FROM: Robert Howard,
Chairman, Board of Trustees
Bill Holman, Executive Director
Re: Clean Water Management
Trust Fund’s 2003 Annual Report
Introduction
We are writing on behalf
of the Board of Trustees and staff of the Clean Water Management
Trust Fund (CWMTF) to thank the members of the General Assembly
of North Carolina for your continuing strong support for investments
in clean water and to make our annual report to the General Assembly
and the public pursuant to GS 113-145.6A.
GS 143-15(a) requires
that the General Assembly appropriate a minimum of $100,000,000
to CWMTF each year. The 2003 General Assembly made many difficult
budget decisions and cut many programs, including CWMTF.
HB 397, Current Operations
and Capital Improvements Act of 2003, appropriated $62,000,000
to CWMTF in each year of the biennium. This is a cut of $38,000,000
or 38% from CWMTF. Thanks to the appropriation of $62,000,000
from the General Assembly to CWMTF in fiscal year 2003-2004 North
Carolina continued to make progress in protecting and restoring
water quality in calendar year 2003. As we face another challenging
budget in 2004, 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.) A twenty-one-member
board of trustees establishes criteria, allocates funds, reviews
applications, approves grants, and hires the executive director.
Seven members are appointed by the Governor; seven, by the General
Assembly upon the recommendation of the President Pro Tempore
of the Senate; and seven, 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 10 times per year - six times across the state
and four times in Raleigh. In 2003, the board met in Greenville,
Gastonia, Fayetteville, Cullowhee, Eden, Jacksonville, and Raleigh.
In 2004, the board plans to meet in Moore County, Currituck County,
Caldwell County, Morganton, Kinston, Greensboro, and Raleigh.
Moneys from CWMTF
may be used to acquire conservation easements or land in fee simple
to preserve riparian buffers, wetlands, floodplains, and greenways;
to restore riparian buffers, streams, and wetlands; to repair
failing wastewater collection and treatment systems; to eliminate
failing septic tanks and straight pipes; to collect and treat
stormwater pollution; to plan water quality projects; and for
administration and staff. The board works through three principal
committees: acquisitions, infrastructure/wastewater, and restoration/stormwater.
CWMTF
applications forms for grants, grant evaluation guidelines, enabling
legislation, lists of the board of trustees, staff directory,
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 executive assistant are based in the
central office in Raleigh. Five field representatives cover the
coast, piedmont and mountain regions of the state. A part-time
water quality advisor is home based.
Progress
& Challenges
The extreme drought
and water quantity were the water issues of 2002. Heavy rain and
Hurricane Isabel in 2003 made flooding, stormwater pollution,
and water quality the water issues of 2003.
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 its biennial 303(d)
report to the US Environmental Protection Agency the DENR/Division
of Water Quality estimates that 3485 miles of streams in North
Carolina are impaired, not meeting their designated uses, or are
polluted.
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 2,908 miles of riparian buffers
and preserve 237,366 acres of land, thereby ensuring streams,
rivers and lakes can continue or will be able to support their
uses.
- CWMTF is helping
the State achieve its goal of preserving a million acres of
open space, as set out in GS 113A-240, and is helping Governor
Easley implement his One North Carolina Naturally initiative.
- CWMTF grants have
been used to develop watershed protection plans and to purchase
buffers surrounding drinking water supplies.
- The CWMTF has funded
79 riparian buffer, stream and wetland restoration projects
totaling over $48.2 million to help maintain and preserve these
important water quality filtering systems.
As the Progress Board
asserts 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.”
CWMTF acquisition
and restoration grants have been used to protect shellfishing
waters, to help restore waters in areas closed to shellfishing,
to restore oyster reefs and other fisheries habitat, and to provide
public access to public waters.
The CWMTF has assisted
local governments with 99 wastewater improvement projects, investing
over $77.2 million to reduce discharges and more effectively treat
wastewater so that fewer nutrients and other pollutants enter
our rivers.
