January 16,2003

MEMORANDUM
To: The Honorable Fountain Odom, Co-Chairman;The Honorable Pryor Gibson, Co-Chairman; Members of the Environmental Review Commission
From: Bill Holman, Executive Director
Re: Clean Water Management Trust Fund's Annual Report

Introduction
I am writing on behalf of the Board of Trustees and staff of the Clean Water Management Trust Fund to thank the members of the General Assembly of North Carolina for your strong support for investments in clean water and to make our annual report to the General Assembly and the public.

Thanks to the General Assembly North Carolina continued to make substantial progress in protecting and restoring water quality in 2002, despite one of the worst fiscal crises in years. As we face another challenging budget year ahead, the future of our state's environmental and economic health depends on your continued support and interest.

Background
The General Assembly for many years has advocated non-regulatory, incentive-based programs to complement North Carolina's environmental regulatory and educational programs and to ensure both a strong economy and healthy environment.

The 1996 General Assembly created the Clean Water Management Trust Fund (CWMTF) (GS 113-145) "to clean up pollution in the state's surface waters and to protect and conserve those waters that are not yet polluted." The CWMTF "shall be used to help finance projects that specifically address water pollution problems and focus on upgrading surface waters, eliminating pollution, and protecting and conserving unpolluted surface waters, including urban drinking water supplies" and "to build a network of riparian buffers and greenways for environmental, educational, and recreational benefit."

The CWMTF is an independent agency housed for administrative purposes in the Department of Environment and Natural Resources (DENR.) An eighteen-member board of trustees establishes criteria, allocates funds and approves grants, makes rules, and hires the executive director. Six members are appointed by the Governor; six, by the General Assembly upon the recommendation of the President Pro Tempore of the Senate; and six, by the General Assembly upon the recommendation of the Speaker of the House. An advisory council composed of the Commissioner of Agriculture, Chair of the Wildlife Resources Commission, Secretary of DENR, and Secretary of Commerce or their designees advises the board of trustees.

Local governments or other political subdivision of the state, state agencies, and nonprofit conservation organizations, such as land trusts, may apply for grants. Deadlines for applications are June 1 and December 1 of each year.

The board of trustees typically meets ten times per year - six times across the state and four times in Raleigh. In 2002, the board met in Blowing Rock, Lumberton, Charlotte, Elkin, Tyrrell County, Ashe County, Troy, and Raleigh. In 2003, the board plans to meet in Greenville, Gastonia, Fayetteville, Cullowhee, Rockingham County, Jacksonville, and Raleigh.

Moneys from CWMTF may be used to acquire land or easements for riparian buffers and watersheds; to restore wetlands, buffers and watershed lands; to repair failing wastewater treatment systems; to improve stormwater controls and management practices; for planning, and for administration and staff. The board works through three principal committees: acquisitions; infrastructure/wastewater, and restoration/stormwater/planning.
CWMTF applications forms for grants, grant evaluation guidelines, enabling legislation, lists of the board of trustees, staff directory, and news releases and other reports and documents are available at www.cwmtf.net.
The executive director, deputy director, senior scientist, administrative officer, public information officer, and administrative assistant are based in the central office in Raleigh. Currently, four field representatives cover the coast, piedmont and mountain regions of the state. A part-time water quality advisor is home based.

Progress
Last year, much attention was focused on North Carolina's water resources because of the extreme drought, which caused widespread agricultural damage and forced communities all across the state to take mandatory conservation measures. During this time, the importance of maintaining quantity of our water resources took center stage.

The drought may have focused attention on the amount of our water resources, but it also served as a reminder that North Carolina's water quality is still one of the state's top environmental issues. In its North Carolina 20/20 report, the state's Progress Board laid out a series of performance targets to improve environmental quality by the year 2020. Those targets included increasing the percentage of water bodies fully supporting their uses, ensuring that 100 percent of all North Carolinians have access to clean and safe drinking water, protecting and permanently preserving one million acres by 2010, and improving water quality to ensure the continued viability of the state's fisheries.

