Fayetteville utility warns $80.6 million in federal grants frozen, annexation costs balloon; council receives annual report

Fayetteville Public Works Commission Chairman Chris Davis told the Fayetteville City Council on March 13 that $80,600,000 in awarded grants and low-interest loans for electric, water and wastewater projects are currently frozen by federal funding reviews, and that if that funding is lost the utility’s “only option is to look at rates.”

The utility also reported that Phase 5 of its annexation project — originally estimated at about $240 million — now has projected costs over $400 million, and the commission estimated another $183 million would be required over the next 10 years to complete remaining work. The PWC presentation listed major projects affected by the federal review, including advanced electric-system technology, a granular-activated carbon filtration system at the PO Hoffer water treatment facility to address PFAS, and lead/galvanized service line replacements.

The report emphasized PWC’s financial contributions in 2024 — more than $25 million returned to the city in the form of payments in lieu of taxes, annexation-related contributions, street lighting, storm drainage and other support — and noted multiple industry awards the utility received last year. But Chairman Davis warned that frozen federal awards would stall critical upgrades. “If the federal funding support goes away, it’s apparent that PWC’s only option is to look at rates,” he said.

Councilmembers asked about long-term planning for power generation and resilience; Davis said the commission and new CEO are discussing alternative energy, redundancy and system upgrades and that PWC intends to be “a part of the entity that delivers a future to this region that includes alternative forms of energy.” He said some projects supported by Department of Energy and other awards are on hold pending federal reviews.

Councilmember Charles Thompson moved to receive the report; Councilmember Liz Marie Hondros seconded. The motion to receive the PWC annual report passed unanimously.

The presentation also gave status updates: PWC reported starting engineering for new water lines to Grays Creek Elementary School at no cost to current customers and initial work on two community solar sites, and invited council members to facility tours. The report said the utility celebrated its 120th anniversary in 2024.

Council members and commissioners described coordination among the city, county and PWC as important for economic development, citing potential industrial and data-center demand for power and the need to “go big” together when pursuing infrastructure investments.

The council took no further action beyond receiving the report and asking staff to continue monitoring the federal funding situation and the Phase 5 annexation budget.