NC0023965_Owner (Name Change)_20080508

Michael F. Easley, Governor
William G. Ross Jr., Secretary
North Carolina Department of Environment and Natural Resources
Coleen H. Sullins. Director
Division of Water Quality
May 5, 2008
MATTHEW W JORDAN
CAPE FEAR PUBLIC UTILITY AUTHORITY
GENERAL MANAGER
127 RACINE DR SUITE 201
WILMINGTON NC 28403
Subject: NPDES Permit Modification- Ownership Change
James A. Loughlin (Northside) WWIP
Permit# NC0023965
New Hanover County
Dear Mr. Jordan:
•
Division personnel have reviewed and approved your request for name/ownership change of the
subject permit received on May 2, 2008. This permit modification documents the change of ownership of
.the above reference facility.
Please find enclosed the revised permit. All other terms and conditions contained in the original permit
remain unchanged and in full effect. This modification is issued under the requirements of North Carolina
General Statutes 143-215.1 and the Memorandum of Agreement between North Carolina and the U.S.
Environmental Protection Agency.
If you have any questions concerning this permit modification, please contact the Point Source Branch
at [phone], extension 350.
Sincerely,
Coleen H. Sullins
cc: Central Files
Wilmington Regional Office, Surface Water Protection
Fran McPherson, NCDENR, DWQ, Budget (letter only)
NPDES File NC0023965
N�`hCarolina
,Natura!!i
North Carolina Division of Water Quality 1617 Mail Service Center Raleigh, NC 27699-1617 Phone [phone] Customer Service
Internet: h2o.enr.state.nc.us 512 N. Salisbury St. Raleigh, NC 27604 FAX [phone]
An Equal Opportunity/Affirmative Action Employer — 50% Recycled110% Post Consumer Paper

NC0023965
STATE OF. NORTH CAROLINA
DEPARTMENT OF ENVIRONMENT, HEALTH, AND NATURAL RESOURCES
DIVISION OF WATER QUALITY
PERMIT
TO DISCHARGE WASTEWATER UNDER THE
NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM
• (NPDES)
In compliance with the provision of North Carolina General Statute 143-215.1,
other lawful standards and regulations promulgated and adopted by the North Carolina
Environmental Management Commission, and the Federal Water Pollution Control Act,
as amended, the
CAPE FEAR PUBLIC UTILITY AUTHORITY
is hereby authorized to discharge wastewater from a facility located at
James A. Loughlin Wastewater Treatment Plant
(Northside WWTP)
NCSR 1302
2311 North 23rd Street
Wilmington
New Hanover County
to receiving waters designated as the Cape Fear River within the Cape Fear
River Basin in accordance with effluent limitations, monitoring requirements,
and other conditions set forth in Parts I, II, III and W hereof.
This permit shall become effective June 30, 2008
This permit and authorization to discharge shall expire at midnight on December 31, 2011
Signed this day May 5, 2008
trt-
�-: Coleen H. Sullins, Direct
Division of Water Quality
By Authority of the Environmental Management Commission

vuiu1 . cuul111Q ►JL+.J .4.aty ul ►JLaw
a
FEB 1 3 Z008 rage 1 Ul 1
North Carolina
r. -• .. ` i Y�.,�-, E PAR M E l T V F I
,;, - "11 Elaine F. Marshall y
Secretary SE0RETARY OF STATE
PO Box 29622 Raleigh, NC 27626-0622 [phone]
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Date: 2/13/2008
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Corporation Names
Name Name Type
NC Cape Fear Public Utility
Authority
Municipal Information
Legal
SOSID: 0927066
Status: Current -Active
Date Formed: 7/2/2007
Citizenship: Domestic
State of Inc.: NC
Duration: Perpetual
Registered Agent
Agent Name:
Registered Office Address: No Address
Registered Mailing Address: No Address
Principal Office Address: 320 Chestnut Street
Wilmington NC 28401
Principal Mailing Address: 320 Chestnut Street
Wilmington NC 28401
For questions or comments about the Secretary of State's web site, please send a -mall to Webmaster.
http://www.secretary.state.nc.us/corporations/Corp,aspx?PitemId=8250739 2/13/2008

