ICWD/Polk County contract now dead in the water

Published 10:22 pm Tuesday, October 13, 2015

After more than a year, negotiations over a proposed water contract between Polk County and the Inman-Campobello Water District (ICWD) are over.

Following an opinion from experts Black & Veatch, ICWD sent notice to the county last week that ICWD will not edit the county’s latest draft of the contract and sees no need to pursue the matter further.

ICWD General Manager Jeff Walker sent the county an email late last week notifying the county of ICWD’s decision.

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“It would appear that, at least in one group of expert’s opinion, that the terms in the April draft were too generous to Polk County,” Walker said. “This effort began with the ICWD simply recognizing a need, and making an offer to our neighbors that would greatly benefit them but not harm the ICWD and in fact, benefit all of the customers for the long term. The ICWD did not see the county’s water resources and water system as a territory to be conquered or a jewel to be swiped as has been suggested by some. We made what we believed was a generous offer, but that was apparently not the opinion of the BOC and now given the opinion of Black & Veatch, the ICWD rescinds our offer to pool our water resources or future water resources with the county. In short, the ICWD does not see the need to pursue the matter further.”

Walker said there are several concerning issues for ICWD in the county’s draft, sent to ICWD in August, but none more so than the requirement for the ICWD to fully maintain the Turner Shoals Dam of Lake Adger for the full 75-year term of the contract.

“It has been my understanding that the board of commissioners (BOC) majority believe that given the value of the excess raw water and perhaps for other reasons, this and the other requirements indicated in the county’s August draft contract, make the deal more equitable,” Walker said. “Further, it would appear that the BOC minority is not satisfied with the August draft contract even including the requirement to maintain the dam, and would like to see a qualified professional or group of professionals evaluate the proposed arrangement.”

Right after ICWD hired Black & Veatch to evaluate the contract, a citizen group, Protect Polk Water, also hired McGill & Associates to evaluate the contract. Black & Veatch analyzed the Turner Shoals Dam in 2009 for the county and were asked by ICWD recently to reach out to experts not associated with the county or ICWD to give an opinion on the proposed contract.

Black & Veatch’s opinion

Black & Veatch concluded that the contract is not in the best interest of ICWD.

“We do not believe that it is in ICWD’s best interest to proceed with this partnership if it places undue hardships on ICWD customers,” stated Black & Veatch’s project manager, D. Morgan Young, Ph.D, P.E. “The original draft contract terms were particularly generous to Polk County. However, we believe that several of Polk County’s requests would place extreme financial burden on ICWD. Therefore, we recommend that ICWD not accept the revised contract unless significant modifications are made.

“Additionally, the cost estimate above (which is based on the original draft version of the contract proposed by ICWD) indicates that ICWD will invest more than $530,000 per year for a term of 30 years. We believe this may not be in the best interest of ICWD customers, and could potentially pose undue financial burden on ICWD with little return over the next 30 years.”

In Black & Veatch’s opinion, based on ICWD’s investments in Polk County’s distribution system for the initial term of 20-years (at $200,000 per year) and the investment into the Turner Shoals Dam, estimated at $3.6 million, the initial term investment is estimated at $7.6 million and does not include any of the costs ICWD would incur for construction of a water treatment plant, estimated at $25 million.

Black & Veatch said if ICWD were to construct an 8 mgd (million gallon per day) treatment plant and Polk were to pay 25 percent of the costs, Polk would contribute approximately $8,332,500 in new infrastructure investment.

Black & Veatch estimated, based on high-level estimates on similar conventional water treatment facilities, that ICWD could spend $25 million on a water plant, $5 million for an intake facility and $3,330,000 on transmission mains, for a total investment of $33,330,000.

“Using the values above, the combined investment that ICWD is making for the benefit of Polk County is nearly $16,000,000,” said Young. “Assuming that the value of this capital investment could be spread out over a 30-year period (the approximate ‘life’ of major equipment and material), this would average out to more than $530,000 per year. Based on values above, we believe that paying more than $530,000 per year for raw water is too high, especially in light of the fact that, based on ICWD’s anticipated demands, ICWD will not utilize this raw water supply for decades.”

Black & Veatch also said they believe ICWD’s initial contract, given to the county in April 2015 was “very fair and extremely generous to Polk County.”

“We have serious concerns about several key modifications that Polk County has proposed,” said Young in his letter to ICWD.

Black & Veatch also advised ICWD to not assume liability on a structure that it does not own. Black & Veatch said the strongly advised ICWD against covering annual maintenance and operation costs for the 75-year term of the contract. Lake Adger belongs to Polk County and is used for recreation and power production, Black & Veatch said, as well as future water supply.

