Memorandum
February 21, 2002
To: Environmental Review Commission
Fr: Bill Holman
Re: Clean Water Management Trust Fund Annual Report


Introduction
I am writing to thank the members of the General Assembly of North Carolina for their continuing strong support for investments in clean water and to provide the Clean Water Management Trust Fund's Annual Report. Thanks to the General Assembly North Carolina continued to make substantial progress in protecting and restoring water quality last year. 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 help meet North Carolina's environmental goals.
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.

State agencies, local governments or other political subdivision of the state, 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 has met or plans to meet in Blowing Rock, Lumberton, Charlotte, Elkin, Raleigh, Tyrrell County, Ashe County, and Montgomery County.

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 form for grants, grant evaluation guidelines, enabling legislation, lists of the board of trustees, staff directory, and news releases 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. Three field representatives cover the coast, piedmont and mountain regions of the state. A part-time water quality advisor is home based.

Surface Water Quality Needs

In its NC 20/20 report, the North Carolina Progress Board argued that "the myth of 'jobs v. the environment' cannot be supported; states can and do have strong economies and simultaneously protect the environment." At this time in our state's development, the connection between of clean and adequate water supplies and a strong, vibrant economy has never been greater. Much of North Carolina's vital travel and tourism industry is founded on clean water. Both the recreational and commercial fishing industries depend on clean water. The knowledge workers of our 21st century economy can live anywhere in the world. They will choose North Carolina if we maintain our high quality of life and continue to invest in protection and restoration of water and air quality and in education.

Yet, according to DENR's Division of Water Quality over 20 percent of North Carolina's surface waters are polluted or do not support their designated uses. The Progress Board identified increased stormwater runoff or non-point source pollution as the state's greatest water quality challenge over the next twenty years. Protection and restoration of riparian buffers, streams, and wetlands; best management practices to reduce urban and agricultural runoff, elimination of straight pipes, repair of failing septic tanks, stopping sewage spills can prevent and reduce stormwater pollution.

As required by the Clean Water Act the Division of Water Quality is developing plans to restore polluted or impaired waters. Additional regulations may be required. However, as the General Assembly recognized in 1996, incentives provided by the Clean Water Management Trust Fund and others will be needed to restore polluted waters and to protect high quality waters.

In December 2001 the NC Center for Public Policy Research analyzed North Carolina's response to Hurricane Floyd. In "The Aftermath of Hurricane Floyd: Lessons Learned and Not Learned" the Center made nine recommendations. Recommendation four endorses the partnership between the Clean Water Management Trust Fund and DENR's Division of Soil and Water Conservation to buy out swine lagoons in the 100-year floodplain.

Recommendation six reads, "The NC General Assembly should fully fund the NC Clean Water Management Trust Fund with the goal of acquiring floodplains for open space and retaining wooded areas along the riverfronts…."

CWMTF estimates that over $10.5 billion is needed to protect and restore surface water quality in North Carolina.

Progress

As of December 1, 2001 786 applicants had requested over $875 million for water quality projects. Since 1997 the Board of Trustees have approved 314 grants for a total of $257.7 million. CWMTF grants have leveraged at least $350 million in private and other public funds.

The CWMTF and its partners have helped protect 1685 miles of riparian buffers and preserve 155,510 acres of land. The CWMTF has assisted 67 local governments with wastewater improvements, funded 57 stream and riparian buffer restoration projects, funded 21 stormwater projects, and funded watershed planning projects.

Last calendar year, the board of trustees of CWMTF approved 79 grants for a total of $46,308,098.

Eighty-five local governments, state agencies, and land trusts requested $89.6 million from CWMTF on December 1, 2001. Last November the Board of Trustees deferred 15 projects requesting $22.1 million until this spring. The Board and staff of CWMTF are reviewing 100 projects requesting $111 million this winter and spring.

CWMTF's $40 million investment in the Conservation Reserve Enhancement Program 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 will probably request another $5 million from CWMTF to continue CREP on June 1, 2002.


2001 Examples

CWMTF provided a grant of $2.75 million to the Division of Coastal Management to help acquire the 1200-acre Bird Island, the last undeveloped barrier island in Brunswick County. The State has been negotiating to purchase Bird Island for about ten years. When the State and the property owner agreed on a price of $4.2 million last year, CWMTF funds were available to acquire the property.