SOSID7927A66, .
Date Filed: 7/2/2007 12:25:00 PM ,
Elaine F. Marshall
North Carolina Secretary of State
C200717700267
ARTICLES OF INCORPORATION
CAPE FEAR PUBLIC UTILITY AUTHORITY
ARTICLE I
. NAME AND PRINCIPAL OFFICE
1.1 The name of the authority shall be the Cape Fear Public Utility Authority
(Authority).
1.2 The address of the initial principal office of the Authority is 320 Chestnut Street,
Wilmington, North Carolina 28401.
ARTICLE II
ORGANIZATION
2.1 The Authority is organized under Chapter 162A, Article 1 of the North Carolina
General Statutes known as the North Carolina Water and Sewer Authorities Act,
as amended (Act).
2.2 The names of the organizing and initially participating political subdivisions are
the City of Wilmington, North Carolina (Wilmington or City) and New Hanover
County, North Carolina (County).
ARTICLE III
MEMBERS
3.1 The Authority shall consist of eleven members who shall be residents of New
Hanover. County.
3.1.1 The governing body of each participating political subdivision shall appoint to the
Authority the number of members set forth opposite its names below:
City of Wilmington 5
New Hanover County 5
No more than two of the members appointed by the City and two of the members
appointed by the County may be elected officials.
3.1.2 The eleventh member of the Authority shall be appointed jointly by the City of
Wilmington and New Hanover County.
.3.2 A proportionate number of the initial members of the Authority shall have terms
expiring three years, two years and one year respectively from the date of

issuance of the Certificate of Incorporation or Charter for the Authority by the
North Carolina Secretary of State. After the initial terms each member of the
Authority shall be appointed for a three-year term. No appointee shall serve more
than three full consecutive terms. An appointee who serves three full consecutive
terms shall not be eligible for re -appointment to the Authority for one year.
3.2.1 The names, addresses and terms of office of the initial members of the Authority
appointed by Wilmington are as follows:
Charles C. Wells - 3 year term
2211 Marlwood Drive
Wilmington, NC 28403
Gene F. Renzaglia - 2 year term
1310 Spotswood Court
Wilmington, NC 28409
Stephen B. Thomas - 1 year term
201 North Front Street, Suite 103
Wilmington, NC 28401
James L. "Jim" Quinn, III — 2 year term
202 Stonewall Jackson Drive
Wilmington, NC 28412
Jason R. Thompson - 3 year term
636 Caicos Court
Wilmington, NC 28405
3.2.2 The names, addresses and terms of office of the initial members of the Authority
appointed by the County are as follows:
John R. Andrew - 3 year term
5910 Cedar Landing Road
Wilmington, NC 28409
Kathryn L. Johnston - 3 year term
3530 Aster Court
Wilmington, NC 28409
Robert G. Greer - 2 year term
8735 Ramsbury Way
Wilmington, NC 28411

Burrows G. Smith - 1 year term
131 Skystasail Drive
Wilmington, NC 28409
William A. Caster - 2 year term
6048 Cedar Ridge Drive
Wilmington, NC 28405
3.2.3 The name, address and term of the eleventh initial member of the Authority
appointed by Wilmington and the County is:
Matt Hunter -1 year term
4501 West Cascade Road
Wilmington, NC 28412
3.2.4 The initial terms of office begin on the date of issuance of the Certificate of
Incorporation or Charter by the North Carolina Secretary of State.
The governing body of each participating political subdivision shall be
empowered to remove at any time any member of the Authority appointed by it
with a three fourth (3/4) majority vote of the appointing governing body.
In addition, persons serving because of their positions as elected officials may be
removed when they leave elected office.
The governing body whose member is removed shall appoint a successor member
to fill the unexpired portion of the removed member's term.
ARTICLE IV
PURPOSES AND POWERS
4.1 The purposes for which the Authority is formed is to exercise all the powers
granted to the Authority to acquire, finance, construct, manage and maintain and
operate a water system and a sewer system as defined and authorized under the
Act, and may include stormwater and other services as authorized by law and if
approved by the City and County.
4.2 The Authority shall have all the rights, power and duties of an Authority under the
Act.
4.3 The Authority shall serve its designated service area of the unincorporated area of
New Hanover County that constitutes the New Hanover County Water and Sewer
District and the City of Wilmington. The Authority may serve such other political
subdivisions and private entities as the Authority may determine upon the terms
and conditions established pursuant to contract.
3