“While ICWD may be using a portion of this water, they have guaranteed that Polk County will be supplied with sufficient treated water to meet its future needs,” Young said.

The report from Black & Veatch also cautioned about the age, classification and unknown future federal and state requirements for the dam.

“Lake Adger dam is approximately 90 years old and is classified by NCDENR (N.C. Department of Environment and Natural Resources) as ‘high hazard’ due to the close proximity of the Highway 9 bridge and other downstream structures,” stated Black & Veatch’s report. “Due to the age and type of structure, annual maintenance on this dam could potentially be significant. Any repairs on the concrete arches will likely require lowering the reservoir, which could present challenges as there are no lower level outlets. Additionally, the future of North Carolina and federal dam is uncertain. Future regulations could potentially require additional significant upgrades to the dam.”

Walker’s response to Polk

Walker said there will be those who will say Black & Veatch wrote their letter exactly how ICWD wanted, but nothing could be further from the truth.

“As you have surely observed, there have been those that have repeatedly stated their opinions as to why the ICWD offered to collaborate with the county in the first place,” Walker said. “Silly proclamations that the ICWD was somehow part of a scheme concerning Duke Energy’s transmission line project, nuclear power, bottled water, and similar fiction-fueled ideas, have had no bearing on the ICWD’s decision to not pursue an agreement with Polk County. We would not let the individuals who generated such nonsense cause us to end an effort that we have always believed would be very beneficial for our neighbors to the north and the region as a whole.

“Instead, it is the apparent distance between our two entities on what is equitable that will prevent this from moving forward. We have given it much contemplation and cannot think of a better overall solution for the future of drinking water in the county than what was offered.”

Walker said that doesn’t mean there aren’t other options for the county and perhaps Polk will be able to partner with a different entity or find a better solution that has not been thought of so far. If so, Walker said, ICWD will not be saddened and will be glad for the county if it finds another option.

“The ICWD has other options to pursue regarding water resources and now, we will be spending our efforts on those,” said Walker.

“Finally, please keep in mind that the ICWD will still continue to serve the customers in Polk County in the same manner we have since 2009. We will not raise rates or fees above what we charge other customers simply because our current agreement allows for it. Likewise, our level of service will not decrease in the slightest.

“Further, as always, when you or you staff need to, please feel free to continue to call us or ask for our assistance as you always have. The ICWD will continue to wish Polk County well in all its endeavors and particularly so with regards for water service for those individuals that need or want it.”

Polk commissioners respond

The Bulletin sent an email to all five commissioners asking them to respond to ICWD’s decision to halt the contract. Commissioner chair Tom Pack and commissioners Michael Gage and Ray Gasperson responded.

Tom Pack

“It appears that the majority of the Board of Commissioners negotiated a contract that was a much better deal for Polk County than the minority thought. To the point that once the experts reviewed the contract, their findings caused ICWD to back off,” said Pack. “If we cannot find another partner to contract with, the tax payers of Polk County are going to be on the hook paying for the dam repairs.  This is also going to delay, if not stop any plans to dredge Lake Adger.”

Michael Gage

“I was asked by the TDB how I felt about ICWD’s response to the proposed water contract between them and Polk County. Before I answer that question, let me as one commissioner thank all of the county’s staff that put in endless hours during the process of creating the document that was sent to ICWD’s board,” Gage said.

“I would also like to thank county manager (Marche) Pittman and county attorney (Jana) Berg for your due diligence during this entire process.

“The contract strongly favored Polk County, in my opinion this is why ICWD rejected it. If Polk County was giving the water away, like the vocal minority promoted to the public, ICWD would have signed on the dotted line. So it seems that this small group wasn’t looking out for ‘you’ the citizens of Polk County, they were just playing politics as usual with plenty of misinformation and scare tactics. It’s sad that we can’t all work together to find solutions to our problems.

“So how do I feel about ICWD response, ‘disappointed.’ If the contract had gone through, it would have freed up funds to be used to dredge Lake Adger. This option is in my opinion off the drawing table. Those funds will now be used to repair the dam. At this point all available resources will have to be used to complete the repairs.

“Thank you Polk County for your amazing support this past year, during the creation of the contract.”

Ray Gasperson

“I want to thank the hundreds of Polk County citizens, especially members of Protect Polk Water, who have stood with me in dogged determination that our valuable water resources be reserved for future generations,” Gasperson said.

“Now that the badly flawed water contract has been stopped, I plan to continue to seek expert advice and community collaboration as we develop a water management plan that benefits all of our citizens.

“I will now push hard for the necessary funding needed for critical dam repairs and lake maintenance. I will continue to oppose using the citizen’s Rainy Day Fund for questionable waterline extensions. I will also continue to support a good working relationship with ICWD.”