KFP: Council approves application for drinking water funds

Elected officials vote unanimously to apply for $600,000 to repair water mains, replace meters

by David Anderson
Kinston Free Press

A week after the members of the Kinston City Council delayed taking a vote on going after state funds to repair part of the city’s water infrastructure, they voted unanimously on Tuesday to go ahead and apply for the funds.

“Water main replacement (funds) are very rare,” Mayor B.J. Murphy said Wednesday. “Our staff identified a problem with water leaks to the tune of at least 60 million gallons a year, so we need to start fixing that, but that is a very expensive proposition.”

City staffers had initially requested the council approve an application for $2 million in loans from the state’s Drinking Water State Revolving Fund — a $500,000 loan to replace aging and leaky water mains in the Lawrence Heights, Oriental/Elizabeth Avenue and Washington Avenue areas, plus $1.5 million to replace manual water meters all around the city with meters that can be read electronically and remotely.

Kinston would only have to pay back half of each loan over 20 years at 2.455 percent interest.

“There’s a number of water leaks and complaints in regards to discolored water, and between the water leaks and the constant flushing of the lines, staff has recommended that they be replaced,” Councilman Will Barker said Wednesday.

Council members delayed taking a vote on whether or not to go after the funds during their Sept. 19 meeting. Officials were concerned about adding another $1 million to the city’s debt, and the potential impact on utility bond covenants.

They wanted to delay taking action until they had more information, and a special meeting was held Tuesday for the vote. The deadline to apply is Friday.

City staffers brought back a reduced project — they proposed merging two applications into one, and seeking out $600,000 in funds to replace water mains in the designated areas, and replace water meters only in those areas, instead of the whole city.

If approved, half of that loan will be forgiven by the state, and the remaining $300,000 will be paid back over 20 years at $20,000 a year.

Interim Finance Director Catherine Gwynn told the council that will not have a negative impact on bond covenants.

The city risked defaulting on its utility bond covenants in the spring of 2010 because revenues were not in line with the amounts required by bondholders; the council was forced to impose significant water and wastewater rate increases.

“We felt like that was a better application,” Barker said of the decision to go after $600,000 instead of $2 million.

Murphy praised the council for its actions.

“I have served (as mayor) for almost two years now, and outside of our typical budget worksession season, this is the first time that we have called a special meeting of the council,” Murphy said. “I think it really showed that our council is concerned about water leaks, but they’re just as concerned about our financial stability and our stewardship.”

 

David Anderson can be reached at 252-559-1077 or danderson@freedomenc.com.