In Brunswick County, developers have hit the brakes on a 400-acre community planned for a site in and around Southport because of uncertainty about the sewer permitting process.

One of the developers, McKay Siegel, explained the decision to pause Waterway, a development that could hold 1,100 homes in a mix of housing types.

"We've placed the project on hold right now," said Siegel, a partner in East West Partners, the firm developing the Waterway community along with Bald Head Island Limited. "We're kind of at the point where we need sewer permits," to connect to the West Brunswick Regional Water Reclamation Facility. But the timeline for potential state approval of those connection permits, Siegel said, is up in the air for Waterway and multiple other Brunswick County developers.

In an email Thursday, N.C. Department of Environmental Quality (NCDEQ) officials stated, "Projects that would connect to the West Brunswick Regional Water Reclamation Facility are on hold until Brunswick County completes a comprehensive accounting of future sewer capacity allocations for new development for this facility."

They said Brunswick County will be meeting with NCDEQ's Division of Water Resources (DWR) on March 19 "to discuss this issue and their assessment."

The hold comes after a state statute passed in 2023. An existing "80/90 rule" requires officials governing wastewater systems to begin planning for expansion when those systems reach 80% capacity and to have construction permits in place before reaching 90% capacity. But session law 2023-55 has provisions related to projected capacity. The law states that "a permittee for a wastewater treatment system, who has signed a contract for the expansion of its wastewater treatment system, utilization, or disposal system and whose current system is located in a county with a projected population growth rate above 2% annually or is located in one of the top 20% of the fastest growing counties in the state, by population, and is meeting flow and pollutant discharge limits set out in the system's current permit, may allocate 110% of its existing system's hydraulic capacity and increase the allocation amount to 115% when the expansion of its system is within 24 months of completion."

The law goes on to single out "projected capacity" by stating that the permitee "may not allocate more than the permitted projected capacity after expansion without approval by the Department. Nothing in this subsection shall be construed to limit the Department from authorizing allocations above 115% of a system's hydraulic capacity."

According to Brunswick County's development dashboard, Brunswick County had approved, as of Friday, nearly 61,000 residential units since 2015. Of those, 8,006 have been built, the dashboard shows.

County and state officials have said they are working together on the permitting accounting issue, with the county asserting in a February statement that Brunswick County is not out of sewer capacity at the Northeast Brunswick Regional Wastewater Treatment Plant or at the West Brunswick Regional plant. "Brunswick County also has several expansion projects that are either under construction or are in the planning or permitting stages to further increase capacity at our plants to anticipate future growth in our sewer system," officials said.

The county's expansion plan for the West Brunswick Regional Water Reclamation Facility would double its capacity, from 6 million gallons per day (MGD) to 12 MGD, according to county staff.

State officials stated in an email Thursday that they are working with Brunswick County "to address future obligated wastewater flows and current capacity at its treatment plants. In addition to working to identify ways to move the permitting process forward for sewer connections, DWR has been working with the county to improve their future wastewater allocation tracking to facilitate future permitting, and to identify additional flow available due to unrealized development projects."

They said DWR has identified a process to move applications forward for connections to the Northeast Brunswick plant. The Northeast WWTP has an expansion plan in process with DWR, according to the state's email.

Meanwhile, the clock is ticking for developers who previously counted on getting those connections sooner. Siegel said even force majeure clauses – a common practice in contracts that can release a party from liability for unforeseen, uncontrollable events – have deadlines.

He also acknowledged that he knows the permit conflict could potentially be resolved between the county and state in a matter of weeks.

But there are other risks.

“Knowing what we know now, if we continue to go and spend money on a project, it would be hard to face your investors and say, ‘Well, sorry, we lost all this. We continued to spend money after we knew the situation and just gambled incorrectly,’“ Siegel said.

The investment in infrastructure to make those sewer connections – from pipes throughout the development to a lift station to off-site work requiring N.C. Department of Transportation permits – requires decisions that have to be made far in advance, he said.

Siegel and his partners had hoped to start the first phase of Waterway – about 250 single-family homes, duplexes and townhomes – this year. 

“We can’t do a lot of the work around the marina (an existing feature at the development site) that we want to do” because of the hold-up, he said, referring to condos specifically.
It’s not just a matter of potentially having to return deposits to the local homebuilders who placed them on Waterway lots. It’s also a concern for the local economy if the sewer capacity issue drags on, Siegel said.

He said, "Those are lots that they won't get to build, and their people that they won't get to employ, and their framers that won't get to put wood up, and plumbers, electricians and everybody else that would work on this."

The Waterway developers are considering building their own sewage treatment package plant, but that could take a few years. Siegel acknowledged that he knows the permit conflict could be resolved between the county and state in a matter of weeks.

Some residents and officials say they worry that the sewer capacity issue could signal that the county's growth is getting ahead of itself. Brunswick County Board of Commissioners member Pat Sykes voted, along with Commissioner Randy Thompson, to "freeze the review of any development applications it has already received and to hold on accepting any more project applications until the issue with the state concerning sewer extension applications is resolved," according to a March 2 commissioners' meeting recap by county staff.

The motion was defeated by a 3-2 vote after county staff explained that, under both state law and the county’s Unified Development Ordinance, a development moratorium cannot be enacted without a public hearing. They also said such a moratorium would apply to commercial and industrial projects, thereby halting developments that would otherwise create jobs.

"I'm not against the growth now, but I'm against it not being handled appropriately and safely for the citizens," Sykes, a Southport resident, said Thursday, "because they're the ones who are going to have to pay down the road."

Editor's note: This version clarifies a 2023 law regarding sewer permittees and allocations.