CWMTF grants have
funded 36 stormwater management projects totaling $29.8 million
to reduce pollution from urban runoff and decrease flooding.
Since 1996 the board
of trustees has approved 512 grants for a total of $405.1 million.
CWMTF grants have leveraged at least $643.3 million or 61% in
private and other public funds.
The CWMTF continues
to be an important tool in helping local governments protect their
water resources. Since 1996, $168.9 million – over forty percent
of the $405.1 million in CWMTF grants has gone to cities, counties
and other local government agencies to finance local solutions
to water quality problems.
All of these efforts
are just as important to North Carolina’s economic well-being
as they are to the health and safety of its citizens and the environment.
They enhance both the recreational and commercial fishing industries,
strengthen North Carolina’s travel and tourism industry, and help
maintain North Carolina’s high quality of life.
CWMTF continues to
work with municipalities and counties on a variety of projects
to protect and restore water quality. The Town of Troy replaced
chlorination of its wastewater with ultraviolet radiation treatment
in 2003 with help from CWMTF. Troy and CWMTF are working to prevent
and reduce pollution of Densons Creek by improving wastewater
treatment and by acquiring riparian buffers and greenways along
the creek. CWMTF has funded four phases of greenway acquisition.
The Ecosystem Enhancement Program (EEP) may fund Phase 5 in 2004.
The City of Greensboro
with assistance from CWMTF acquired a key property for its stormwater
treatment project on South Buffalo Creek. CWMTF has provided $1,370,000
to Greensboro to acquire property and to construct its stormwater
project.
Mecklenburg County
and CWMTF continue our efforts to clean up Sugar Creek and other
streams in Charlotte. Mecklenburg County dedicated a constructed
wetland at the Bruns Avenue School on April 25, 2003. CWMTF has
provided $3.9 million to help Mecklenburg County and Charlotte
restore urban streams.
Bessemer City has decommissioned
its wastewater treatment plant, connected to Gastonia’s wastewater
system, and reduced infiltration and inflow in its sewer system
with $2,000,000 million grant from CWMTF. Regional wastewater
systems generally collect and treat pollution to higher standards
at lower costs.
Working with the Southern
Appalachian Highlands Conservancy CWMTF acquired a conservation
easement on the Town of Canton’s pristine 870-acre Rough Creek
Watershed with a $689,000 grant. SAHC raised $429,000 in private
funds. Canton reinvested the funds to improve its drinking water
system and its parks system.
The NC Coastal Land
Trust (NCCCLT) acquired 911 acres from International Paper (IP)
in November to continue its efforts to protect Town Creek in Brunswick
County. CWMTF provided $2 million. NCCLT will transfer the property
to Brunswick County for a local park. NCCLT, IP, and CWMTF have
protected more than 10,000 acres along Town Creek since 1997.
Working with The Conservation
Fund CWMTF, EEP, NHTF provided funding to acquire part of the
headwaters of the Yadkin River, the 5621-acre Mingo tract in Caldwell
and Wilkes Counties. The Wildlife Resources Commission will manage
the property as gamelands.
Conservation Reserve Enhancement Program (CREP)
CWMTF has provided
state funds to match over $200 million in US Department of Agriculture
funds for the Conservation Reserve Enhancement Program (CREP).
CWMTF provided a grant of $5.4 million to the DENR/Division of
Soil and Water Conservation (DSWC) in 1998 for the first phase
of CREP. CWMTF provided a second grant of $4.2 million to DSWC
in 2003 for Phase 2 of CREP.
CWMTF and DSWC have worked together to increase the incentives
offered to farmers who sign up for permanent conservation easements.
CWMTF has approved expansion of CREP into the Pasquotank, Roanoke,
White Oak, and lower Cape Fear Rivers. The Chowan, Tar-Pamlico,
Neuse, and upper Cape Fear Rivers were already covered.
