PITTSBORO — This town’s water and sewer problems are no secret.
Contamination of the town’s water supply and the dueling realities of aggressive development and constrained water and sewer capacities have been documented for years.
Still, in 2022, the town progressed on a number of key matters related to its water and sewer issues — navigating a potential merger of utility systems with the city of Sanford, pursuing funding for the Sanford force main, and successfully installing a granular activated carbon (GAC) filter system to improve water quality in the Haw River.
With multiple municipalities, timelines and projects involved, there are a number of moving parts in the pathways forward. So how did Pittsboro’s utilities — specifically with wastewater — reach their current states? And what’s likely to happen in 2023?
Bill Terry came to Pittsboro as town manager back in 2007. During the first year of his tenure, it became clear that water and sewer needs had to be prioritized, he said.
At the time, he recalls the town facing a moratorium on development; moratoriums on development in Pittsboro date back to 1999 and span through 2011, when the town put in place functional limits on sewer capacity.
“[The town] had concluded that they were in the last few thousands of gallons of sewer capacity available, and they had no clear vision about how they were going to fix that,” Terry, who later served as Pittsboro mayor from 2013 to 2015, said. “So they basically slammed the brakes on development.”
Mayor Cindy Perry also spoke to the lengthy history of moratoriums on development in town, saying the focus on increasing the capacities of the town’s utilities just weren’t “a priority” in the 1990s.
“And being a small town and being one that didn’t have a tremendous amount of growth at the time, I don’t know that we thought that that was a huge problem, or there wasn’t a ready monetary solution for it — I think all of that combined,” Perry said.
Pittsboro’s wastewater treatment plant was built in 1977 and underwent a major upgrade in 1989. Its current capacity sits at 750,000 gallons of wastewater a day.
Last year, the National Pollutant Discharge Elimination System (NPDES) allowed the town to use up to 90% of the capacity, meaning Pittsboro’s current wastewater capacity is 675,000 gallons.
The town’s water plant was constructed in 1964 and is able to produce 2 million gallons per day of flow. Currently, the plant is handling about 25% of its production capacity.
Based on estimates from a report provided by Freese and Nichols — an engineering firm Pittsboro hired to explore the town’s capacity options — the town will be out of water capacity around 2024 or 2025 with the current 2 million gallons per day.
Terry also recalls serious sewer capacity and compliance issues around 2007. For example, every time a huge rainstorm passed through town, the plant’s small capacity would become overwhelmed, Terry said, leading to high levels of raw wastewater being dumped into the Haw River.
Ultimately, the town was able to build holding basins for the wastewater treatment plant through Recovery Act funds, which slowed down the transfer of wastewater. The water plant also added carbon filters, and the board lifted the development moratorium, Terry said.
“While we wanted to expand our capabilities — both water and sewer — first we had to solve the problem that we had, you know, two limping plants,” Terry said. “And we eventually got that done.”
And while he was able to target some of the town’s water and sewer issues during his five years as town manager, reducing the threat of receiving fines for contamination and putting out the immediate fire at hand, Terry said he unfortunately “ran out of time” to address other aspects of Pittsboro’s utility needs, like the expansion of capacities, when he retired in 2012.
“As many of these things do, it came down to money,” he said. “The wastewater treatment plant of the size that we needed, or we were authorized to build, was going to be on the order of $30, $35 million, something like that. And the debt on that — a little town like Pittsboro can’t absorb that much debt without massive increases in water and sewer rates and tax rates, and the sort of thing.”
Kent Jackson, who serves as town engineer, said around 2016, town staff and the commissioners started to consider the best course of action for Pittsboro’s sewer capacity was to send wastewater to Sanford.
“And then that has just evolved over this last six years to, well, maybe we need to further that, and not only send the sewer there, but just consider merging systems,” Jackson said.
In May 2022, the Pittsboro Board of Commissioners authorized former Town Manager Chris Kennedy to send a letter of intent to Sanford to merge the two municipalities’ utility systems.
There are a number of towns in North Carolina smaller than Pittsboro which still operate their own water and sewer systems, said Interim Town Manager Hazen Blodgett. But as regulations have changed over time, he said it’s become an increasingly technical skill to be a wastewater treatment plant operator.
