City seeks to avoid paying $2M bill at one time

Published 12:16 pm Saturday, August 15, 2009

By Staff
Washington chargedfor expenses relatedto moving utility lines
Contributing Editor
Washington and the N.C. Department of Transportation are close to an agreement that will keep the city from paying nearly $2 million at one time for relocating water lines, sewer lines and power lines.
Instead the state will withhold about a third of the city’s annual Powell Bill allocation each year until the nearly $2 million bill is paid or for 20 years, whichever comes first. Powell Bill money, which varies each year, is used for transportation purposes such as paving unpaved roads. The amount varies because of the formula used to calculate the allocation. As a city or town’s population and miles of paved/unpaved roads changes, those parameters affect that city or town’s allocation.
City Manager James C. Smith, during the City Council’s meeting Monday, said the agreement has not been finalized, but he expects the state to honor the deal made with city and DOT officials met to discuss the matter.
The city expects to receive about $292,000 in Powell Bill money — which does not reflect a reduction by one-third — this fiscal year, said Allen Lewis, the city’s public-works director. With the reduction, that amount likely will be closer to $200,000. For fiscal year 2007-2008, the city received a little more than $354,000, Lewis said.
The city plans to use money from its water and sewer funds to replace whatever the state withholds from its annual Powell Bill allocation to the city, Lewis said. That money is the pro-rata share of the two funds’ part of the nearly $2 million bill from DOT, Lewis said.
“Basically, the Powell Bill fund will not lose any money,” Lewis said.
About two years ago, DOT notified the city that it would be required to pay the $1.75 million it cost DOT to move water and sewer lines in the say of the U.S. Highway 18 bypass project. Those lines were under DOT’s right of way in the project area. Counties and municipalities with populations of less than 5,000 people are not required to pay for such relocations.
DOT billed the city $1,296,397 to relocate water lines and $631,732 to relocate sewer lines.
“We couldn’t afford that so they offered to ‘lend’ us the money for three years without interest and then 12 years at 8%. That would have required us to pay out about $180,000 per year in (principal and interest). The new agreement will cut that in half, saving us (and the rate payers) $620,000,” wrote City Manager James C. Smith in an e-mail he sent to the media.
Later, DOT told the city that it would require the city to relocate Washington Electric Utilities’ 230 KV main power feed from Progress Energy at a cost of $750,000.
“Our line is already well above the minimum height to cross a road or rail line and there are standard methods of construction available to avoid interference during construction. We protested and DOT admitted they could instruct the contractor to use an alternative method to cross under our line,” Smith wrote in the e-mail.