The
Soil and Water Conservation Commission will have to amend its
rules in 2004 to incorporate the new incentives for farmers.
CWMTF has urged DSWC
to increase processing of conservation easements and to reduce
the backlog of enrollments in 2004. DSWC will report to the Board
of CWMTF in April 2004 on its progress. DSWC will probably request
additional funding from CWMTF in June 2004. CWMTF supports providing
the state matching funds to continue CREP in NC – if DSWC improves
administration of the program. If DSWC does not improve administration,
CWMTF may not provide Phase 3 funding for CREP.
CWMTF is working with
DSWC, local soil and water conservation districts, the US Natural
Resources Conservation Service, and others to leverage other federal
Farm Bill conservation programs, such as the wetlands reserve
program (WRP) and the environmental quality incentives program
(EQIP).
Ecosystem
Enhancement Program (EEP)
The NC Departments
of Environment and Natural Resources and Transportation and the
US Army Corps of Engineers established the Ecosystem Enhancement
Program (EEP) in 2002 to improve coordination and the quality
of stream and wetland mitigation projects.
CWMTF
and EEP coordinate their efforts. CWMTF refers all acquisition
and restoration applications to EEP for review and potential funding.
As of December 1, 2003 the Board of Transportation had approved
full or partial funding of at least 12 CWMTF projects valued at
over $37 million.
CWMTF will share its
expertise and experience in working with local governments and
land trusts on contracts and conservation easements with EEP.
CWMTF believes that CWMTF, EEP, and the public will benefit from
consistent policies on contracts and conservation easements.
DuPont State
Forest Settlement
In 2000 CWMTF provided
$12.5 million to DENR/Division of Forest Resources (CWMTF Project
#1999A-005) to acquire a critical 2,200-acre inholding in DuPont
State Forest in Transylvania and Henderson Counties. Unfortunately
the State could not reach an agreement with the property owner,
and the Council of State authorized condemnation of the property
in October 2000.
The property owner
and the State settled on the value of the property in August 2003.
The Office of State Budget and Management (OSBM) transferred $12.0
million from CWMTF to pay for the settlement. The Board of Trustees
of CWMTF did not approve the transfer. OSBM committed to try to
reimburse CWMTF $8.0 million with $4.0 million coming from DENR
and $4.0 million coming from Department of Transportation wetland
and stream mitigation funds. As of December 29, 2003 CWMTF had
not received any reimbursement for the DuPont State Forest settlement.
Base Realignment
and Closure (BRAC)
The US Department
of Defense will consider realignment and closure of military bases
in 2005. The Department of Defense, the State of North Carolina,
and many local governments are working together to prevent and
reduce encroachment on military bases by acquiring conservation
easements and land in fee simple and by regulating land uses.
In 2003 CWMTF, Natural
Heritage Trust Fund, The Nature Conservancy, and the US Navy worked
with the Wildlife Resources Commission to acquire the Beck tract
(CWMTF Project # 2001B-036) in Onslow County to help protect Camp
Lejeune.
The Wildlife Resources
Commission applied to CWMTF for additional funds to protect water
quality and Camp Lejeune in December. Goldsboro and Wayne County
also applied to CWMTF for funds to acquire floodplain and converted
wetlands near Seymour Johnson Air Force Base. With assistance
from CWMTF the Sandhills Area Land Trust is conducting a riparian
corridor conservation study on the Little River – the northern
boundary of Fort Bragg.
CWMTF and the other
conservation trust funds can assist the State and the military
in protecting both the environment and the training mission of
our bases.
Stormwater
Problems and Phase II Rules
CWMTF is one of the
few sources of funds local governments can seek to reduce stormwater
pollution and flooding and to comply with EPA and state Phase
II stormwater rules. Thirty-three counties and 123 municipalities
are covered by EPA and State Phase I and Phase II Stormwater rules.
CWMTF has funded 36 local stormwater projects totaling $28.9 million.