CWMTF has provided two grants totaling $1.7 million to the City of Lumberton to be matched with local funds to enable the city to separate some 150 combined stormwater and sewer lines along 40 city blocks and to reduce sewage spills into the Lumber River. City Manager Todd Powell told the Board of Trustees at its February 18, 2002 meeting in Lumberton that CWMTF funds not only have improved water quality but that they also prevented a moratorium on development. Mr. Powell estimates that $80 million worth of private investments in hard-pressed Robeson County were saved by the CWMTF-funded wastewater improvements.

David Bone, Town Manager of Chadbourn, and Al Leonard, Town Manager of Tabor City, also spoke at the CWMTF meeting in Lumberton. Both commended CWMTF for assisting them with wastewater grants of $1.3 million grant and $570,000, respectively.

As part of its Deep River Protection efforts the Triangle Land Conservancy acquired the historic civil war era Endor Iron Furnace on the Deep River in Lee County last year with CWMTF funds.

CWMTF has provided a series of grants to the Town of Troy to enable the Town to acquire conservation easements along Densons Creek to both protect water quality and to provide for a greenway trail. Last November CWMTF provided a grant of $260,500 to enable the Town to install ultraviolet lights to disinfect and improve treatment of its wastewater. The combination of riparian buffers and removal of chlorine in its wastewater discharge will enable the Town to ask the Environmental Management Commission to upgrade the classification of Densons Creek to High Quality Waters (HQW).

CWMTF has provided a series of grants, including $420,373 last year, to the Catawba Lands Conservancy to acquire conservation easements along the South Fork of the Catawba River in Gaston and Lincoln Counties. Miles of the river have been protected since 1997.

The municipalities in Gaston County have been working together to consolidate and regionalize their wastewater treatment and collection systems. CWMTF provided $2.0 million to Bessemer City to enable it to connect its wastewater system to the City of Gastonia's. This project will remove a wastewater discharge and send effluent to Gastonia's advanced wastewater treatment plant.

The non-profit Haywood Waterways working with the Haywood County Soil & Water Conservation District and Southwestern NC Resource Conservation & Development identified sources of sedimentation in Richland Creek, a major tributary of Lake Junaluska and the Pigeon River. They requested and received $677,555 to restore streams and stabilize streambanks from CWMTF last year.


Recent Legislative Action

The 2001 General Assembly appropriated $40 million to CWMTF in fiscal year 2001-02 and $70 million in fiscal year 2002-03, as committed by the 2000 General Assembly.

The 2001 General Assembly also exempted employees of CWMTF from the provisions of the State Personnel Act to enable the recruitment and retention of highly qualified staff and increased the administrative cap of CWMTF to $1,250,000 or 2% of the cash balance whichever is greater.

The Future

Governor Mike Easley announced on February 5, 2002 that he was cutting $20.8 million from the CWMTF to help him plug the projected $900 million shortfall in the State's 2001-02 budget. This is a 52% cut in CWMTF's 2001 appropriation.

CWMTF has asked the State Budget Office to honor 16 contracts signed by both grantees and CWMTF totaling $17.6 million. Four other grantees have signed final contracts worth $3.6 million, but CWMTF has stopped signing contracts. CWMTF has sent draft contracts worth $8.8 million to 19 grantees.

At its February 18, 2002 meeting in Lumberton the Board of Trustees by consensus committed to honor all grants approved by the Board last November - if necessary out of 2002 appropriation from the General Assembly.

Last year the Board of Trustees authorized hiring two new field representatives - one to cover the Cape Fear and Lumber River Basins and one to cover the Neuse, Tar-Pamlico and Lower Roanoke River Basins - to improve technical assistance to grantees and to increase monitoring of existing projects. Hiring new staff has been postponed until the State's budget improves.

The wood products industry plans to sell large tracts of land in North Carolina and others states in the next few years. This is an extraordinary opportunity for land and water conservation.

The 1998 Clean Water Bond grant funds have largely been spent. Local governments continue to need state assistance to improve their water, wastewater, stormwater, and park systems to both protect water quality and to be prepared for future economic growth.

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