Pender County staff and advisers warn utility CIP will need borrowing; rural water access requires grants and planning

Davenport and county utilities staff told commissioners at the retreat that Pender's public-utility finances are sound by many metrics but that an extensive capital program will require financing and careful planning.

Davenport reported roughly $65.8 million in utility debt outstanding and estimated FY25 operating revenue of about $12 million with operating expenses near $8.1 million, leaving roughly $6.7 million in net revenue compared with annual debt service of about $4.7 million (about 1.44 times coverage). Drew from the presentation: "That 1.44 times coverage is a solid level, but we would like to see it nearer 1.5 or higher," a Davenport presenter said.

The county's draft five-year utility capital improvement program (FY27'FY31) contains more than $200 million of projects, staff and advisers said. Davenport and utilities staff said existing unrestricted cash and reserves provide some capacity but not enough to cash-fund the CIP; the county will likely need a mix of debt financing, system development fees (SDFs), modest rate adjustments and operating revenue growth to maintain coverage targets.

Commissioners and staff also raised rural-water access as a priority. Several commissioners described long-standing requests in western Pender for water extension where low household density makes conventional financing infeasible. Staff described constraints on USDA subsidized loans and other revenue-based borrowing: lenders typically require demonstrable new-customer revenue or other security to underwrite long pipe runs. County staff recommended pursuing a multi-pronged approach: (1) a utility master plan and hydraulic modeling to prioritize extensions and improve grant competitiveness; (2) reassessment of system development fees (statutorily required every five years) to align fees with current costs; and (3) continued pursuit of state and federal grant programs and potential regional partnerships to fund low-density connections.

Utilities staff outlined an operational timetable for a Hamstead water plant: design complete, well installation anticipated in the coming months, permitting and discharge approvals required, with target operational milestones in late 2028 to mid-2029 depending on permits and construction sequencing.

The board asked staff to make the utilities master planning and SDF reassessment priorities in the upcoming budget cycle and to pursue legislative and grant avenues that would help rural areas qualify for funding. Commissioners also discussed operational options such as small, localized well-and-tank systems that could serve sparsely populated clusters while preserving options to tie into a regional system when capacity becomes available.

What happens next: staff said they will proceed with master planning and an SDF study in the budget process, continue pursuing grants and federal contacts, and bring updated projections and potential rate scenarios to the board for policy decisions.