City, DOT remain at odds over payment

Published 5:11 pm Sunday, September 19, 2010

Contributing Editor

The City of Washington could take legal action in regard to a payment dispute between the city and the N.C. Department of Transportation.
During its meeting Monday, the City Council indicated it might come to that. The payment dispute centers around the relocation of utilities associated with the building of the U.S. Highway 17 bypass at Washington.
For more than three years, the council has discussed how to address paying close to $2 million in costs the city was charged for the relocation of water and sewer lines in the bypass corridor. The N.C. Department of Transportation, which required the lines be relocated, wants the city to pay the bill for that work.
Several years ago, DOT notified the city that it would be required to pay the approximately $1.75 million it cost DOT to move water and sewer lines in the way of the U.S. Highway 17 bypass project. Those lines were under DOT’s right of way in the project area. DOT billed the city $1,296,397 to relocate water lines and $631,732 to relocate sewer lines.
Subsequently, DOT reduced the amount to $1,687,430.19 million for the work on the utilities ($1,089,452.25 for work on the water lines and $597,977.94 for work on the sewer lines).
In January, the council authorized the city manager to negotiate with DOT a payment plan regarding the relocation of those utilities.
A Sept. 7 letter to City Manager James C. Smith from DOT stated: “As you also know, after requests by the City for a more flexible reimbursement schedule, NDCOT has authorized special terms for the reimbursement of these costs: a fifteen-year payment plan with no interest to be charged in the first three years. NCDOT then submitted the Utility Agreement for Project R-2510B, WBS 34440.5.7 for reimbursement of costs related to relocation and adjustment of sewer lines water pipes in accordance with the Flatiron/United estimated (bypass contractor), which Washington officials found reasonable.”
The letter notes that the city has not returned executed originals of agreements regarding the reimbursement, nor has the city submitted its first installment of the reimbursement due under the utility agreement that reflects the new amount the city owes to DOT.
“I am submitting both agreements to you and formally requesting that you submit an executed original of each agreement to me within 10 days from the date of this letter, by September 17, 2010. I am also formally requesting payment in the amount of $112,495.34 representing the first reimbursement payment under the Utility Agreement by September 17, 2010,” wrote Eugene A. Conti Jr., DOT secretary, in the letter. “This is not unreasonable since the City of Washington has delayed payment under their original authorization of November 14, 2005, and has had three years to budget for this obligation since the original Utility Agreement was submitted by the City.”
The letter warned the city that if DOT had not received the executed agreements and the first reimbursement payment by Sept. 17, DOT “will be forced to take all actions available to recover the sums owed … including, but not limited to, withholding Powell Bill funds for the City of Washington.”
The city has been working with its representatives in the General Assembly in an effort to either reduce the amount DOT says it is owed, if not eliminate it entirely. That effort continues.
The council, during its meeting Monday, indicated they consider the matter something the city did not initiate.
Mayor Archie Jennings, during discussion about the matter, said it is something the city “would litigate” if it determines that to be the best course of action.
City officials are not happy with DOT charging the city for relocating the lines. Under state law, municipalities with populations less than 5,500 people and all counties, regardless of population, are exempt from paying such relocation costs to DOT.
During a discussion of the matter earlier this year, Councilman Doug Mercer said the city is being “penalized” as a result of that law. He said it does not make sense that the city is being forced to pay for the relocation of water and sewer lines when “others are getting it for nothing.”
Mayor Pro Tempore Bobby Roberson, in a brief interview Saturday, said the current council, which took office in December 2009, wants to review the situation, with an eye toward resolving the matter soon.
“I think one of the things we have to do is look at different options,” Roberson said.
As a prelude to doing that, Roberson said, the council needs to review the original contracts between the city and DOT.
“I find it hard to believe the city would enter into a contract without knowing the costs to relocate the utilities,” Roberson said.
The city is willing to work with DOT to find a solution that’s amenable to the city and DOT, Roberson said.
Roberson did not rule out the city going to the General Assembly to seek help with the matter.
Earlier this year, the city and DOT jettisoned a proposal that called for the state to withhold about a third of the city’s annual Powell Bill allocation each year until the debt was paid or for 20 years, whichever came 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.