Skip to main content
NC DEQ logo NC DEQ

Topical Navigation

  • Home
  • Divisions
    Divisions
    • Air Quality
    • Coastal Management
    • Energy, Mineral, and Land Resources
    • Environmental Assistance and Customer Service
    • Environmental Education and Public Affairs
    • Marine Fisheries
    • Mitigation Services
    • Waste Management
    • Water Infrastructure
    • Water Resources
  • Permits & Rules
    Permits & Rules
    • Permit Directory
    • State Environmental Policy Act (SEPA)
    • Express Permitting
    • DEQ Forms
    • Permit Assistance and Guidance
    • Rules & Regulations
    • Enforcement
    • NC DEQ ePayments
    • DEQ Permitting Transformation Program
    • Environmental Application Tracker
    • Pre-Regulatory Landfills Map
    • Title VI Compliance
    • Risk-Based Remediation
  • Outreach & Education
    Outreach & Education
    • N.C. Environmental Education
    • Distance Learning - Environmental Education
    • Environmental Justice
    • Educator Resources
    • Recognition Programs
    • Public Involvement Programs
    • Training
    • Recreation
    • Research
    • Grants
    • Conservation
    • Recycling
  • Energy & Climate
    Energy & Climate
    • Energy Group
    • Climate Change
    • Community Solar
    • Energy Assurance
    • Energy Efficiency and Weatherization
    • Energy Resilience
    • Transportation
    • Workforce Development
    • Offshore Wind Development
  • News
    News
    • Press Releases
    • Public Information Contacts
    • Environmentally Speaking Blog
    • Public Notices & Hearings
    • Events
    • Key Issues
    • DEQ Dashboard
    • Legislative Reports
    • Requesting Public Records
  • About
    About
    • Our Mission
    • Leadership
    • Boards and Commissions
    • Divisions
    • Green Square
    • Contact
    • Work at DEQ
  • NC.GOV
  • AGENCIES
  • JOBS
  • SERVICES
NC DEQ »   About »   Divisions »   Water Infrastructure »   Viable Utilities

Viable Utilities

What is a Viable System?

A viable system is a utility that functions as a long-term, self-sufficient business enterprise, establishes organizational excellence, and provides appropriate levels of infrastructure maintenance, operation, and reinvestment that allow the utility to provide reliable water services now and in the future.

  • North Carolina's Statewide Water and Wastewater Master Plan: The Road to Viability

The Master Plan presents the state's roadmap for viable water and wastewater utilities that safeguard public health, protect the environment, support vibrant communities and encourage economic development.

What is the Viable Utility Program? 

The new viable utility program provides funding to build a path toward viable utility systems using long-term solutions for distressed water and wastewater units in North Carolina.

The State Water Infrastructure Authority and the Local Government Commission have developed criteria to determine how local government units should be assessed for need and eligibility under the Viable Utility Reserve. Identified distressed units must:

  • Conduct an asset assessment and rate study
  • Participate in a training and educational program, and
  • Develop an action plan

The criteria were used to evaluate 496 local government units with water and/or sewer systems. This determination is an important first step in a closer evaluation of the utility's status. In addition, it is a factor in the allocation of $9 million in funding made available through Viable Utility Reserve legislation, Session Law 2020-79, signed into law by Governor Roy Cooper in July 2020.

VUR establishing legislation, signed by Governor Cooper in July 2020 (SL2020-79, House Bill 1087)

Initial funding for the Viable Utility Reserve (VUR) is $9 Million

VUR Process Overview- Implementation

The Viable Utility Reserve provides grants to:

  • Physically interconnect and extend public water or wastewater infrastructure to provide regional service.
  • Rehabilitate existing public water or wastewater infrastructure.
  • Decentralize an existing public water system or wastewater system into smaller viable parts.
  • Fund a study of any one or more of the following: rates, asset inventory and assessment, merger, and regionalization options.
  • Fund other options deemed feasible which result in local government units generating sufficient revenues to adequately fund management and operations, personnel, appropriate levels of maintenance, and reinvestment that facilitate the provision of reliable water or wastewater services.
  • Fund emergency grants for operating deficits.

 

 

What are the Assessment and Identification Criteria?

The State Water Infrastructure Authority and Local Government Commission adopted the following Identification Criteria to be used to identify distressed units:

1. A unit whose fiscal affairs are under the control of the Commission pursuant to its authority granted by G.S. 159-181 (“under Commission fiscal control”), or

2. A unit that has not submitted its annual audits for the last two (2) fiscal years to the Commission as required by G.S. 159-34, or

3. A unit with a Total Assessment Criteria Score that: a) Equals or exceeds 9 for units providing both drinking water and wastewater services, or b) Equals or exceeds 8 for units providing only one service, either drinking water or wastewater, or

4. A unit for which other information is available to or known by the Authority or Commission that reflects and is consistent with, but does not expressly appear in, the Assessment Criteria to account for situations in which the Assessment Criteria score does not wholly or accurately reflect a system’s level of risk due to the limitations of available data.

