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Financing increasing need for water in east Lincoln ever-growing concern

On April 18, members of the East Lincoln Area Chamber (ELAC) met to discuss the possibility of consolidating the city and county water and sewer systems.
Finding ways to finance the impending project – whether involving consolidation or not – was the main focus of the meeting, and guest speaker Jeff Hughes was brought in to discuss the options.
According to Hughes, Lincoln County is looking at significant capital challenges as it tries to proactively solve water and sewer issues.
Hughes also addressed the idea of consolidation, something he acknowledged may make some people uncomfortable.
“It carries with it a weight,” said Hughes. “It tends to get people ill at ease.”
The discussion then turned to the problem of finding ways to pay for the project. Hughes outlined several options, including saving funds to cover the cost and splitting capital into chunks, then “scraping off” money from revenue to gain the needed finances.
In addition, Hughes said obtaining grants was another possibility, though he made it clear this would be difficult to do.
Finally, Hughes talked about loans, the most common way counties pay for these types of proposals. According to Hughes, loans are probably the most promising avenue for the county.
Hughes stressed the need to act fast if the county wants to take advantage of the State Revolving Fund, a joint EPA and state government program.
“It’s going to get considerably more competitive,” Hughes said.
If Lincoln County hopes to get a loan from the program, it might benefit from showing an effort toward cooperation.
Another choice, the USDA’s Rural Development Fund was also mentioned. This program would involve loans from the federal government.
Commercial options were the final possibility discussed at the meeting.
Hughes talked about low interest loans available from banks and discussed two types of bonds, general obligation (meaning the security for the debt instrument is the taxing authority) and revenue (meaning the security is the revenue, in this case from water and sewer).
These are relatively new concepts for smaller communities, but Hughes says they are gaining some popularity.
“A lot of local governments are borrowing money from banks just like you would with a house,” said Hughes.
This option is not currently available to water and sewer districts, but, with a new law moving through the House of Representatives, it should be soon.
In looking ahead, Hughes stressed the importance of careful decision making.
“When you make a decision this year, it impacts what you can do next year,” Hughes said.
With that in mind, Hughes pointed out the making sure a new water treatment plant is built to meet the county’s future rather than current needs. Having excess capacity is the key.
With current capacity at 80-90 percent, excess is not a word one would use to describe the facility’s present situation.
In designing and constructing a new water plant for East Lincoln, the idea is to make excess capacity only about 50 percent and rely on deals with neighboring community’s to use their excesses for a while.
The new sewer plant is supposed to go online in 2009, with the capacity to process 1.7 million gallons a day, expandable to 3.4 million.
By the time Hughes was finished speaking, it became clear that cooperation between East Lincoln and the City of Lincolnton may be a better option than the original idea of a merger.
After Hughes’ discussion, the members of ELAC stayed around to discuss where to go from here. The members decided to recommend to the full Chamber of Commerce board to push the county commissioners and city council to look beyond the next five years and make decisions based on what the county will need 10 or 20 years in the future.
The idea of running the sewer line down NC 73, which had been previously discussed, was brought up again and seemed to be a popular one among the ELAC members.
Before the meeting was adjourned, the members opted to make a decision in May and present to the full Chamber board in June.
by Allyson Levine

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