ARTICLE V
AMENDMENT AND ACTIONS
5.1 These articles shall not be amended or changed without the express agreement of
each of the governing bodies of the organizing political subdivisions.
5.2 None of the following actions shall be taken or permitted to occur by the
Authority without the affirmative vote of a majority of the members appointed by
each incorporating political subdivision:
(a) The inclusion of additional political subdivisions or other entities in the
Authority in accordance with the Act.
(b) Agreements with other political subdivisions, entities, or persons for the bulk
sale of surplus water or the acceptance and treatment on a bulk basis of
wastewater, hauled waste and/or sewage.
ARTICLE VI
ANNUAL BUDGET, AUDIT AND ENVIRONMENTAL REPORTS
6.1 A certified copy of the annual budget and annual audit and a copy of annual
environmental compliance reports shall be delivered promptly to each of the
participating political subdivisions and any other participating entities.
IN WITNESS WHEREOF, the City of Wilmington, North Carolina has caused
these Articles of Incorporation to be executed by its Mayor and.its corpo to seal to be
affixed hereto and attested by the City Clerk as of this al 4k day of
20 0 7 ; and the Board of Commissioners of New Hanover County, N Carolina, has
caused these Articles of Incorporation to be executed by its Chairman and its co orate
seal • be affixed hereto and attested by the Clerk to the Board as of this 0/ day of
2007.
APPROVED AS FORM:
City Attorney
CITY OF WILMINGTON
/14*/*/ s�yr
Mayor
4

BOARD OF COMMISSIONERS
OF NEW HANOVER COUNTY
°I,);5L%.,,,,a.cas,
Chairman
'%\,.,\.t ',),.,
County Clerk
APPROVED AS TO FORM:
County Attorney

R �Y
STATE OF NORTH CAROLINA
COUNTY OF NEW HANOVER
I, the undersigned Notary Public, do hereby certify that Penelope Spicer-Sidbury
personally appeared before me, and who being duly sworn, sa that : e ows the
common seal of the City of Wilmington and is acquainted with
Mayor, of the City of Wilmington, d e - lo Spicer-Sidbury is Cle of the City
of Wilmington and saw the said , �, , Mayor, of the City of
Wilmington, sign the foregoing instrument, and . w the common seal of said City of
Wilmington affixed to said instrument by said Mayor that she, the said Penelope Spicer-
Sidbury, Clerk as aforesaid, signed her name in attestation of the due execution of said
instrument in the presence of said Mayor of the City of Wilmington.
Witness myhand and notarial seal, this sthe / day of 200 7
Notary Public
My Commission Expires: /6 —19 09
STATE OF NORTH CAROLINA
COUNTY OF NEW HANOVER
..,...r•..w.r..•.r
OFFICIAL SEAL
Notary Pubic • Now Cram
COUNTY OF PENDER
DIANE E. DAYTON
I, the undersigned Notary Public, do hereby certify that Sheila Schutt personally
appeared before me, and who being duly sworn, says she knows the common seal of
the New Hanover County acquainted and is with who is
Chairman of the Board of Commissioners of New Hanover C , and . . Sheila
Schutt is the Clerk of New Hanover County and saw the said
Chairman of the Board of Commissioners of New Hanover County, sign the foregoing
instrument, and saw the common seal of said New Hanover County affixed to said
instrument by said Chairman, and that she, the said Sheila Schutt as aforesaid, signed her
name in attestation of the due execution of said instrument in the presence of said
Chairman of the Board of Commissioners of New Hanover County.
WITNESS my hand and notarial seal, this the .2.l day o 20 07 .
OFFICIAL SEAL
Mdary PubGc . North Carolina
NEW HANOVER COUNTY
TERESA P. ELMORE
M Commlaslon E res.4119l08
•n0 .►
., P
No Public
6

