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Should Fort Mill build water plant?

Going against the grain may be worth it - if it means gaining control of one's own destiny.

That's the idea driving the Town of Fort Mill to build its own water plant rather than continuing to buy water from the City of Rock Hill as its done for more than two decades.

The decision bucks a trend of water providers abandoning smaller, less efficient operations to become customers of regional systems, which tend to be larger and more efficient, industry professionals say.

Acknowledging that trend, Fort Mill town officials said they want a long-term solution to the town's water needs, one they believe will eventually mean lower costs for their residents.

With Fort Mill's agreement with Rock Hill expiring in 2014 town leaders had a decision to make, said Fort Mill Town Manager David Hudspeth.

The Fort Mill Township has grown by 42 percent over the past decade. The latest economic downtown has affected the housing market, slightly slowing growth.

Nonetheless, Fort Mill leaders don't see their town as being like other small towns. Its proximity to Charlotte means the growth will come.

Owning their own water plant will help them prepare for that growth on their own terms, they said.

"We're looking at the long term," said Paul Mitchell, Fort Mill's engineering director. "We're looking at what's going to happen to Fort Mill at build out, when what's now a 10,000 person community becomes a 40,000-person community."

Now seems to be the right time, they said.

"A lot of things aligned for us now," Hudspeth said. "While it may not be a once-in-a-lifetime opportunity, it kind of is."

Two approaching deadlines pushed the process: the end of the Rock Hill contract and legislation moving through the statehouse that will likely prolong the time it takes to secure permitting.

Fort Mill secured their rights in time, Mitchell said. Despite how the state enacts the new regulations, the town can move forward with building a plant and a new intake on the Catawba river. If they had waited, there's no telling when they'd be able to get a permit, Mitchell said.

Too many uncertainties on future costs also compelled their decision.

Even as Rock Hill's proposals grew from effectively doubling their rate to more agreeable rates equaling what Rock Hill's in-city customers pay plus added fees for overages, Fort Mill leaders "warmed" to the idea of having their own plant.

Controlling how much of their costs get passed on to customers was one consideration, said Fort Mill Councilwoman Guynn Savage.

"We began to proceed toward a decision to build our own plant and be in a little more control over our own destiny," Savage said.

The also saw a window of opportunity.

"Council's concern was none of us would likely be around this table 20 years from now," Hudspeth said.

Fort Mill Mayor Danny Funderburk said the project has Town Council's unanimous support.

Without the final details of the contract with Rock Hill, and without knowing exact costs of operating their own plant, Hudspeth admitted it's difficult to say with absolute certainty whether they'll be able to provide water cheaper to their residents than what Rock Hill could.

Still, the town has reports that help it understand what a new plant will cost and how that cost will be passed onto customers through rates - and both seem acceptable.

Last month the town raised water and sewer rates which will allow them to move forward with their plans. An average monthly utility increases $2.39 for water and $2 for sewer. Similar increases may follow, they said.

To curb costs, Fort Mill would like York County and Tega Cay to share in constructing and operating the plant. Their participation will determine how big the plant needs to be and its final costs. Because Fort Mill is negotiating with potential partners, Hudspeth said he couldn't release any figures.

The payoff may not come for several years, but Mitchell and Hudspeth said they feel confident Fort Mill customers eventually will see lower rates that are competitive with Rock Hill's.

Even though Rock Hill currently sells Fort Mill water what they charge in-city customers without penalties for overages, Fort Mill customers still pay more, picking up the cost of Fort Mill's delivery system, Mitchell said.

Bigger is better

Several industry professionals said Fort Mill's decision to build a plant, especially if it's a small one, is unusual.

Fort Mill currently purchases about 2 million gallons a day from Rock Hill. Sixty percent of that goes to customers in York County and Tega Cay.

A target size for building its own plant is about 3 million gallons a day with room for expansion, Mitchell said. The size could change, depending on the level of involvement from potential partners.

A 3 million gallon plant might cost between $12 million to $16 million, said Scott Willett, executive director of the Anderson Regional Joint Water System, which serves 15 customers ranging from water districts to municipalities.

Fixed costs for a plant include meeting federal and state health, environmental, and employment laws while maintaining a minimum staff needed to run a plant.

The more customers a system serves, the less each customer will have to pay to absorb those costs, Willett said.

That's why smaller communities that operate plants have been selling their systems and becoming customers of larger, regional providers.

Clemson University and the Town of Williamston who sold their operations and joined the Anderson system.

Harry Kirby, now the environmental compliance officer for Clemson University, was formerly the engineer in charge of the university's water filtration plant.

In 1989 the university decided to sell its plant and join a larger regional provider because it was too expensive to up fit the plant to meet new regulations. It had not been that long since the plant had been upgraded for compliance.

"Just two or three years before, we had upgraded our plant to make it pass regulations on how much water we could put through our plant," Kirby said.

"In the back of Clemson's mind," he said, was the idea that "when new regulations come out, you have a couple of years to respond. We were not able to respond in a quick manner as far as getting funding," he said.

Not that it's impossible to move forward with a small system, he said.

"If you've got that kind of money, and you're willing to keep the place staffed and willing to make the commitment to keep it maintained then it's doable," he said.

Rock Hill officials echoed concerns about the size of the plant and burden Fort Mill would take on.

Jimmy Bagley, assistant city manager and director of utilities in Rock Hill, said he was surprised Fort Mill backed out of negotiations. "I thought what we had was fair," he said.

"Some people don't mind paying more just because they get to call the shots," he said. "If I could get rid of the liability, I would get rid of it in a skinny minute."

The cost and responsibility required to maintain a plant such as Rock Hill's is tremendous, he said, adding, "You're not making money - it's a service."

"But those aren't reasons not to do it," he said.

Time to 'partner up'

Fort Mill officials are pushing their own deadline to close negotiations with potential partners and start designing a plant. The town will soon hire a financial advisor and others needed to design the plant.

To ensure water delivery to Fort Mill residents by the end of 2014, Mitchell said about 30 to 36 months of work must be done in the 32 months that remain. Designing the plant can only happen after they know how much water they'll need.

"We haven't been able to do that with the outstanding question of who's on board," Mitchell said. "It's time to pony up and partner up or step away."

Hudspeth said they'd need to know "by the end of the year, and probably by the end of this month" whether they'll have any partners.

"We'll proceed without any partners if we need to and then if they decide they want to be a partner and we can accommodate them in the future then we will," he said. "But we can't delay our schedule for a few months for them to make a decision."