Florence, S.C., to fund $537 million sewer, water upgrade with bonds and 5% rate hike

(UI) — City authorities in Florence, according to SCNow, expressed concerns that the city's current water infrastructure won't be able to support the completion of all permitted industrial and residential developments.

Michael Hemingway, the city's utility director, warned the Florence City Council members during a special meeting last week that Florence must start making plans for a thorough overhaul of the water and sewer system in all locations and facets.

Although planning has already begun, the project will need to be funded through the issuing of bonds totaling around $446 million over the next four years, as well as the imposition of higher fees.

"The reason we are here today is because of growth, and because of that growth, we have to have the revenues in place to be able to handle, not only the present capacity of the system we have in place, but future growth within the city," stated Michael Hemingway, the city's utilities director, as reported by SCNow.

The $810 million AESC US electric vehicle battery facility, which commenced work on June 7, is anticipated to place the most burden on the water and wastewater infrastructure. According to Hemingway, if the plant's three phases were completed, it would use around 3.3 million gallons of water and generate about 2.9 million gallons of sewage daily.

Hemingway asserts that the water system would be 630,000 gallons per day over capacity if the AESC US facility and the 3,300 residential units approved by the Florence City Council were built at the same time.

He did, however, emphasize that the sewer system would still have some capacity left—roughly two million gallons per day—even though this calculation just takes into account the projects that are now approved and does not take potential future expansion in the city into consideration.

Hemingway noted that because the AESC facility is located in a brand-new industrial park, the city aims to build infrastructure capable of allowing any foreseeable park extensions as opposed to doing so only to meet the needs of the AESC plant.

Hemingway emphasized that potential investors like to see that Florence already has the water and sewer capacity they need rather than having to wait for modifications to be put in place. He stated that the system would still have around four or five years of capacity left if nothing was done. However, he stressed the significance of remaining proactive and maintaining extra capacity in preparation for future expansion.

The first project on the schedule, should the proposal be approved, calls for enlarging the city's surface water treatment facility. The extension will increase the plant's current output from 10 million to 20 million gallons per day, and planning for it has already begun.

The expanded surface water treatment facility will be situated next to the current facility and operate as a single entity. The project is anticipated to be finished by December 2026, subject to Florence City Council approval.

The city will have the freedom to make minor infrastructure changes after the expansion to further increase the plant's capacity to 30 million gallons per day, as Hemingway said. At this time, the expansion's design is about halfway finished.

Hemingway stated that although the city is prepared to satisfy the demands of that facility, the enlarged water treatment plant won't be finished until the first phase of the AESC project is anticipated to go online. The other two phases are the ones that might endanger the present system.

The city's water supply will benefit from improved filtration methods as a result of the water treatment plant expansion. Although the city presently complies with all quality requirements, new equipment is being developed to assist in filtering out a class of chemicals known as PFAS, which research has lately connected to a number of health issues.

The city of Florence intends to make an investment in a new Jeffries Creek sewage line in connection with the development of the surface water treatment facility. Installed along Second Loop Road, this sewage line will continue to South Irby Street and link to the Stockade Drive wastewater plant, as shared by Hemingway.

The city plans to increase the wastewater facility's capacity from 22 million gallons per day to 33 million gallons per day in the future. Hemingway pointed out that the wastewater facility now has greater available capacity, therefore the wastewater expansion project provides for more time for consideration and construction than the surface water treatment plant. He said that the wastewater expansion's design is anticipated to be finished by the following fall.

Hemingway claims that the city's long-term plans include closing the Timmonsville wastewater treatment facility and moving the garbage now handled there to Florence utilizing brand-new infrastructure.

The city of Florence has spoken with First Tryon Advisors, its financial advisers, about funding these projects. They advise the city to issue three different bonds totaling about $446 million in borrowings. Additionally, alternative financial sources like cash reserves or state grants will need to be used to acquire an extra $91 million.

The costs associated with planning and designing the expansion of the surface water treatment plant, the AESC economic development project, the utility system engineering master plan, and the installation of automated water meters for billing purposes will be primarily covered by the first bond, which is proposed at $33.5 million.

In order for the bond to be paid off before the end of the year, President and COO Walter Goldsmith advised City Council members to take that into consideration while voting on the first bond at the July meeting.

The extension of the surface water treatment facility will be built with funds from the second bond, totaling $183 million. The second bond should be issued, according to Goldsmith, around August 2024.

The third bond, valued at $230 million, will cover the cost of the Florence East Industrial Park's sewage project as well as the expansion of the wastewater facility. According to Goldman, this bond is predicated on the assumption that the city will have $50 million in cash set aside to lower the total amount of debt the city must incur.

In August 2026, he advised, the third bond should be issued.

If Florence City Council members accept each bond, the city is expected to pay off its debt between the years 2028 and 2040 in an annual amount of around $28 million.

Goldsmith recommended that the city raise water and sewer rates at a higher-than-projected percentage over the following five years due to inflation and the anticipated projects.

According to a report from 2020, the city should boost its water and sewage charges by 2% and 3% year, respectively. However, according to Goldman, rates will need to go up even more.

He suggested that the city hike fees for both water and sewer by 5% the next year, putting the typical monthly bill at about $72.50. The city must increase both by 10% in 2025, and then by 9.5% in each of the three years that follow.

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