Resolution
City Council
City of Wilmington
North Carolina
Introduced By: Sterling B. Cheatham, City 06/19/2007
• Manager
Concurrent Resolution of the Wilmington City Council and the Board of
Commissioners of New Hanover County Creating the Cape Fear Public Utility
Authority
LEGISLATIVE INTENT/PURPOSE:
N.C.G.S. Chapter 162A, Article 1 known as the North Carolina Water and Sewer Authorities
Act, as amended (the "Act") authorizes political subdivisions, including cities and counties, to
create a water and sewer authority to operate their water system and/or sewer system.
On September 20, 2005 the Wilmington City Council and on September 19, 2005 the New
Hanover County Board of Commissioners adopted a concurrent resolution setting forth their
intent to form an authority to consolidate their water and sewer utilities. The governing bodies
directed City and County staff to research and develop a proposed implementation plan to
include, legal, financial, engineering and administrative issues relating to the consolidation of
water and sewer utilities and to present the final plan to them and to hold a public hearing.
The City and County engaged Municipal & Financial Services Group (MFSG) as the Project
Manager to plan for the consolidation and formed the joint Water Sewer Advisory Committee to
guide the consolidation and to make recommendations to the City and County governing bodies
regarding creation of a consolidated water and sewer authority for the City and County water and
sewer systems, excluding stormwater.
MFSG developed a consolidation plan and implementation schedule that identifies
responsibilities, organization structure, timeline and preliminary utility rates and fees.
The Water Sewer Advisory Committee has made its recommendations to the City Council and
Board of Commissioners, including a recommendation to create an Authority pursuant to the Act.
In accordance with the requirements of the Act, pursuant to notice a public hearing was held
before the Wilmington City Council and New Hanover County Board of Commissioners, and
they have determined that it is in the best interest of the City and County to create the Cape Fear
Public Utility Authority pursuant to the provisions of the Act and desire to do so by the adoption
of concurrent resolutions.
The City of Wilmington and New Hanover County desire to create the Cape Fear Public Utility
Authority to operate their water and sewer systems, excluding stormwater.
THEREFORE, BE IT RESOLVED BY THE WILMINGTON CITY COUNCIL AND THE

BOARD OF COMMISSIONERS OF NEW HANOVER COUNTY THAT:
Section 1. Creation of the Authority. There is hereby created the Cape Fear Public Utility
Authority pursuant to the North Carolina Water and Sewer Authorities Act (Chapter 162A, Article
1 of the North Carolina General Statues), as amended.
Section 2. Articles of Incorporation. The Articles of Incorporation of the Cape Fear Public Utility
Authority (the "Authority"), a copy of which is attached hereto and incorporated herein by
reference, are hereby adopted. The Mayor of the City of Wilmington and the Chairman of the
Board of Commissioners of New Hanover County are hereby authorized and directed to execute
the Articles of Inco oration on behalf of the City and County as organizers of the Authority.
Adopted at a regular meeting
on June 19 , 2007.
ATTEST:
Adopted at a meeting
on -t,a.Q \ , 2007.
ATTEST:
1\1,;4\r.,
CITY OF WILMINGTON
Bill Saffo, Mayor
APPROVED AS TO FORM:
City Attorney
COUNTY OF NEW HANOVER
4,20,t;a..v. cea,„
Chairman, Board of Commissioners
APPROVED AS TO FORM:

AFFIDAVIT OF PUBLICATION
STATE OF NORTH CAROLINA
COUNTY OF NEW HANOVER
Before the undersigned, a Notary Public of Said County and State,
T. Weil-Tallnradge
Who, being duly sworn or affirmed, according to the law, says that he/she is
CLASSIFIED ADVERTISING MANAGER
of THE STAR -NEWS, a corporation organized and doing business under the Laws of the State of
North Carolina, and publishing a newspaper known as STAR -NEWS in the City of Wilmington
Public hearing
was inserted in the aforesaid newspaper in space, and on dates as follows:
6/8 lx
And at the time of such publication Star -News was a newspaper meeting all the requirements and
qualifications prescribed by Sec. No. 1-597 G.S. of N.C.
/l 6U.cc.O �c�i�cad�
Title: CLASSIFIED ADVER. MGR
Swoin or affirmed to, and subscribed before me this 1 1 'I't`' day of
J - . , A.D., a 007
In Testimony Whereof, 1 have hereunto set my hand and affixed my >rt �y�Rjd
1t'' 1,
year aforesaid. Ga r
co s
blif
V
G G..
■
My commission expires day of A U G. , 20 1 1 02.,
y��7,