In almost all the areas cited by the North Carolina 20/20 report, CWMTF grants are playing a role in reaching those performance targets. Here are some examples:

    • The CWMTF and its partners have helped protect 2,422 miles of riparian buffers and preserve 203,966 acres of land, thereby ensuring streams, rivers and lakes can continue or will be able to support their uses. In total, CWMTF has funded 61 stream and riparian buffer restoration projects totaling over $158.8 million.
    • The CWMTF has funded 61 wetlands restoration projects totaling over $42 million to help maintain and preserve these important ecosystems.
    • The CWMTF has assisted 74 local governments with wastewater improvements, investing over $65 million to reduce discharges and more effectively treat wastewater so that fewer nutrients and other pollutants enter our rivers.
    • CWMTF grants have funded 24 stormwater management projects totaling $25.3 million to reduce pollution from urban runoff and decrease flooding. .
    • CWMTF grants have been used for watershed planning projects, and to purchase land surrounding water supply watershed lakes to make sure some of the state's largest population centers are guaranteed clean drinking water.
    • CWMTF acquisition grants have been used to protect waters in areas closed to shellfishing, or to protect important nurseries for key fisheries.

     

All of these efforts and the target measures to which they correlate are just as important to North Carolina's economic well-being as they are to the health and safety of her citizens and the environment. They enhance both the recreational and commercial fishing industries, reinforce North Carolina's travel and tourism industry, and help maintain North Carolina's high quality of life.

As the Progress Board states in its report, "…states can and do have strong economies and simultaneously protect the environment. In fact, the states with the strongest environmental records also claim the distinction of having the best job opportunities and climate for long term economic development."
Thanks to appropriations from the General Assembly CWMTF approved 89 water quality grants totaling over $64.9 million in calendar year 2002.

As of December 1, 2002, 840 applicants had requested over $933 million for water quality projects. Since 1997 the board of trustees has approved 372 grants for a total of $300.4 million. CWMTF grants have leveraged at least $499 million in private and other public funds.

The CWMTF continues to be an important tool in helping local governments protect their water resources. Since 1996, $142.9 million - nearly half of the $300.4 million in CWMTF grants issued - have been awarded to local governments. These grants have funded:

  • Improvements to wastewater treatment facilities
  • Stormwater management
  • Removal of septic tanks/straightpiping
  • Wetlands and stream restoration
  • Greenway and open space acquisition

These projects are increasingly important to cities and counties as they experience increased growth and development, and as they face severe water usage issues in light of the 2002 drought.
2002 Examples

In May, the state completed the second and final phase of the $4.2 million purchase of Bird Island in Brunswick County. With the help of a $2.75 million CWMTF grant the Division of Coastal Management has added Bird Island to its Coastal Reserve system. The acquisition protects 1.2 miles of ocean beach and 1.5 miles of shoreline and extensive marshes for a total of nearly 1,300 acres.

The CWMTF awarded a $444,000 grant to the Southern Appalachian Highlands Conservancy to help purchase an important conservation easement at the headwaters of the Catawba River in McDowell County. The easement on 180.5 acres will extend the protection already provided by the U.S. Forest Service to the source of the river by an additional mile. As part of the project, a conservation easement will be donated on the 137-acre uplands portion of the property for a total of 317.5 protected acres.

Last year, the City of Goldsboro's innovative constructed wetlands project to reduce pollution in the Neuse River was completed. The $3.2 million venture was funded in part with a $1.6 million grant from CWMTF. This project is only one of several being taken by the city to curb pollution in the Neuse. Goldsboro has reduced discharges of nitrogen.

Two early CWMTF grants are coming to fruition in the Little Tennessee watershed. The Macon County Greenway Project received a $3.8 million CWMTF grant for restoration of wetlands and buffers along the river in Franklin in 1997.

Macon County government partnered with the Macon County Soil and Water Conservation District to restore riparian and wetland habitat in the six-mile portion of the river that flows through the town of Franklin.
In conjunction with the restoration, the county has developed a greenway along this section of the Little Tennessee, enhancing its environmental, recreational and economic value to the community.

Last year, the CWMTF helped fund the purchase of the 2,168-acre North River Farms in Carteret County for wetlands restoration. The property is adjacent to the North River, Core Sound, and the upper reaches of Jarretts Bay, and was drained and converted to cropland over the last several decades. Three creeks originate on the land. Many of these surrounding wasters are now too polluted for shellfish harvest because of high bacteria counts contained in runoff from drained land.

Conservation Reserve Enhancement Program (CREP)

CWMTF's $40 million investment in the Conservation Reserve Enhancement Program (CREP) will leverage $221 million in US Department of Agriculture and $10 million in other funds over the next six years. The Division of Soil and Water Conservation requested $4.5 million in June 2002 from CWMTF to continue CREP. CWMTF approved expansion of CREP into the Pasquotank, Roanoke, White Oak, and lower Cape Fear Rivers last year. The Chowan, Tar-Pamlico, Neuse, and upper Cape Fear Rivers were already covered.