Local Government Units Assessment Scores Based on 2019 Data

Background

Session Law 2020-79 required the State Water Infrastructure Authority and Local Government Commission to develop criteria to assess and review local government units, and to utilize the assessment and review process to identify distressed units.

In Oct. 2020, the staffs of the Division of Water Infrastructure and the Commission presented the Authority and Commission with proposed Assessment Criteria. They then developed criteria for identifying distressed units (Identification Criteria). At their respective Nov. 2020 meetings, the Commission and the Authority adopted the Assessment Criteria and Identification Criteria. At the Authority's Dec. 2020 meeting and the Local Government Commission's Jan. 2021 meeting, a draft list of local government units (LGUs) designated as distressed was reviewed. Approval by both agencies is required. Four LGUs were officially designated as distressed at the respective Nov. 2020 meetings of the Local Government Commission and State Water Infrastructure Authority (see below). Four additional LGUs were approved by the State Water Infrastructure Authority at its Feb. 2021 meeting. 

Designation of Units

The Division of Water Infrastructure, which serves as staff for the State Water Infrastructure Authority, along with the Local Government Commission, compiled data for local government units to begin identifying distressed units. The first four officially designated as distressed are: Bethel (Pitt County), Cliffside Sanitary District (Rutherford County), Eureka (Wayne County), and Kingstown (Cleveland County). Each of these towns was allocated a grant, ranging from $100,000 to $400,000, to be used to assess the condition of their infrastructure, study rates, or look into alternatives that provide a long-term, viable solution.  These towns represent growing economic challenges for rural parts of the state and the struggle to maintain viable water systems.

The Authority considered 111 additional local government units for the designation at its April 14 meeting. Towns had been given an opportunity to share information that might affect their assessment. Designations are based on distressed unit criteria approved by the Authority at its November meeting and developed in collaboration with the Local Government Commission.

After considering the additional information from the utilities on the list of potentially distressed utilities, the following determination was made:

  • 87 local government units were identifies as distressed.
  • 18 were placed on hold pending additional evaluation.
  • three were removed from the list when it was determined the LGU no longer owned their utility.
  • three received a reduced score, removing them from distressed designation.

(The Authority designated 8 units as distressed at previous meetings.)

 

 

 

 

Benefits of the Viable Utility Program

There are many challenges for water utilities across the state, such as declining population, loss of larger water customers, recruiting and retaining staff, and increasing costs for replacement of aging infrastructure.  The Viable Utility Program provides a process to address these challenges.

The state’s master plan provides a vision of utility viability to address the state’s water infrastructure needs.  How do utilities develop a business plan that addresses the numerous challenges they face and, at the same time, maintain viability?

  • The Viable Utility statutes (SL2020-79, House Bill 1087) provide a broad framework and process for ensuring the utility has a long-term financial plan that ensures viability.
  • May provide a better understanding of the true cost of providing water services with board members and customers.
  • Provides a mechanism for discussion of these issues with the utility’s board.
  • Many resource agencies are focused on assisting utilities as they face their challenges, including those utilities designated as distressed.  

 
  • In water infrastructure planning, it’s important to first know what you have along with the condition and location of what you have. With so much water infrastructure buried underground, it can be difficult to know which capital projects to prioritize.

  • Asset Assessment can help with getting the process started.

  • Aging infrastructure costs more and more each year- projects are more expensive to do in the future- it’s better to address them now.

  • Consistently, across the nation, the number one issue in water infrastructure is replacing infrastructure. The second issue is determining how to pay for this.

Once a local government unit (LGU) is designated as distressed, the division can leverage various funding programs to fit the individual LGU need.

  • Division of Water Infrastructure Funding Programs

  • Viable Utility Reserve- new in 2020: VUR establishing legislation, signed by Governor Cooper in July 2020 (SL2020-79, House Bill 1087)

Many kinds of assistance may be available to designated units

  • Asset Assessment: Asset Inventory and Assessment Grants

  • Rate Study

  • Merger /Regionalization options: Merger / Regionalization Feasibility Grants

  • Interconnection

  • Decentralization

  • Rehabilitation or replacement

  • Emergency operating funds (ONLY if the Local Government Commission has assumed financial control of the LGU)

Designation as distressed can facilitate development and implementation of action plans

  • Education and training for local leadership so they have information to share with citizens on the true cost of services they provide.