NOTICE OF PURUC HEARING
NOTICE IS HEREBY given that the City Coundl of the City of Wibnington will hold a public hearing o
the 19th day of June, 2007 at 6:30 p.m. or thereafter in the Council Chambers in City Hall at 10
North Third Street and the New Hanover County Board of Commissioners will hold a public hearin
on the 18th day of lune, 2007 at 9:00 a.m. or thereafter In Suite 135 of the Government Center
230 Government Center Drive, Hurnan Resources Training Center, Room 401 in Wilmington, Nort
Carolina in order to consider the Concurrent Resolution of the Wilmington City Council and the Ne
Hanover County Board of Commissioners signifyingtheir determination to organize a water and sews
authority under the provisions of Chapter 162A, title 1 of the North Carolina General Statutes an
to authorize the execution of the Modes of Incorporation for the Cape Fear Public Utility Authoril
The proposed Resolution and Articles of Incorporation are as follows:
Concurrent Resolution of the Wilmington City Comd1 and the Board of Commissional
of New Hanover County Creating the Cape Fear Public Utility Authority
LEGISLATIVE INTENT/PURPOSE
N.CG.S. Chapter 162A, Mock 1 known as the North Carolina Water and Sewer Authorities Act, r
amended (the "Act") authorizes political subdivisions, including cities and counties, to create a watt
and sewer authority to operate their water system and/or sewer system.
On September 20, 2005 the Wilmington Ctty Council and on September 19, 2005 the New Harrow
County Board of Commissioners adopted a concurrent resolution setting forth their intent to Corm
authority to consolidate their water and sewer utilities. The governing bodies directed l,and Coun
s research and develop a proposed implementation plan to include, legal, financial, engineerir
and administrative issues relating to the consokdatiorr of water and sewer utilities and to present tl
final plan to them and to hold a public hearing.
The City and County engaged Munidpal & Ftnandaf Services Group (MFSG) as the Project Manag
to plan for the consolidation and formed the joint Water Sewer Advisory Committee to guide tt
consolidation and. to make recommendations to the City and County governing bodies regardir
creation of a consolidated water and sewer authority for the City and County water and sewer systerr
excluding stormwater.
MFSG developed a consolidation plan and IMptementatlon schedule that identifies responsibilitic
organization structure, timelne and preliminary utility rates and fees.
The Water Sewer Ackisory Committee has made its recommendations to the City Council and Board
Commissioners, including a recommendation to create an Authority pursuant to the Act.
In accordance with the requirements of the Act, pursuant to notice a public hearing was held befo
the Wilms gton City Coundl and New Hanover County Board of Commissioners, and they ha
determined that It Ls In the best Interest of the City and County to create the Cape Fear Public Util
Authority pursuant to the provisions of the Act and desire to do so by the adoption of cons urre
resolutions.
The City of Wilmington and New Hanover County desire to create the Cape Fear Pubfrc Utility Author
to operate their water and sewer systems, excluding stormwater.
THEREFORE, BE IT RESOLVED BY THE WILMINGTON CITY COUNCIL AND THE BOARD 1
CONNJSSIONERS OF NEW HANOVER COUNTY THAT:
Section 1, Creation of the Authority: There is hereby seated the Cape Fear Public Utility Author
pursuant to the North Carolina Water and Sewer Authorities Act (Chapter 162A, Article t of the Not
Carolina General Statues), as amended.
Section 2. Articles of incorporation. The Mtldes of Incorporation of the Cape Fear Public Uti
Authority (the "Authority"), a copy of which is attached hereto and incorporated herein by releren
are hereby adopted. The Mayor of the City of Y.ilmington and the Chairman of the Board
Commissioners of New Hanover County are hereby authorized and directed to execute the Articles
lnoorporation on behalf of the Oty and County as organizers of the Authority
ARTUCLES OF INCORPORATION
CAPE FEAR PUBLIC UTILITY AUTHORITY
ARTICLE
NAME AND PRINCIPAL OFFICE
1.1 The name of the authority shall be the Cape Fear Public Utility Authority (Authority).
1.2 The address of the initial prindpal office of the Authority is 320 Chestnut Street, tr{dmingti
North Carolina 28401.
ARTICLE II
ORGANIZATION
2.1 The Authority is organized under Chapter 1624 Mtide 1 of the North Carolina General
Statutes known as the North Carolina Water and Sewer Authorities Ad, as amended (Ad).
2.2 The names of the organizing and initially partidpating subdivisions are the City of
Wlmington, North Carolina or City) and New I�County, North Carolina (Coon
ARTICLE Ill .
MEMBERS
3.1 The Authority shall consist of eleven members who shall be residents of New Hanover
County
3.1.1 The governing body of each participating political subdivision shall appoint to the Authori
the number of members set forth opposite its names below:
City of Wilmington 5
New Hanover County 5
No more than two of the members appointed by the City and two of the members appoin
by the County may be elected officials.
3.1.2 The eleventh member of the Authority shall be appointed jointly by the City of Wilmington
New Hanover County
3.1.3 A proportionate number of the initial members of the Authority shall have terms expiring
three years, two years and one year respectively tom the date of Issuance of the Certify
of•tncorporation or Charter for the Authority by the North Carolina Secretary of State. Al
the initial terms each member of the Authority shall be appointed fora three-year term.
appointee{,shall serve more than three full consecutive terms.
tAn appointee who serves tl
3.z.' Y1ro` mnca rm
,s� jtte o ao gnome Derr of the Authority appoin
by Wilmington areas follows:
Charles C. Wells - 3 year term
2211 Martwood Drive
Wilmington, NC 28403
Gene F. Renzagfa - 2 year term
1310 Spotswood Court
Wilmington, NC 28409
Stephen B. Thomas -1 year term
201 North Front Street, Suite 103
Wilmington, NC 28401
lames L lie Quinn, 111- 2 rear term