Jackson reiterated Blodgett’s point, saying that one of the primary considerations for Pittsboro in merging is the extreme cost to keep up with changes to system requirements and capacity needs for utility systems.
“I think another point of that is the capital costs for the water and sewer systems are so excessive, that it really strains smaller jurisdictions to be able to afford the capital,” Jackson said. “So I think that is a big part of what leads them to merge, or what have you.”
When it comes to sewer issues in Pittsboro, the other major project being explored is the construction of the Sanford force main.
The force main, a 14-mile pressurized sewer pipe that will transport wastewater from Pittsboro to Sanford, has been in the works for a number of years. The project would see Pittsboro’s current 750,000-gallon wastewater plant decommissioned, as untreated sewer instead gets sent to Sanford’s Big Buffalo Wastewater Reclamation Facility, which has a capacity of 12 million gallons per day.
Pittsboro opened construction bids for the force main infrastructure project in early November. Since then, the town has received four bids each for two contracts. The first contract, with the base bid priced around $15 million, would convert Pittsboro’s Wastewater Treatment Plant to an equalization station and a lift station to collect and transmit wastewater to Sanford. The second contract has a base bid around $40 million and focuses on the effluent connection and line work for the force main to get to Sanford.
Aside from serving the city of Sanford, the municipality’s wastewater plant services other portions of Lee County and the Moncure megasite, and sells water and wastewater services to the town of Goldston.
And though Sanford’s water plant has 12 million gallons per day capacity, the city is planning on expanding the plant to 30 million gallons a day and is negotiating plans to sell water to nearby municipalities like Holly Springs and Fuquay-Varina, in addition to Pittsboro.
Victor Czar, Sanford’s public works director, highlighted the strength of the Cape Fear River as a raw water source and the steady, incremental growth of the utilities that matched the growth of the city.
“But it’s allowed us to grow and learn as we did, you know, versus if somebody with a smaller utility, and all of a sudden somebody wants to come and put a major development on top of you,” Czar said. “That would be difficult to handle here.”
Czar said the utility business is prone to economies of scale, an important factor in the merger conversation.
“The more gallons of water, whether it’s wastewater or drinking water that we send through a plant, the less it costs per gallon to treat,” he said.
In considering the benefits for Sanford in a merger with Pittsboro, Czar also pointed to the general growth coming to the region, referencing VinFast — the Vietnamese electric vehicle manufacturer that, back in March, was announced as the largest economic development project in state history — which promises to create 7,500 new jobs in Chatham County.
“There’s a little bit of rising tide lifts all boats kind of thing,” Czar said. “We like to see our neighbors be successful because we think that makes us successful.”
Over the next two decades, Pittsboro’s population is expected to grow by more than 1,000%. In that time, the town will have to find ways to meet the water and sewer needs.
Town staff see some benefits to growth, however. At the moment, Pittsboro has 2,100 customers for its utility services, Blodgett said. Chatham Park — the 7,068-acre development in the northern portion of town — will have 22,000 homes, meaning there will be more customers to split costs of debt service should the merger with Sanford take place.
By 2042, Freese and Nichols has estimated that Pittsboro will need about 10 million gallons of wastewater disposal.
“We need to be able to grow and be in control of our own destiny, as far as water and sewer [goes],” Blodgett said. “Because water and sewer does drive development.”
At a special meeting Dec. 13, Pittsboro’s board of commissioners heard an update from Freese and Nichols regarding the financial impact of the proposed merger.
The town had previously engaged in an agreement with the consulting group in late summer to conduct a two-phase study examining the proposed merger.
Phase I, which was presented at the Dec. 13 work session, provided an overview of capital improvements needed and the two revenue streams to pay for utilities — rates and system development fees (SDF). Phase II, which will only take place per the approval of both Pittsboro and Sanford, provides a deeper examination of details regarding the operations and maintenance of the merger, including system interconnections and how SDF collection would work with two separate municipalities.
Based on a capital improvements plan developed by Freese and Nichols, Pittsboro is facing around $380 million for water improvements and close to $190 million for wastewater improvements over the next 20 years.
“That’s a big push for any community,” said Account Director for Freese and Nichols Charles Archer. “And it’s particularly a big push, big effort for the town of Pittsboro.”
