Stalled project drains $700K
BY LISA STAYTON
MOUNTAIN CITIZEN
INEZ — A stalled infrastructure project has drained $700,000 from the Martin County Water District, leaving residents at risk of a water rate increase, officials said in a May 6 special meeting.
Nearly four years after announcing upgrades to the raw water intake and treatment plant, the Martin County Water Board faces tough financial issues.
According to board chairman Tim Thoma, delays in the raw water intake project have cost the district approximately $700,000 in unbudgeted expenses. That translates to a $427,000 operating deficit, he said.
The board entered executive session shortly after the meeting began with Martin County Judge/Executive Lon Lafferty joining them. After the closed-door discussion, Thoma commended Lafferty for working to find a resolution with the Big Sandy Area Development District, which administered the grant funding and contracts.
“I want to applaud the judge for his efforts,” Thoma said. “He worked on it for four or five months trying to resolve this problem. Unfortunately, the problem wasn’t resolved. We find ourselves here today with the question of ‘how do we move forward?’”
The raw water intake upgrade is part of a $3.5 million infrastructure contract with Pace Contracting, alongside improvements to the water treatment plant. The project officially began Oct. 4, 2021 with the district’s management firm, Alliance Water Resources (AWR) estimating a 300-day completion timeline.
As of this week that timeline has ballooned to 1,318 days — and the project remains incomplete.
To keep water flowing through 5 miles of pipeline from the Tug River to the Crum Reservoir, the district rented diesel-powered pumps. At times, it also deployed pumps at the reservoir as the water level dropped below intake valves that gravity-feed the treatment plant.
Thoma said the financial toll of renting pumps and purchasing fuel contributed directly to the utility’s $427,000 operating deficit.
“This board is faced with a very, very difficult problem from the perspective that the raw water intake has damaged this county to the tune of almost $700,000 to date,” Thoma said. “Had it not been for the raw water intake unbudgeted cost, we wouldn’t find ourselves in that position.”
Thoma advised the board to weigh the options: Obtain legal counsel to pursue damages or wait for the state Public Service Commission to require a rate increase to cover the deficit. A move by the PSC would shift the financial burden to customers.
“That’s a very bad situation to be in,” he said. “The truth of the matter is it’s not the ratepayers’ or this board’s fault that the raw water intake wasn’t administered properly and finished in a timely manner.”
The board authorized Thoma to sign an engagement agreement with the law firm Stites & Harbison to represent the district. Members Vernon Robinson, John Paul Hensley, Nina McCoy and Thoma supported the motion. Member Colby Kirk abstained.
“It’s our hope and our prayer that we can work this out,” Thoma said. “But there is no other choice in this matter.”
Board recovers $35K for diesel
Thoma also reported that the district resolved a related issue with AWR regarding diesel fuel purchases for the temporary pumps. From November 2023 through September 2024, AWR purchased more costly on-road diesel — rather than off-road diesel — at the district’s expense.
The board initially sought $49,700 to recoup the difference. However, members agreed to accept AWR’s offer of $35,000 to avoid additional legal costs.
“Alliance Water Resources’ contract requires them to manage these expense items in an efficient manner to optimize the total cost of operations and maintenance of the utility,” Thoma said after the meeting. “The use of on-road diesel was not required to operate the temporary diesel pump and, therefore, did not meet the conditions of their contract.”
Thoma expects to sign a release agreement with AWR this week.
In May 2024, AWR reported diesel costs were draining about $35,000 per month from the district. After joining the board in October 2024, Thoma arranged for the use of off-road diesel. That switch saved the district an estimated $7,000 to $8,000 monthly.
Lafferty wants accountability
In an interview Sunday, Judge Lafferty addressed the long-stalled water project, a situation he said has spiraled beyond the control of local water officials.
“The water district is in a terrible position through no fault of its own,” Lafferty said. “It is the grant recipient, but another agency administers the funds and the contracts for the project. Six years after the grant award, the project is still incomplete.”
The judge went on to describe the toll the delays have caused.
“A job that was supposed to help us has done anything but that,” said Lafferty. “For years, while the project continued to flounder, the district had no choice but to rent high-priced pumps and purchase expensive diesel fuel to keep water in the reservoir. That cost has only increased year after year.”
When Lafferty heard the current deficit was putting residents at risk of a water rate increase, he sought a resolution.
“Clearly, no one is minding the store, but there is plenty of finger-pointing,” he concluded. “Big Sandy Area Development District says it is not their responsibility. The water district says that as just the grant recipient, it lacks authority.
“At the end of the day, someone has to be accountable—instead of burdening the residents of Martin County with a rate increase. There is nothing left to do but go to court and let a court decide who is supposed to do what.”