Mount Holly

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The City of Mount Holly
400 E. Central Ave.
Mount Holly, NC 28120

Wastewater Treatment Transfer Negotiations - Questions and Answers

Thank you for your interest in the decision to continue contract negotiations with Charlotte Mecklenburg Utilities. Below are responses to some questions you may have:

How is losing control of operations and ultimately the costs the best long-term solution for the citizens/taxpayers of Mount Holly?

The City of Mount Holly will be continuing to negotiate a mutually acceptable contract with Charlotte Mecklenburg Utilities. As part of this process, we will be working to secure a long term rate structure and debt service arrangement which will be an improvement to our current water treatment cost as well as the interest rate and loan terms the city could obtain on it's own. This will allow the city to maintain a contractual relationship which provides us with some measure of rate stability and future capacity growth. The rate charged to Mount Holly would be the system average to treat waste water for the Charlotte Utilities system which is less than what Mount Holly currently treats its waste.

There are two important issues which are being addressed in this process. The first and most immediate issue is the state mandated requirement that the city reduce the amount of nitrogen being released into the Catawba River. This requirement is part of a law suit brought by the State of SC against the State of North Carolina. Currently, the City of Mount Holly is in violation of this requirement. We are being allowed to use a portion of Charlotte's discharge permit allowances for discharge which allows us to remain compliant until a more long term solution is secured. If the city were to undertake this endeavor by itself, it would cost at a minimum $12 Million to upgrade our plant to discharge properly. If the city undertook this path, the discharge allowance from Charlotte would be disallowed. Additionally, the cost to treat waste as well as the capital cost would increase rates for our citizens.

The additional issue is current and future capacity. The city currently has capacity of 4 million gallons per day. When the capacity of our system reaches 80% of 4 million gallons per day, the city would then have to begin construction of adding an additional 2 million gallons per day capacity. This cost ranges from $40-$50 Million to expand the city's facility for this additional capacity. The city is approaching this 80% threshold and must act in order to meet the state regulations on capacity. There is also an issue of the necessary amount of space needed to construct the additional capacity components on the current waste water treatment facility and land. The Charlotte Water contract would allow the city to use up to the 4 million capacity limit without a need to expend additional money to gain the additional capacity required for the 80% rule. Also, in the contract is a provision where by the city can purchase additional capacity from Charlotte in 100,000 gallons per day increments thus reducing the impact of the financial burden born by doing it in 2 million gallons per day increments.

What are the projected increases in water/sewer rates and taxes as a result of this agreement?

Based on the estimates to connect to Charlotte Water, it will cost approximately $25 Million to connect to Charlotte and decommission the city's current waste water treatment plant. The cost for maintaining the city's discharge permit and meeting the denitrification requirement as well as increasing the necessary capacity, will cost the city $50 Million. The difference is 2-3 times higher for the citizens of Mount Holly if we maintain our system than going with the Charlotte Utilities option.

What is the projected impact on service and operations as a result of this agreement?

The city will continue to maintain the lines and infrastructure on this side of the Catawba River. The contract will outline the service requirements which Charlotte Utilities is responsible for going forward.

 What is the projected impact on Economic Development in our area as relating to industrial and business relocations? Specifically, if a business or corporation would wish to relocate or expand to our City, what would be the process of requesting expanded capacity through CMUD to help entice or accommodate these companies to bring jobs and expanded tax base to our area?

As stated above, the Charlotte Utilities option provides the city with a more economical solution to capacity and therefore, allows for future industrial and commercial growth in the future.

Simply stated, what are the benefits that the citizens/taxpayers of the City of Mount Holly will receive as a result of this agreement?

The financial burden on the is diminished with the Charlotte Water option based upon the above information about rates and debt structure. The city will have an enhanced ability to secure chosen development without the burden of not being able to address the waste water treatment needs of a development. The city's future vibrancy encompasses the above issues as outlined. It is well documented that a lot of cities have faced bankruptcy due to anticipated growth that did not happened while major expenditures had already been exercised. In our case, when growth occurs we will have the ability to charge those that seek to take advantage of the available capacity that we have or need to purchase. This too will ease the burden on our existing citizens. The heart of economic development are job, tax base and the overall vibrancy of a city. The Charlotte Water option gives us the best opportunity to address that as intended.

Can you explain the compliance issue we are facing with our current wastewater treatment system?

The compliance issue is fairly complex but I will try to address it succinctly, if possible. In the late 1990's it was determined by NC DENR that Mount Holly would be grandfathered from having to comply with the denitrification requirements. However, in August 2007, the city was sent a letter from NC DENR indicating this was no longer the case and Mount Holly as well as Belmont would be required to meet the new standards. At this point, council and staff began discussions regarding whether the City should maintain its permit and continue to treat waste water and expand the waste water treatment plant or seek other options. Additionally, the city formed the Utilities committee made of staff, citizens and council members to assist in analyzing the different options available to the city.

There were several options considered. Among the options were for the City to form a partnership with Belmont and/or Gastonia. These 2 options were vetted and determined it was cost prohibitive due to distance and geography. During this time, discussions were begun with Charlotte Utilities as to its efficacy.

The council has been torn between maintaining the city's permit and going to Charlotte. Because of the difficult decision as to going to Charlotte and the continuing negotiations to protect the future interest of Mount Holly, it has taken time to get to this decision. The staff and council will continue to work on a contract which benefits Mount Holly now and far into the future.

Tags: Public Utilities Utility Workers Water

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