Pilot board makes 40-year decision


By Bill Colvard - bcolvard@MtAiryNews.com



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This financial analysis by McGill Associates compares upgrading Pilot Mountain’s existing water plant with interconnecting with Mount Airy and buying water from the city.


Submitted graphic | McGill Associates

Pilot Mountain Town Manager Michael Boaz stands at left, facing the town board, sitting in the next row, as they discuss options for the future of the town’s water supply. From left, they are Commissioners Gary Bell, Kim Quinn, Evan Cockerham and Linda Needham and Mayor Dwight Atkins. Town Clerk Holly Utt takes minutes in the back row.


Bill Colvard | The News

PILOT MOUNTAIN — The town board took action in a workshop meeting on Tuesday that will affect the town for at least four decades, according to the mayor and several commissioners.

After two years of discussion and preliminaries, the board voted unanimously in favor of creating a memorandum of understanding to enter into an interlocal agreement with the city of Mount Airy to provide the town with water for a term of 40 years.

The Mount Airy and Surry County boards of commissioners will both have to sign off on the plan for it to move forward. Mount Airy will address the issue tonight and the county at its next meeting on Oct. 1.

Pilot Mountain has already received $3.9 million in funding for the project from the State Water Infrastructure Authority, half of which is a grant, and half of which is a 0-percent interest, 20-year loan.

Until Tuesday night, it was undecided if the town would use the funding for an interconnect project with Mount Airy or upgrade its own existing water treatment plant. The state funding was secured with the option to pursue either project.

Before a decision was reached, as the pros and cons of each option were being weighed, Town Manager Michael Boaz said, “During your time on the board, this will be your biggest decision. It’s 40 years.”

During the meeting, Doug Chapman of McGill Associates, the engineering firm retained by the town for preliminary engineering work on the project, spoke to the board by speaker phone and walked them through the details of both water options.

The water plan upgrade would focus on equipment, reliability, water quality, and taking care of the most urgent needs first. The estimated cost of the plan was $2.73 million; half the cost of the project would be taken on in debt service (via a loan from the state) to be borne entirely by the town of Pilot Mountain.

The Mount Airy interconnection plan requires 33,000 linear feet of 12-inch water line, which would run alongside Old US 52. Gravity flow would get the water to Pilot Mountain, and Mount Airy would charge the town the same rate as its other bulk-use customers, such as Dobson and Cana, Virginia — currently $2.84/1,000 gallons.

The estimated cost of the project is $3.9 million, and again half the amount would be taken on as debt service; however, this time, the debt could be shared equally by Pilot Mountain, Mount Airy and Surry County.

The master meter would be at Simmons Grove Church Road, with future customers who tap in on the Mount Airy side going to Mount Airy, and the ones on the Pilot Mountain side going to Pilot Mountain.

The agreement contracts for a minimum of 100,000 gallons per day and up to one million gallons per day. Pilot Mountain currently uses an average of 250,000 gallons per day. More than one million gallons per day could be provided if needed, but with a premium on price and caveats on service.

Once all the financial factors were on the table, the board began debating the merits of the two plans in earnest.

The primary problem with upgrading the town’s water plant, as voiced by members of the board, was that the upgrade being considered was not a one-off. During the 40-year term being considered, other maintenance, improvements and upgrades would be needed. Boaz estimated that the work being funded by this project would itself only have a lifespan of 30 years, before substantial work needed to be done again, with other additional projects required as needed.

The 12-inch pipes used for an interconnect project would be a mix of ductile steel and PVC and would have a lifespan of 50 years, according to the McGill engineer.

“Fix things in the interconnect, and you’re done,” said Chapman.

The biggest sticking point with the interconnect system was surrendering control of the amount paid for water to an outside entity. Under the agreement, Mount Airy sets the rate they charge. Boaz said Mount Airy typically raises the rate 2 percent a year.

“I don’t want to speak for Mount Airy’s board,” said Boaz, “but it seems to me, they are of a mind that small, steady increases are better than occasional, larger ones. You can expect 2 percent a year.”

Boaz added that political pressure on Mount Airy’s commissioners would be the brakes that would slow the increase of rates.

“They can’t raise our rates without raising the rates on their own customers,” he said, reminding the commissioners of several recent sharp increases in Pilot’s water rates. “That was not popular.”

“My biggest problem is these continuous increases,” said Commissioner Gary Bell. “Two percent a year for 40 years.” He shook his head as his voice trailed off. “Our residents are already paying a lot for water.”

“If we’re doing our own production, will we be raising them any less?” asked Mayor Dwight Atkins.

Projections provided by McGill showed the increase in revenues needed for the upgrade plan to be 11 percent over the first ten years, versus increases of 3.5-percent for the interconnect plan in the same time period.

Those figures are for revenue increases, not necessarily rate increases, pointed out Chapman. Revenue increases could come from an increased amount of water sold, more of which would be likely with interconnection as new customers could be picked up along the route of the new water line to Mount Airy. Businesses along the Cook School Road interchange of U.S. 52/I-74 would be among possible new water customers.

“That’s what makes this so difficult,” said Commissioner Evan Cockerham. “There is no option without rate increases, but clearly, the best option is interconnect.“

Cockerham then made a motion to approve the interconnect plan. Bell seconded, though board rules do not require a second, and the board voted unanimously to approve the motion.

Boaz told the board that if Mount Airy approves the memorandum on Thursday, he will ask town attorney Ed Woltz to begin drafting the more detailed final contract, as the final party to the plan, Surry County, has already voiced tentative approval of the plan.

This financial analysis by McGill Associates compares upgrading Pilot Mountain’s existing water plant with interconnecting with Mount Airy and buying water from the city.
https://www.pilotmountainnews.com/wp-content/uploads/2018/09/file6-1-.pdfThis financial analysis by McGill Associates compares upgrading Pilot Mountain’s existing water plant with interconnecting with Mount Airy and buying water from the city. Submitted graphic | McGill Associates

Pilot Mountain Town Manager Michael Boaz stands at left, facing the town board, sitting in the next row, as they discuss options for the future of the town’s water supply. From left, they are Commissioners Gary Bell, Kim Quinn, Evan Cockerham and Linda Needham and Mayor Dwight Atkins. Town Clerk Holly Utt takes minutes in the back row.
https://www.pilotmountainnews.com/wp-content/uploads/2018/09/web1_IMG_1901.jpgPilot Mountain Town Manager Michael Boaz stands at left, facing the town board, sitting in the next row, as they discuss options for the future of the town’s water supply. From left, they are Commissioners Gary Bell, Kim Quinn, Evan Cockerham and Linda Needham and Mayor Dwight Atkins. Town Clerk Holly Utt takes minutes in the back row. Bill Colvard | The News

By Bill Colvard

bcolvard@MtAiryNews.com

Reach Bill Colvard at 336-415-4699.

Reach Bill Colvard at 336-415-4699.

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