Jeff Hughes and Richard Whisnant UNC School of Government

1.Highlight the role of water in fostering vibrant and resilient communities

2.Identify water management “budgetary” (natural and financial) challenges

3.Share and “test drive” leadership strategies for addressing challenges

The EFCN will provide training and technical assistance to small public water systems in all fifty states and five territories to help local water systems achieve and maintain compliance with the Safe Drinking Water Act.

Workshops and trainings will be provided in these areas:

◦ Asset Management

◦ Water Loss Reduction

◦ Water System Collaboration

◦ Fiscal Planning and Rate Setting

◦ Energy Management

◦ Funding Coordination, and

◦ Managerial and Financial Leadership

◦ Contact Information:

Glenn Barnes 919-962-2789 505-924-7028

glennbarnes@sog.unc.edu

9:00-10:30 Water budgets: wise governance for water

Fundamental concepts of water resources and water service delivery

Regional and special issues for public systems in North Carolina

` Introduction to an exercise in water leadership

10:30-10:45 Break

10:45 -12:15 Leadership exercise: decisions where water leadership matters

12:15 - 1:00 Lunch – Swimming in the Reservoir (optional)

1:00-2:45 Exercise results and discussion

3:00 - 5:00 Ethics training

Norma Houston and Frayda Bluestein, UNC-CH School of Government

How big is a jurisdiction’s water supply?

How much demand is there for the same water?

How secure is a supply?

MGD (million gallons per day)

Acre-feet (more common out west)

Surface vs. groundwater vs. purchased

Watersheds: River basins, subbasins, drainage areas

Storage versus run-of-river

Forms of storage ◦ Reservoirs

◦ Off-stream reservoirs, e.g. quarries, borrow pits

◦ Decentralized storage

◦ The ground

Interbasin transfers

Reuse of water

Water efficiency/conservation

Stormwater for beneficial use: catchments

Desalination

Seasonality

Flow statistics: 7Q10

Treatment capacity permits

Withdrawal amounts ◦ No state limits except in treatment permits, but…

◦ State Environmental Policy Act review

Trigger: State permit or state funds for a project

◦ In-stream flow studies and the 20% rule

◦ Grandfathered systems

Look at the handout for Central City. Do you see any limits presented there?

Your system’s demand changes ◦ How tightly integrated are your development

approval, industrial recruitment, and water supplystrategies?

Major water users: other public water systems, energy, industry, agriculture

Seasonality and demands

Other factors that can change flows ◦ Upstream land use changes

◦ Reservoirs – new or changed operations

Accidents and terrorism ◦ Wellhead protection and source water protection

plans

Water supply watershed program

Stormwater/erosion & sediment control

Groundwater contamination

Saltwater intrusion

Financial viability (more on that later….)

Competing users ◦ Riparian rights

◦ New and expanded upstream

◦ withdrawers

1. Meet payroll and pay for fuel withouttransfers

2. Pay debt service

3. Cover capital deterioration

4. Cover known future needs

5. Investments in proactive water sourceprotection

6. Covering the impacts to downstream users

Beneficiaries vs. Polluters

Current customers vs. future customers

Customers vs. tax payers

The “State”

The “Feds”

The Bond Family

Comparison against other services ◦ Actual cost

◦ Increase in trends

Comparison with what your neighboring utility is charging

Consider average community household income

Consider income of most financially distressed households

http://efc.unc.edu/RatesDashboards/nc.html

The “average North Carolinian” pays $64.92/month for 5,000 gallons of water and wastewater

Medians: 0.9% water, 1.1% sewer

2.3% combined

NCLM and EFC Water and Wastewater Rates and Rate Structures in North Carolina, 2012

15

What Utilities Charge Customers Located Outside their Political Boundaries (Inside vs.

Outside)

All of the charges presented above refer to what utilities charge customers that live within their political

boundaries. Municipal utilities often serve customers who live outside of city limits, and a handful of other

utilities specify geographical boundaries within their service areas and identify their customers as residing

“inside” and “outside” those boundaries. In many cases, utilities charge different rates for customers living

inside or outside the boundary. Overall, 62 percent of water rate structures and 65 percent of wastewater rate

structures specified different rates for customers living outside, and the vast majority were for municipal

utilities. In fact, 84 percent of the rate structures from municipal utilities in the sample charged more for outside

customers than for inside customers. At 5,000 gallons/month, outside customers who are charged a different rate

than inside customers pay, at the median, a water bill that is 1.89 times more than inside customers. For

wastewater, the median ratio is 1.95. Most utilities with different outside rates charged less than double the

inside charges, as shown in Figure 24. Figure 25 shows median charges for combined residential water and

wastewater service for all utilities that have a separate rate schedule for outside customers for both water and

wastewater service. For utilities that charge for both water and wastewater, the median combined bill charged to

inside customers for 5,000 gallons/month is $67.48 compared to $115.33 for outside customers.

Figure 24: Ratio of Outside Residential Bills to

Inside Bills at 5,000 gallons/month (n=516 water,

n=423 wastewater)

Figure 25: Median Combined Residential Water

and Wastewater Bills for Rate Structures with

Different Inside/Outside Rates (n=258)

There are at least three reasons why utilities might charge more for outside customers. First: in the case of

municipalities, higher outside charges might be part of managing growth and annexation. Second: for all

utilities, outside customers are often inherently more expensive to serve because of lower densities and the fact

they reside farther, on average, from the water or wastewater treatment plant than inside customers. Extra costs

for distribution and collection systems justify higher rates for outside customers. Third: inside customers, as

citizens of the unit of local government that provides the utility service, bear more of the investment risks of

owning and operating a utility. They also bear more of the burden of financing and facilitating its operations

through their local government unit7.

7 AWWA (2000). Principles of Water Rates, Fees, and Charges. Manual of Water Supply Practices: M1. 5th Ed.

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Outside

Inside

Delegate responsibility to another provider

Share authority

Share assets

Federal government ◦ USDA – promote rural development

◦ EPA – promote environmental protection

◦ HUD – support for low and moderate incomecommunities

State government ◦ DENR – promote environmental protection

◦ Rural Center – promote rural economicdevelopment projects

◦ Department of Commerce – community andeconomic development

Current rates

Current debt

Size of customer base

Size of system assets

Operating costs

Projected needs

Projected customers and demand

Community characteristics

Decent County Central City

wells and septic

second home residential growth

little commercial or industrial

BUT a commercial opportunity (hotel/retail/shopping) has just shown up…

source water: surface intake, small in-stream reservoir

central water and sewer recent slow/no growth

Central City *source water: surface intake, small in-stream reservoir *central water and sewer *loss of major water customers *recent slow growth

Decent County *wells and septic *no stormwater services *second home residential growth *little commercial or industrial

Take a break…when you return, we’ll choose and get started

wwtp

Commercial?

The rise of special purpose water and wastewater institutions

The flexibility of interlocal agreements

What’s a governing board’s role in encouraging city and county staff to look outside the jurisdiction’s limits for strategic possibilities?

Residential customers

Commercial customers

Academics Staff The State Engineers and

consultants Media

Environmental Finance Center

efc.unc.edu

Water Wiki

water.unc.edu

And see handouts…

Jeff Hughes 919.843.4956 jhughes@sog.unc.edu Richard Whisnant 919.962.9320 richard_whisnant@unc.edu