CWMTF is working with DENR's Division of Soil and Water Conservation, local soil and water conservation districts, the US Natural Resources Conservation Service, and others to leverage federal Farm Bill conservation programs.

Recent Legislative Action

The 2002 General Assembly demonstrated that protecting and restoring water quality remains a high priority of the State and appropriated $66.5 million ($70 million minus a 5% budget cut) to CWMTF in fiscal year 2002-2003. The Office of State Budget and Management is withholding about 4% of that appropriation to CWMTF. The 2002 appropriation enabled the board of CWMTF to provide funds for all the projects that CWMTF approved in 2001 but were delayed by 2002 budget cuts and to fund about one-third of the applications that CWMTF received and reviewed in 2002.

The 2002 General Assembly also continued its strong support for CWMTF partners, the Parks and Recreation Trust and Natural Heritage Trust Fund.

CWMTF appreciates the efforts of the 2002 General Assembly to simplify and clarify CWMTF's reporting requirements and to clarify and strengthen the law regarding conservation easements.

The CWMTF board of trustees supported legislation in the 2002 session of the General Assembly to restructure the terms of board members in an effort to promote continuity in the decision-making process. Under the existing law the terms of two-thirds of the board expired on December 31, 2002. The proposed change was among provisions in the appointments bill passed by the General Assembly but ultimately vetoed by the Governor. The board will continue to push for the change in the 2003 legislative session.

Finally, on October 31, Governor Easley signed SB 1161, Amend Present Use Value, by Senator Fletcher Hartsell and others. SB 1161 clarified that rollback taxes are not owed when a conservation easement is either donated or purchased on farm or forestland and clarified that property encumbered by a conservation easement remains eligible for present use taxation. CWMTF supported SB 1161 and commends the General Assembly for its passage. SB 1161 is another incentive for conservation on private lands.

The Year Ahead

The CWMTF board and staff are reviewing 70 projects requesting $105.2 million this spring. Specific grant requests submitted in the December 2002 cycle include:

  • $2.3 million from the North Carolina Division of Parks and Recreation for purchase of 815 acres along the Eno River near Durham.
  • $13.3 million from the North Carolina Wildlife Resources Commission for purchase of the 4,458-acre Needmore tract on the Little Tennessee River in Swain and Macon counties.
  • $2.4 million from the City of Fayetteville for stormwater management on Little Cross Creek.
    $450,000 from the Buncombe County Soil and Water Conservation District for stream restoration along Newfound Creek in the French Broad River Basin.
  • Two separate requests from Mecklenburg County for continued stormwater improvements and stream restoration along Little Sugar Creek totaling $1.8 million.
    $400,000 from the town of La Grange for improvement to the town's wastewater treatment plant which will reduce discharges into the Neuse River.
  • $500,000 to the city of Charlotte for additional land acquisition to protect Mountain Island Lake. Mountain Island Lake provides drinking water for Charlotte, Gastonia, and many other towns.

2003 Legislation

State law requires an appropriation of $100 million to CWMTF in 2003-2004 and future years. CWMTF will work with the General Assembly this year to secure appropriations to continue North Carolina's progress in protecting and restoring water quality.

CWMTF supports the work of the Conservation Income Tax Program, Natural Heritage Trust Fund, Parks and Recreation Trust Fund, and Farmland Preservation Trust Fund.

The 2002 General Assembly considered HB 1761 and SB 1464, Certificates of Participation for Natural Heritage and Parks, sponsored by Representative Pryor Gibson, Senator Fountain Odom, and others. CWMTF is interested in certificates of participation financing for natural heritage, parks, and other purposes.

CWMTF is available to assist the Governor and General Assembly in their efforts to mitigate hazards in floodplains to help reduce rising property insurance costs and to prevent encroachment on Fort Bragg, Camp Lejuene, and other military bases. Governor Mike Easley is hosting a National Governors Association conference on encroachment on military bases on January 21, 2003 in Kinston.

CWMTF recommends that the General Assembly reenact legislation to improve the staggering of terms of CWMTF trustees.

CWMTF is available to assist the General Assembly in the development of an incentive-based air quality program such as the proposed Clean Air Trust Fund.

Please contact me if you need more information.


 

 

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