  • Long-term planning ensures viability.

  • Helps utilities break the cycle of relying on grants to alleviate difficult, acute or emergency infrastructure situations

Units Designated Under Identification Criteria

As defined in Session Law 2020-79, a distressed unit is a public water system or wastewater system operated by a local government unit exhibiting signs of failure to identify or address those financial or operating needs necessary to enable that system to become or to remain a local government unit generating sufficient revenues to adequately fund management and operations, personnel, appropriate levels of maintenance, and reinvestment that facilitate the provision of reliable water or wastewater services.

As discussed above, the State Water Infrastructure Authority and the Local Government Commission adopted Identification Criteria to be used to identify distressed units. Units are considered distressed after formal designation by both the Authority and the Commission. Units that are designated must comply with the statutory requirements of the VUR program as described in Session Law 2020-79. The document below includes 95 units of local government that are currently designated as distressed.

 

North Carolina Local Government Units Designated as Distressed by the State Water Infrastructure Authority and the Local Government Commission and Eligible for VUR Funding, Including ARPA 

 

 

 

Division of Water Infrastructure Funding Programs

In addition to funding through the new Viable Utility Reserve, the Division offers a variety of funding programs and leverages them to find the best possible funding scenario to meet the needs of individual units. The programs are described at the link below.

  • Division of Water Infrastructure Funding Programs

Water and Wastewater Needs in North Carolina 

The capital cost of water and wastewater infrastructure needs in the state ranges from $17 to $26 billion over the next 20 years- more likely at the higher end of the range.

  • Water Infrastructure needs = $10 to $15 billion

  • Wastewater Infrastructure needs = $7 to $11 billion

(These are capital costs only- the costs of operations, maintenance and on-going renewal/replacement are not included.)

Even if enough funds were available to address all of today's capital needs, funding by itself does not safeguard long-term viability. Comprehensive management of a water utility's infrastructure, organization, and finances is needed.

Viable Utility-related News (articles, recent webinars, and television content)
  • March 2021: Article from Southern Cities Magazine, a publication of the N. C. League of Municipalities: Utility Regionalization

  • November 2020: Article from "Circle of Blue", a national water news service: North Carolina panel designates financially distressed water systems

  • Oct. 2020:  Video of Program on UNC-TV: ncIMPACT- Water Infrastructure Challenges: Panel Participants: Kim Colson (Director, Division of Water Infrastructure/DEQ and Chair, State Water Infrastructure Authority; Mayor Gloristine Brown (Town of Bethel); and Greg Gaskins (former Secretary, Local Government Commission, NC Department of State Treasurer).

  • June 2020 Webinar Video: NC Rural Center 'Rural Talk' Session-Water Infrastructure:   (Transcript of webinar) Panel Participants: Rose Williams (Assoc. Exec. Director of Public and Government Affairs, NC League of Municipalities; Bethel Mayor Gloristine Brown;  Kim Colson (Director, Division of Water Infrastructure/NCDEQ and Chair, State Water Infrastructure Authority; Sharon Edmondson (Secretary, Local Government Commission and Deputy Treasurer, State and Local Finance Division, NC Department of State Treasurer; Sen. Don Davis (NCGA); Rep. Chuck McGrady (NCGA)  

  • June 2020: Article from "Circle of Blue", a national water news service: North Carolina in early stages of financial review, sees potentially large number of distressed water systems

 

Viable Utility-related Press Releases
  • NC Communities Awarded $282 Million for Water and Sewer Improvement Projects 

  • State Water Infrastructure Authority Adopts Distressed Unit Assessment and Identification Criteria

Water Infrastructure

  • I Have Funding
  • I Need Funding
  • News, Events and Training Opportunities
  • State Water Infrastructure Authority
  • The Division of Water Infrastructure
  • Viable Utilities

Share this page:

  • Facebook
  • Twitter
  • Email

How can we make this page better for you?

Back to top

Contact Us

Physical Address
North Carolina Department of Environmental Quality
217 West Jones Street
Raleigh, NC 27603 Map It
877-623-6748

Mailing Addresses

Work for Us

  • Job Opportunities at DEQ
  • For State Employees
  • DEQ Intranet

Twitter Feed

Tweets by NC DEQ

Follow Us

  • Facebook
  • Twitter
  • Instagram
  • YouTube
  • LinkedIn
  • DEQ Employee Directory
  • Translation Disclaimer
  • Accessibility
  • Terms of Use
  • Privacy Policy
  • Open Budget
NC DEQ
https://deq.nc.gov/about/divisions/water-infrastructure/viable-utilities