Archer also laid out a five-year capital improvements plan with estimated costs of $122 million, encompassing the major projects Pittsboro is undertaking:
• $55 million for the Sanford force main (based on the lowest bids)
• $37 million for the Water Treatment Plan expansion project in partnership with Sanford, Chatham County, Holly Springs and Fuquay-Varina
• $30 million for water line transmission from Sanford to Pittsboro
• $325,000 for wastewater planning in considering Pittsboro’s long-term needs
Based on Freese and Nichols’ model, SDF would pay for major capital projects while rates paid by existing and new customers would cover typical operating costs.
A system development fee refers to an upfront charge from a local government for water and sewer, intended to standardize how utility systems in the state calculate fees charged to new development for the impact they’d have on water and sewer capacities.
If the town sets the SDF at $38,000 per unit and 500 housing units are built a year, Pittsboro should expect $19 million in revenue per year to help pay for the capital improvements, Archer said. The revenue from the SDF would also mean Pittsboro should retire the first wave of capital investment in 10 years or less.
Should the town not implement a SDF, Pittsboro would have to increase utility rates 335% in the 2023-24 fiscal year to make up for the loss in revenue.
“It’s just not practical,” Archer said.
In September, the town applied for a $30 million grant from the Division of Water Infrastructure; without a merger, Pittsboro would only be eligible for $15 million in funding, Archer noted.
Pittsboro’s average water bill for residential customers is around $115 per month, while Sanford’s is around $59 per month. Archer also pointed to the economy of scale that Sanford benefits from, with 20,000 utility customers compared to the 2,100 Pittsboro has.
Based on the model used by Freese and Nichols, rates would have to increase in the next fiscal year by around 15%, in year four by around 2.5% or in year five by around 2%. In its presentation, Freese and Nichols proposed instead spreading out the increases over a five-year period at around a cumulative 2% each year, which also takes into account the additional ratepayers from a merger.
“If you were to adopt a model like we’re suggesting this evening, it will stabilize,” Archer said. “You’ve had rate increases over the last two years for your ratepayers, it will stabilize the rate of those increases to what we’re talking about, to something that’s manageable with a typical homeowner.”
When it comes to how Pittsboro’s capacities are expected to expand in the coming steps of the proposed merger and other developments in town and Chatham County, it’s a decades-long timeline.
At a Nov. 14 board meeting, Commissioner Kyle Shipp said with the increased capacity from the Sanford force main and the Chatham Park Water Recovery Center, Pittsboro’s sewer capacity should expand from 675,000 gallons to 1.25 million gallons a day.
The Western Intake Partnership — a raw water intake and pump station out of Jordan Lake — would also see an additional 6 million gallons a day for Pittsboro, but is only expected to be operational by 2030. Chatham Park and Sanford also have an agreement for a 3 million-gallon-a-day water line, which would stretch from VinFast’s Moncure megasite up to the town of Pittsboro and is expected to open around 2026.
In July, the town commissioners accepted a “distressed community” designation, and voted to become part of North Carolina’s Viable Utility program. The program and designation means Pittsboro is eligible for grant money — potentially in the millions — specifically intended to assist distressed utilities in addressing water and wastewater infrastructure challenges.
The town applied for two grants in September and will know whether the town will be recipients of grant funds in February. One of the grants would be used toward financing the force main, while the other would be used to finance bringing a water line from Sanford, Jackson said.
On Dec. 13, in separate meetings, both the Pittsboro Board of Commissioners and the Sanford City Council agreed to have Freese and Nichols proceed with Phase II of the merger evaluation.
The next steps, given that all groups are still on board after the evaluation, include developing an interlocal agreement and having an attorney specialized in utility mergers assist Pittsboro in the process of navigating the merger.
Perry said there are still questions to be answered and she’s hopeful that all three entities — Pittsboro, Sanford and Chatham Park — can operate cooperatively as a pathway forward with the merger becomes clearer.
“It’ll be a fascinating crossword puzzle to watch us be able to put it together,” Perry said.
Reporter Maydha Devarajan can be reached at firstname.lastname@example.org and on Twitter @maydhadevarajan.