Raeford reviews bulk water deal with Hoke County; engineers present multiple rate scenarios

City Manager Dennis Baxley introduced Charlie McGougan, P.E., of MBD Consulting Engineers at the March 15 called meeting to describe a draft water-purchase contract and the calculation of an "effective rate" for potential bulk sales to Hoke County.

Mr. McGougan said the draft assumes an expected usage of about 430,000 gallons per day with an instantaneous flow limit of 300 gallons per minute through the meter. McGougan explained that flows above the 300-gallon-per-minute threshold would trigger the need for distribution-system improvements on Raeford's side, and those upgrades would be the responsibility of Hoke County under the draft terms.

He described the effective-rate calculation as the sum of a volumetric charge and an allocation of fixed costs. The volumetric charge used in the draft is $1.10 per 1,000 gallons, derived from historical water-treatment-plant expenditures. Fixed costs identified in the analysis include $50,000 annually for combined administrative and operational costs and $212,601 annually for debt service tied to capital costs, including a required 12-inch transmission main and Water Treatment Plant improvements. Under the draft assumptions, the combined effective bulk rate is calculated at $2.80 per 1,000 gallons if the county's share of capital costs is rolled into the City's debt service. If Hoke County instead reimburses Raeford directly for its share of the capital costs, the effective rate would fall to $1.43 per 1,000 gallons.

McGougan said Raeford's Water Treatment Plant has averaged about 1.0 million gallons per day in recent years; supplying Hoke County at the projected level would raise average production to roughly 1.43 million gallons per day. He noted the plant's last major upgrade occurred in 1974 and estimated a new raw water well (including piping and a well house) would cost about $500,000, with site selection a likely challenge.

Council members asked questions about comparative rates and local service impacts. Councilman Wayne Willis asked about the cost of constructing a new raw water well; Mr. McGougan gave the $500,000 estimate. Manager Baxley said Fayetteville PWC's bulk water rate was $3.50 per 1,000 gallons, which council members used as a regional reference point. Councilman Johnny Boyles raised concerns about sufficient water for local fire protection; Councilmen Ricky Sandy and Charles Allen flagged possible constraints on the city's ability to expand service to new customers under a long-term bulk-water agreement and suggested the agreement be reviewed annually. After discussion the council agreed that MBD Engineering would develop a rate schedule and present it to the City Manager for council consideration.

The council did not take a formal vote to authorize a contract at the called meeting; the action taken was to request a formal rate schedule and return the item for future consideration.