology.

Financial Condition. To finance needed infrastructure improve-ments, most rural communities continue to rely on grants.Private bank financing or state and federal loansevenwhen offered at lower than market interest ratesare notaccessible. Bond ratings below 75, as determined by theNorth Carolina Municipal Council, largely preclude the useof debt financing for many rural communities.

Water and sewer systems in rural counties tend to havemore difficulty operating cost effectively. Faced with tight-ening regulatory requirements and changing populationconsumption patterns, many North Carolina communitieshave rates that are remarkably low, producing just enoughrevenue to get by. Many rate structures are insufficient togenerate the revenue needed to effectively maintain andoperate the system, much less set aside reserves for futureneeds.

Decisions to keep rates low often have been made indeference to the aging and low-income populations of ruralcommunities. The result of these artificially low rates has

been to defer needed system improvements to another day.Deferred improvements lead to system failure andobsolescence.

Conclusion. North Carolinas rural communities need bothtechnical and financial assistance to move beyond the cur-rent crisis. Cost-effective, easily manageable and sustainablesolutions will be required if many of these systems are to besaved.

Serious effort should be made to encourage regional systemsand consolidation and mergers of smaller systems wherefeasible and the development and use of alternative andcost effective systems of wastewater disposal.

Additional grant funds to address immediate, critical waterand sewer needs must be developed. Structuring these fundsto ensure they reach rural North Carolina communitiesbylinking them to community bond ratings, water/sewer rates,and local household incomewill be vitally important.

North Carolina Water and Sewer NeedsNow Estimated at $11.34 Billion

Initiative Doubles Estimate of State Water and Sewer Ne

Estimated Environmental Protection NC Water & SewNeeds Agency Initiative

Water $2.7 billion $4 billion

Sewer $3.754 $7.34

Total $6.46 billion $11.34 billion

Needs were underestimated in the past.

North Carolinas chief environmental regulatory andfunding agency, the N.C. Department of Environment andNatural Resources, works with the national EnvironmentalProtection Agency (EPA) to develop estimates for water andsewer needs in the state. The needs include facility improve

ments and system upgrades necessary to meet regulatorycompliance requirements for a 20-year planning period. Itis these estimatesstatistically derived from surveysthatare used to determine the amount of federal funds allocatedto the state each year through EPA.

The most recently available figures estimate wastewaterneeds for public systems in North Carolina at $3.754 billionand water needs at $2.7 billiona combined total of $6.46billion in needs. (1995)

While the figures represented the best available data at thetime, many professionals in the water and sewer industrybelieved that they may have underestimated the total need

for North Carolinas water and sewer systems, particularlythe need for small (fewer than 3,300 customers) and verysmall (fewer than 500 customers) systems. In fact, the tech-nique used by EPA for the 1995 survey sampled only twosystems in the very small category for projection of data onwater needs.

The Water & Sewer Initiativeprovides a more accurate measure.

The North Carolina Water & Sewer Initiative offered anopportunity to conduct a thorough inventory of systemsin the participating counties and to project, from the data

gathered, the states total water and sewer needs over a20-year period.

Unlike the EPA survey, which included only two very smallcommunities, the inventory included more than 160 watersystems serving fewer than 500 customers.

When the final numbers were compiled, the data containedin the inventory were used to project a revised total of$11.34 billion in water and sewer needsalmost double thEPA estimate. This figure is based on current dollars requireto meet current regulatory requirements. (1997)

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As North Carolinas leaders establish financial, developmental, and environmentalpriorities for the state, they must recognize the unique challenges faced by smalland rural systems in supplying safe drinking water and adequately treating waste-water. The following recommendations have emerged from extensive study anddialogue throughout the course of the North Carolina Water & Sewer Initiative.

They are presented here as a practical guide for addressing the states vast waterand sewer needs.

Approve clean water bonds to meet states urgent water and sewer needs.The Clean Water and Natural Gas Critical Needs Bond Act of 1998 contains $800million in funds to begin addressing urgent water and sewer needs across the stateand $200 million to help extend natural gas lines into some of the 22 unservedcounties. The bond act provides the single largest investment in critical water andsewer needs in the states history. $300 million in loans for water and sewer projectswill be available for communities at half the states bond rate. By applying to thestate, communities can avoid the costs of preparing and issuing their own bonds forwater and sewer improvements, normally 2 percent of the issuance cost. Because thefront end effort to sell individual bond issues can be avoided, the loan funds will

reach communities that need them more quickly.

The bond act also contains $500 million in grant funds. These funds are dividedamong four programs and are targeted to meet critical water and sewer needs. Withthe exception of $20 million in funds for critical needs economic developmentprojects, the grants require recipient communities to bear their fair share of costsby raising water and sewer rates to a level at least equal to 1.5 percent of the medianhousehold income of their community.

The bond act also contains a provision establishing a State Infrastructure Councilcharged with the development of a long range strategic plan for water andwastewater in the state. The long range plan would describe the needs forimprovements and would propose strategies for meeting these needs, including

definition of appropriate roles for state and local governments and the privatesector. The councils first report would be due to the General Assembly by July 31,1999.

Set aside funds to rehabilitate collection systems and prevent enforcement action.On July 1, 1999, the State of North Carolina is expected to begin enforcementagainst failing sewer collection systems. State leaders should take steps now to aidNorth Carolina communities in meeting the challenges posed by the newenforcement program. The state should encourage the set aside of existing grantfunds for rehabilitation projects in sewer collection systems. The financing programshould be supported by a system of technical assistance on the state and regionallevels.