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New Hanover County Contract No. 68-26 `%
Table of Contents
ARTICLE I DEFINITIONS
Section 1.1 Definitions
8
ARTICLE II CONVEYANCE OF SYSTEM
Section 2.1 Purpose of Agreement 10
Section 2.2 Conveyance of System 10
Section 2.3 Operation of System 10
Section 2.4 Real Property and Rights and Privileges as to Real Property 10
(A) Real Property
(B) Rights and Privileges
Section 2.5 Personal Property 11
(A) Motor Vehicles
(B) Equipment and Furnishings
(C) Software Licenses
Permits 11
Assignment of Prior Agreements 12
Assumption of Claims and Liabilities 12
Non-profit Corporations 12
Indebtedness 12
(A) Assumption and Payment by Authority
(B) After Closing
ARTICLE IiI REPRESENTATIONS AND WARRANTIES OF THE LOCALITIES
Section 2.6
Section 2.7
Section 2.8
Section 2.9
Section 2.10
Section 3.1
Section 3.2
Section 3.3
Section 3.4
Section 3.5
Section 3.6
Authorization
Non -contravention
Notice
Known Orders, Decrees and Litigation
No Violations of Law
Permits, Licenses and Certificates
13
13
13
13
14
14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE AUTHORITY
Section 4.1
Section 4.2
Section 4.3
Section 4.4
Section 4.5
Authorization
Non -contravention
Notice
No Known Litigation
No Violations of Law
14
14
14
14
15
Page 1 of 36

New Hanover County Contract No.
ARTICLE V COVENANTS OF THE LOCALITIES
Section 5.1 Access to Information 15
Section 5.2 Fiscal Agent 15
Section 5.3 Additional Services 15
Section 5.4 Cooperation 15
(A) Transactions
(B) Permits
(C) Authority Review
Section 5.5 Authority to Provide All Utility Service 16
ARTICLE VI COVENANTS OF THE AUTHORITY
Section 6.1 Access to Information 16
Section 6.2 Expenses of Authority 16
Section 6.3 Billing and Collection of Accounts Receivable 16
(A) Billing for Stormwater and Solid Waste
(B) Collection of Stormwater and Solid Waste Accounts Receivable
(C) Collection after Closing of Outstanding Accounts
Receivable
Section 6.4 Rates, Fees and Charges 17
(A) Rate Schedule
(B) Rate Equalization
(C) Fire Hydrants
Section 6.5 Financing, Budgeting and Compliance 17
(A) Fiscal Year
(B) Finance and Budget
(C) Compliance
Section 6.6 Provision of Services 18
(A) Services
(B) Permits
(C) Business
(D) Non-profit Corporations
(E) Standards
(F) Future Expansions
(G) Fire Hydrants
(H) Stormwater Management
Section 6.7 Personnel 20
(A) Transition until Closing
(B) Transition after Closing
(C) Locality Employees Immunities
(D) Authority Employees and Compensation
(E) Benefits
Page 2 of 36

