Costs related to Hibriten Drive project add to Lenoir's budget headaches

May. 29, 2013 @ 08:41 AM

Lenoir will have to borrow money to pay $1 million to the state for moving utility lines related to the Hibriten Drive interchange being built on U.S. 321, another complication to a 2013-14 city budget that officials fear is going to take a hit from tax reform proposals in the General Assembly.

City officials have said the city could lose as much as $1.7 million in revenue from sales taxes and franchise taxes on utility bills, depending on the details of what legislators adopt. The Senate passed its budget bill last week, and the House is expected to unveil its version of the budget soon.

The city could begin making payments as early as next March, said Radford Thomas, the city's director of public utilities. That is when the state expects to finish construction on the interchange.

The state requires municipalities with a population of more than 5,000 to reimburse certain costs related to state road projects. The city in recent years has lobbied state legislators to revise such policies to reflect an “understanding of the financial condition of cities our size,” Thomas said.

“A million dollars to the city of Durham is a little different than a million dollars to the city of Lenoir,” which is required to reimburse the costs within three years, he explained. City officials so far have failed to secure a repayment extension.

City Manager Lane Bailey and others have referred to the utility work at Hibriten Drive as an “unfunded mandate” that will force the city to take out a loan.

“We don’t have the reserves to tap for something like that,” Bailey said.

The city also could face unusual maintenance concerns and unknown costs later if there are leaks and other malfunctions because the state-hired road crews reburied the utility lines, in some locations, as deep as an additional 30 feet underground, Thomas said.

The reimbursement issue is among the reasons that the city's support of the interchange project has dwindled over the years. Officials sought improvements to the road more than 20 years ago, when trucks and other traffic from the area's furniture and other manufacturers created traffic congestion. By the time the project finally rose to the top of the construction list, closures and layoffs had diminished the need for it.

City Councilman Todd Perdue is among those who would rather have seen the $12.5 million for the project spent on things that would be “far more valuable to our community,” including repaving hundreds of miles of streets within the city limits and other improvements to infrastructure.

“It’s just a big hit to our budget,” he said. And “there’s nothing we can do about it now.”