1. Road Map to the Future: The Consolidation of Sewer Infrastructure in Rutherford County, NC November 16 th, 2015

2. Project Purpose To evaluate the best long term strategies for providing sewer service within the County and Towns.

5. Preliminary Data Acquisition

6. Technical Evaluation

7. Administrative / Management Evaluation

8. Financial Analysis & Model

9. Flow Analysis - Infiltration System Inch- Milesgpdim Infiltration & Inflow Percentage of Total Wastewater Cliffside5138245% Forest City3601,55544% Lake Lure148164071% Rutherfordton27476042% Spindale4301,06553%

10. Flow Analysis - Inflow System Average Daily Flow (gpd) Estimated Average Daily Water Consumption (gpd) Infiltration & Inflow (gpd) Estimated Sewer System Populationgpdpc Cliffside43,00023,50019,500130150 Forest City1,260,000700,000560,0005,650100 Lake Lure340,00097,000243,0001,000243 Rutherfordton500,000291,000209,0002,75276 Spindale870,000413,000457,0002,212205

11. Flow Analysis – Peaking Factor WWTP Permitted Capacity Avg. Daily Flow Peak Daily Flow Available Capacity Calculated Peaking Factor (MGD) FC - Second Broad WWTP4.951.2616.693.69 13.2 FC - Riverstone WWTP0.05< 0.005N/A0.045 N/A FC - DRG WWTP0.91InactiveN/A> 0.91 N/A Rutherfordton WWTP1.0 / 3.00.54.32.5 8.6 Spindale WWTP3.0 / 4.5 /6.00.876.15.13 7 Cliffside WWTP0.05 / 1.750.0431.1171.71 26 Lake Lure WWTP0.9950.340.63N/A 1.9

12. Staffing & Operations Recommended Collection System Staffing EntityFTE’s Recommended Current FTE’s Surplus (Deficit) Cliffside10.25(0.75) Forest City – 2 nd Broad87(1) Forest City – Riverstone1-- Forest City – DRG1-- Lake Lure30.75(2.25) Rutherfordton53.5(1.5) Spindale52.75(2.25)

13. Staffing & Operations Recommended WWTP Staffing EntityFTE’s Recommended Current FTE’s Surplus (Deficit) Cliffside10.25(0.75) Forest City – 2 nd Broad87(1) Forest City – Riverstone1-- Forest City – DRG3-- Lake Lure31(2) Rutherfordton62(4) Spindale83(5)

14. Financial Analysis & Model All project stakeholders assume that the full cost of service is currently being charged to their rate payers. A more regionalized approach will benefit rate paying customers through O&M efficiencies & economies of scale that can be recognized through the shared use of labor, equipment, purchasing agreements, & capital resources. These savings and efficiencies can be passed on to your rate payers in the form of reduced rates, or the provision of greater rate stability.

15. Existing Rates StakeholderBase Per 1,000 3,0005,00010,000 Cliffside $26.00$5.05$36.10$46.20$71.45 Lake LureInside$21.00$3.68$32.04$39.40$57.80 Outside$42.00$7.35$64.05$78.75$115.50 Forest CityInside$14.95$3.71$14.95$22.37$40.92 Outside$27.15$6.97$27.15$41.09$75.94 RutherfordtonInside$12.09$4.70$21.49$30.89$54.39 Outside$36.27$14.11$64.49$92.71$163.26 SpindaleInside$16.00$5.69$27.38$38.76$67.21 Outside$32.00$11.38$54.76$77.52$134.42 Avg $38.05$51.97$86.77 Avg Inside $26.39$35.52$58.35 Avg Outside $52.61$72.52$122.28

16. Financial Model AlternativeProbable Cost Lake Lure to Rutherfordton WWTP$9,901,000 Cost to Upgrade Lake Lure WWTP$7,014,000 Rutherfordton to Spindale WWTP$5,171,000 Upgrades to Spindale WWTP to Handle Rutherfordton & Lake Lure $11,205,000 Spindale to Rutherfordton WWTP$8,292,000 Spindale and Rutherfordton to Forest City WWTP$8,294,000 Cliffside to Forest City Second Broad River WWTP$5,423,000 Forest City Second Broad River WWTP Upgrades to Handle Cliffside, Rutherfordton, and Spindale $8,585,000

17. Options for Consolidation Finding an organizational solution for organizing a new sewer management entity must consider the varying interests & find ways to mitigate differing philosophies & equities. The best solution may not necessarily be the same in all instances. Flexibility should be considered as the most important aspect when initiating consolidation.