2003 Legislative
Action
The 2003 General Assembly
demonstrated that protecting and restoring water quality remains
a high priority of the State. HB 397, Current Operations and Capital
Improvements Act of 2003, appropriated $62,000,000 to CWMTF in
fiscal year 2002-2003 and $62,000,000 to CWMTF in fiscal year
2004-2005. The Office of State Budget and Management is withholding
2.0% of CWMTF’s 2003-2004 appropriation or $1,240,000.
Section 11.7 of HB
387 directed the Property Tax Subcommittee of the Revenue Laws
Study Committee to study the positive and negative impacts of
conservation land acquisition on local government ad valorem tax
revenues. The subcommittee had not considered this issue as of
December 1, 2003.
Section 11.8(b) of
HB 397 authorized CWMTF for fiscal year 2003-2004 to spend up
to $4,100,000 to match federal, State, local, and private farmland
preservation and forestland preservation funds and to acquire
permanent conservation easements on working farms and forests.
CWMTF has participated in some federal farmland preservation and
forest legacy projects in calendar year 2003.
Section 6.8 of HB
397 directed the NC Department of Administration, in consultation
with other agencies, to develop and implement a State-owned surplus
real property disposal system. CWMTF recommends that surplus properties
with high conservation values be allocated to conservation agencies
such as the Division of Parks & Recreation and Wildlife Resources
Commission. CWMTF also recommends that the State place permanent
conservation easements on 100-year floodplains, riparian buffers,
and wetlands before selling surplus properties.
Section 6.21 of HB
397 strengthened reporting requirements for non-state entities
that receive state funds. CWMTF has amended its contracts to require
non-state entities to comply with GS 143-6.1.
Section 6.23(a) of
HB 397 authorized the Office of State Budget and Management to
transfer up to twenty percent of the balance of any special fund
other than CWMTF, NHTF, and PARTF to the Reserve for Special Funds
Transfer. If OSBM determines that transfers from other special
funds are insufficient, then it may transfer funds from CWMTF,
NHTF, and PARTF. As of December 19, 2003 OSBM had not transferred
any funds from CWMTF for this purpose.
The 2003 General Assembly
also continued its strong support for CWMTF partners, the Parks
and Recreation Trust Fund (PARTF) and Natural Heritage Trust Fund
(NHTF). HB 855, Special (Vehicle) Registration Plates, by Representative
Martha Alexander and others, increased the fee for personalized
license plates by $10 and dedicated half of the increase to the
Parks and Recreation Trust Fund and half of the Natural Heritage
Trust Fund.
The General Assembly
established the new Mayo River State Park (HB 1078) in Rockingham
County and Haw River State Park (HB 1025) in Guilford and Rockingham
Counties. The Division of Parks & Recreation will probably
apply to CWMTF in the future to help acquire land for these two
new state parks.
The CWMTF Board of
Trustees supported SB 831, Stagger CWMTF Appointments, by Senator
Charlie Albertson, to restructure the terms of board members to
increase continuity in the decision-making process. Under the
existing law the terms of two-thirds of the board expired on December
31, 2002. SB 831 also added three appointments to the board. Governor
Easley signed SB 831 on August 14, 2003.
HB 738, Expand CWMTF
Purpose, by Representative Paul Miller and others, and SB 551,
Expand CWMTF Purpose, by Senator Jeanne Lucas and others, were
referred to the House Committee on Environment and the Senate
Committee on Appropriations/Base Budget, respectively, and were
not acted upon.