Encourage regional water and sewer systems to improve service and reduce cost.Many local governments, struggling with the inefficiencies of operating a singlewater or sewer system, are discovering the benefits of collaborating with othercommunities on system consolidations, mergers, or the establishment of regionalsystems. State leadership should encourage this trend. Merged, consolidated orregional systems can provide greater flexibility in financing, making it possible toqualify for loans in addition to grants. They also can provide, because of their largercustomer and resource bases, a sustainable operation with the ability to grow andadapt to the changing regulatory and financing environment.

Recommendations


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Pursue wastewater treatment alternatives to reduce costs and protect resources.State leadership should join with the academic community to explore new efficientand cost-effective methods of managing wastewater. The development andcommercial application of alternative waste management technologies particularyfor small systems may represent an opportunity to reduce costs and mitigate theimpact of wastewater on the environment. Ongoing research at N.C. StateUniversity is expected to reveal promising results.

Make capital improvement plans a priority for guiding local investments.Capital improvement plans are a useful tool to help small communities planstrategically for their investments in water and sewer facilities. Funding for capitalimprovement plans will be made available through proceeds from the Clean Waterbonds, and priority points will be given to applicants who have capitalimprovement plans in place. To encourage the development of sound capitalimprovement plans, the State and other funding organizations should jointlydevelop a set of sample plans, based on community size and the complexity ofoperations.

Establish a cooperative technical assistance program for small communities.

The North Carolina Water & Sewer Initiative clearly indicated the level of needfor water and sewer system improvements statewide. Many of the communitiesincluded in the initiatives inventory will require significant technical assistance to1) interpret the increasingly complex array of regulatory requirements; 2) identifytechnical solutions suitable for their individual needs; and 3) gain access to fundsfrom existing sources and, if approved by the voters in November 1998, to the newclean water bonds. North Carolina should establish a cooperative technicalassistance program that draws on currently existing resources and ensures that thedelivery of services meets local needs.

Create a dedicated source of funding for water and sewer improvements.

The Clean Water and Natural Gas Critical Needs Bond Act of 1998 was structuredto be a first step in a multi-step process toward meeting the states $11.34 billion inprojected water and sewer needs. Funding made available through bond proceedswill be used to meet critical needs firstneeds for improvements to systems onmoratorium or under other administrative orders by the state. It is stronglyrecommended that the state, through the infrastructure council, begin immediatelyto investigate and propose a dedicated revenue source to continue this program ofmeeting the states water and sewer needs over the next 20 years.

Complete and maintain water and sewer data for improved planning at all levels.The N.C. Water & Sewer Initiative inventoried water and sewer systems in 75 NorthCarolina counties, resulting in a highly informative, useful set of data. The State ofNorth Carolina should commit to completing the inventory of the remainingcounties and to identifying funds for updating and maintaining the data at regularintervals.


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Special Recognitions . . .This report recognizes the important contributions of themany men and women who work daily in North Carolinato bring us clean water. While it is impossible to mentionthem all, we would like to extend our appreciation to afew without whom this initiative could not have moved

forward.John Soleswho has dedicated his career to buildingand improving water and sewer systems throughout thestatedirected the North Carolina Water & SewerInitiative from 1994 to 1997.

The N.C. Rural Development Council, which is housed inthe N.C. Rural Economic Development Center, was the co-sponsor of the North Carolina Water and Sewer Initiative.The council was instrumental in forming the state-federalpartnership.

Major funders included the Appalachian RegionalCommission, the N.C. Department of CommercesDivision of Community Assistance, the U.S. Department ofCommerces Economic Development Administration, andthe N.C. Rural Economic Development Center. Otherfunds for the project were provided by Z. Smith ReynoldsFoundation, AdvantageWest, the Northeastern NorthCarolina Economic Development Commission, N.C.sSoutheast Regional Economic Development Commission,The Lower Cape Fear Water & Sewer Authority and BooneHousing Authority.

45 Rural Counties of North Carolina contributed their 50percent cost share to the project. Without the cooperationof these local governments, the second phase of the pro-

ject would have been impossible.

The U.S. Department of Agriculture and the NorthCarolina Office of the Governor negotiated an intergovern-mental agreement that allowed the USDA RuralDevelopment Administration to assign a specialist to theinitiative full time for two years. The U.S. Department ofAgricultures Economic Research Service also awarded aplanning grant that assisted early planning for the project.

The N.C. Center for Geographic Information and Analysis(CGIA), a state agency, has provided extensive technicalguidance to the project and a home for the water and

sewer database. A special word of appreciation goes toCGIA staff member John Nicosia for his development ofthe statistical information for this report.

The N.C. Department of Transportation provided the digi-tized road maps over which the water and sewer informa-tion could be laid.

Several state agencies and organizations provided assis-tance throughout the project. These include the Divisionsof Water Quality, Public Water Supply, and WaterResources, all in the N.C. Department of Environment andNatural Resources; the N.C. Water Resources Institute; the

Professional Engineers of North Carolina and theConsulting Engineers Council of North Carolina; theWater Resources Research Institute; and the WesternCarolina University Center for Mountain Living.

McGill and Associates, P.A., an engineering consultingfirm, conducted the inventory, needs assessment, andGIS database construction

Documents

Clean Water Report 99