18. Options for Consolidation The list of viable alternatives was reduced to the following: Inter-Local Contracts or Inter-Governmental Agreements Joint Management Agency Sewer Authority Sanitary District County Sewer District

19. Findings Sewer systems should be run responsibly. Operational structures, policy & practices should remain sensitive to the specific needs of the geographic areas that are served by the selected management system. Consolidated management systems should provide administrative & management functions more efficiently & economically due to economies of scale. Economies of scale will result in lower long term O&M costs. Individually project stakeholders may not be able to fund substantial investments in new system capacity or new service infrastructure on their own.

20. Findings Financing mechanisms available to a new management entity should be flexible & should approximate those available to municipal & county government in NC. Improved planning & more effective investment of capital into the County’s sewer systems will lead to improved sewer system reliability; and, Both Spindale & Lake Lure are experiencing compliance issues associated with meeting their NPDES permit limits.

21. Findings All Project Stakeholders are: Understaffed; Under charging customers for the cost of operating; Do not appreciate the future costs associated with maintaining their assets; and, Are not sustainable under their current operating approaches.

22. Findings Maintaining the status-quo will result in the following: Lake Lure’s rate payers being subject to substantial rate increases to fund capital improvements. Solvency & operational issues associated with the long term viability of Cliffside as a standalone sewer entity. All project stakeholders not completely addressing I&I or maintaining their collection & treatment systems / funding their CIP’s as well as programmatic mandates. The possibility of inhibiting economic development because a project stakeholder may not have the resources necessary to fund the capital improvements associated with a potential economic development project outside their service area.

23. Impediments Selling existing wastewater assets to a new management entity is not fair & reasonable; Individual financial ability to implement better long term strategies for providing sewer service w/o supplemental financial assistance could create a hardship; The form of control of a new management entity; Setting equitable rate structure(s); Condition of the existing wastewater systems; and, Final determination that the project stakeholders intend to implement better long term strategies for providing sewer service.

24. Recommendations The project stakeholders should consider phased implementation of: The consolidation of Lake Lure, Rutherford & Spindale; and, The consolidation of Cliffside with Forest City. Short term - Inter-Local or Governmental Agreement(s) Intermediate term - Joint Management Agency Long term - a combination of management structures & entities to manage the complex nature of wastewater service within the County.

25. Recommendations 1. Consolidate Cliffside with Forest City Form an Advisory Committee between Cliffside, Forest City, & the County. Form an IGA for Forest City to treat Cliffside’s wastewater. Include the County in the IGA so the County can form a TIF District for the area that would become developable due to the availability of sewer service in an effort to help offset user charges.

26. Recommendations 2. Consolidate Lake Lure, Rutherfordton, & Spindale – Abandonment of Lake Lure’s & Rutherfordton’s WWTPs Form an Advisory Committee between Luke Lure, Rutherfordton, Spindale, & the County. Form multiple IGA’s in an effort to work towards a new sewer management system or entity: Between Lake Lure & the County for a TIF District Between Lake Lure & Rutherfordton for the treatment of Lake Lure’s wastewater. Between Rutherfordton & Spindale for Spindale to treat Rutherfordton’s wastewater.

27. Financial Model - Scenarios Consolidating Cliffside, Lake Lure, Rutherfordton & Spindale with Forest City Consolidating Lake Lure, Rutherfordton & Spindale Consolidating Cliffside with Forest City

28. Financial Model

29. Conclusions A regionalized approach would benefit Lake Lure, Rutherfordton, & Spindale in the long term: Through efficiencies in O&M; Through economies of scale like the shared use of labor, equipment, purchasing agreements, & capital resources; By eliminating discharges points in the County; Through efficiencies in financing opportunities; and, For economic development purposes.

30. Conclusions A regionalized approach would benefit Forest City in the long term: By eliminating a discharge point to the Second Broad River; Through the expansion of their service territory; and, For economic development purposes. A regionalized approach would benefit Cliffside in the long term: Because it would address solvency & operational issues; Through efficiencies in O&M; Through efficiencies in financing opportunities; and, For economic development purposes.

31. Questions?