The Year Ahead
The CWMTF board and
staff will review 83 applications requesting $151.8 million this
spring (2004A Cycle). CWMTF will also receive applications on
June 1, 2004 and review them in the fall (2004B Cycle). Specific
grant requests submitted on December 1, 2003 for the spring 2004
cycle include:
- A request for $1.7
million from the City of Goldsboro and Wayne County to help
protect Stoney Creek, a tributary of the Neuse River, and to
prevent encroachment on Seymour Johnson Air Force Base;
- A request for $891,150
from DENR/Division of Forest Resources to help protect Mountain
Island Lake and to expand the Mountain Island Lake Educational
State Forest in Gaston and Lincoln Counties;
- A request for $3.2
million from the Southern Appalachian Highlands Conservancy
to help protect water quality in Reems Creek, a tributary of
the French Broad River in Buncombe County;
- A request for $7.6
million from the Town of Spring Lake in Cumberland County to
eliminate failing septic tanks and reduce pollution of the Little
River, a major tributary of the Cape Fear River;
- A request for $7.7
million from DENR/Division of Soil & Water Conservation
to implement phase three of the swine lagoon buyout program
in the 100-year floodplain.
CWMTF may centralize
water quality monitoring of its restoration and stormwater projects
to improve quality and reduce costs in 2004. CWMTF is reviewing
its policies regarding stewardship and long-term management of
properties that are acquired with CWMTF funds. CWMTF is also reviewing
the criteria by which it evaluates projects.
CWMTF hopes to develop
consistent contracts, conservation easements, monitoring requirements,
and stewardship policies with EEP.
Planning, design,
permitting, bidding, and construction of wastewater, stormwater,
and restoration projects take many years. CWMTF in 2003 began
to start funding the design and permitting phase of projects to
ensure that water quality objectives are being met, to develop
more accurate estimates of cost, and to manage its cash balance.
CMWTF has also reduced the average time to implement acquisition
projects from 36 months to 12-18 months. CWMTF will continue to
work to manage its cash balance in 2004.
2004
Legislative Issues
State law requires
an appropriation of $100 million to CWMTF in 2005-2006 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 its partners: the Conservation Income Tax Program, Natural
Heritage Trust Fund, Parks and Recreation Trust Fund, Farmland
Preservation Trust Fund, and the new Ecosystem Enhancement Program.
The 2003 General Assembly
considered SB 683, State Capital Facilities Financing, by Senators
John Kerr and David Hoyle, and HB 1227, Finance Parks and Natural
Heritage, by Representative Gordon Allen and others. Many provisions
of SB 683 and HB 1227 were incorporated into the budget bill,
HB 397. CWMTF is interested in certificates of participation financing
for natural heritage, parks, clean water, and other purposes.
Tier I and Tier II
counties are concerned that acquisition of land in fee simple
by the Wildlife Resources Commission, Division of Parks &
Recreation, and other agencies for conservation purposes is reducing
their property tax base. CWMTF has encouraged the sellers and
buyers of conservation properties in Tier I and Tier II counties
where thirty percent or more of the land is in fee simple conservation
ownership to provide a one-time payment worth ten times the ad
valorem taxes of the property to the county. CWMTF respectfully
recommends that the 2004 General Assembly consider legislation
to enable CWMTF to provide some Tier I and Tier II counties with
a one-time payment to compensate them for the loss of property
tax revenues.
The 2002 General Assembly
enacted SB 1161, Present Use Taxation Amendments, by Senator Fletcher
Hartsell. SB 1161 clarified that farm or forestland taxed at present
use would remain taxed at present use after a conservation easement
was donated or acquired. CWMTF funds acquisition of many conservation
easements. SB 1161 also directed that the Property Tax Subcommittee
of the Revenue Laws Study Committee address other issues associated
with property taxes and conservation easements. As of December
29, 2003 the Property Tax Subcommittee had not considered these
issues.
CWMTF is available
to assist the Governor and General Assembly in their efforts to
prevent inappropriate development in floodplains and to mitigate
flood hazards.
CWMTF is available
to provide technical assistance to members of the General Assembly
in the development of an incentive-based air quality program such
as the Clean Air Trust Fund, proposed in SB 981 by Senators Steve
Metcalf and Joe Sam Queen and HB 866 by Representative Phil Haire
and others.
Please contact me if
you need more information.
