Senate Bill 401: water and sewer relocation helps transportation projects
On May 13, 2019, the Governor of South Carolina signed Senate Bill 401 into law. Senate Bill 401 serves to expedite publicly funded transportation improvement projects by helping public water and sewer utilities relocate impacted facilities. Historically, the South Carolina Department of Transportation (SCDOT) and other public governmental entities have experienced delays because utilities struggle to fund and construct relocations in a timely manner. This new law is similar to legislation seen in other states allowing relocation costs to be included within the transportation project funding. This removes the onus from the utility provider and their customers. The funding is contingent on adherence to the bidding and construction timeframes of the transportation project, which minimizes overall project delays.
How does Senate Bill 401 designate funding?
This law has designated public utilities into two sizes:
- Small utilities have up to 10,000 water taps or sewer connections, and serve populations of up to 30,000
- Large utilities have over 10,000 water taps or sewer connections, and serve populations of over 30,000
The amount of funding allocated is dependent on the size of the public utility. For small utilities, the transportation project will pay 100 percent of relocation costs. For large utilities, the transportation project will pay for relocation costs up to four percent of the original construction contract amount.
If utilities of differing sizes are involved in the transportation project, the percentage is increased to 4.5 percent. However, 100 percent of the costs for the small utilities would still be covered, and the remainder of the 4.5 percent would be used for the relocation costs of the large utilities. The funding covers relocation costs including design/engineering, right-of-way acquisition, permitting, bidding, materials and construction.
However, the transportation project will not fund betterment of any public water or sewer facilities. A betterment is considered an upgrade to a facility that can’t be attributed to the transportation improvement project, and is instead made solely for the benefit of the public water system.
How can a utility receive funding?
To receive this funding, the public water or sewer utilities must submit a funding request letter to verify eligibility under the law. Once eligibility has been verified, the utility must enter into a Memorandum of Agreement (MOA) with the entity undertaking the transportation improvement. This MOA defines the eligible costs, the required documents from the utility to be included into the transportation improvement project, and the schedule for these deliverables. The utility must meet the bidding and construction schedule established by the transportation project. Typically, the MOA requires submitting relocation plans, specifications, cost estimates, permits, and three preferred construction vendors—all at least 180 days prior to the receipt of the bid for the project.
Furthermore, for small utilities, the relocation must be placed “in-contract,” which means that it is under control of the general contractor of the transportation improvement project. Large utilities may opt-out of the “in-contract” requirement. However, to remain eligible for funding, the relocation construction contract must meet the construction schedule established by the general contractor and the transportation entity. In any case, if the utility fails to meet the bidding and construction schedule requirements established in the MOA, they will have to bear costs for the relocations, unless the delay is beyond their control.
Senate Bill 401 requires the SCDOT to track, evaluate and report results of the program. This legislation will expire in seven years without new legislative action. It may be extended if the results indicate that the law has met its objectives: to reduce delays due to utility relocations, and reduce the burden on public water or sewer utilities for relocation costs related to transportation projects.
The countless affects this water and sewer relocation bill could have on our industry are widespread. It’s possible more states will adopt similar policies in the future. Our team is capable of helping transportation entities and utilities navigate current and future changes. Ultimately, our goal is always to help these entities elevate the communities they serve.
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