New Hanover County Contract No.
(F) Retirement
(G) Post -retirement Health Care
(H) Accrued Vacation
(I) Accrued Sick Leave
(J) Accrued Holidays
(K) Personnel Records
Section 6.8 Insurance 22
(A) Coverages
(B) Self Insured Retention
(C) Certificates
Section 6.9 Franchise 24
Section 6.10 Hold Harmless and Indemnity • 24
Section 6.11 Cooperation 24
Section 6.12 Regulation, Compliance with Laws and Ageements 25
(A) Ordinances and Regulations
(B) Compliance with Law
(C) Compliance with Agreements
ARTICLE VII CLOSING AND EFFECTIVE DATE
Section 7.1 Closing 25
Section 7.2 Time and Place of Closing 26
Section 7.3 Conditions of Closing 26
(A) Local Government Commission Approval
(B) Transfer of Permits
(C) Consents to Assignments of Agreements
(D) Transfer of Consent Order
(E) Trustee and Bond Insurer Consent
(F) Insurance
(G) Pending Legal Proceedings
(H) Budget, Rate Schedules, Utility Extension Policies, CIP,
Ordinances and Regulations
(I) IVIFSG Opinion
(J) Non-profit Corporation Articles of Incorporation
(K) Representations and Warranties
Section 7.4 Remedies and Effective Date 27
(A) Effective Date and Duration
(B) Termination Prior to Closing
(C) Judicial Action
(D) Rights upon Dissolution or Failure to Operate
Page 3 of 36

New Hanover County Contract No.
ARTICLE VIII MISCELLANEOUS
Section 8.1 Expenses 28
Section 8.2 Severability 28
Section 8.3 Notices 28
Section 8.4 Headings 29
Section 8.5 Entire Agreement 29
Section 8.6 Amendment 29
Section 8.7 Counterparts 29
Section 8.8 Assignment 29
Section 8.9 Binding Effect 30
Section 8.10 Governing Law 30
Section 8.11 Continuing Obligation 30
Section 8.12 Survival of Representations, Warranties, Covenants and Agreements 30
Section 8.13 Reference 30
Section 8.14 Immunity Not Waived 30
Section 8.15 Waiver 30
Exhibits
35
Page 4 of 36

New Hanover County Contract No.
INTERLOCAL AGREEMENT
For Transfer of Assets and Operation of Water and Sewer Systems
THIS INTERLOCAL TRANSITION ANJ OPERATING AGREEMENT dated as
of the day of,fu , 200 this "Agreement") is made among NEW
HANOVER COUNTY, a olit' a1 subdivision of;
P the State of North Carolina (the "County");
the CITY OF WILMINGTON, a municipality of the State of North Carolina (the "City"); the
NEW HANOVER COUNTY WATER AND SEWER DISTRICT, a public body politic and
corporate of the State of North Carolina (the "District"); and the CAPE FEAR PUBLIC
UTILITY AUTHORITY, a public body politic and corporate of the State of North Carolina
(the "Authority").
WITNESSETH:
WHEREAS, after extensive discussion, the City Council and the County Board of
Commissioners have concluded that a "consolidated" water and wastewater authority would be
the best vehicle for ensuring the citizens of their localities the most reliable means of providing
quality water and wastewater treatment.
WHEREAS, N.C.G.S. §160A-461 authorizes units of government to enter into
agreements with each other in order to execute an undertaking.
WHEREAS, the County and the City desire an Authority that shall maintain or enhance
quality of service.
WHEREAS, the County, the City, the District and the Authority desire to enter into an
interlocal agreement for the transfer of the City, County and District water and sewer systems as
identified in Exhibits B through I, inclusive, excluding stormwater, to the Authority for operation
by the Authority.
WHEREAS, the County and the City used certain guiding principles for the creation of
an authority to consolidate their water and sewer services, as follows:'
(1) Both the County and City will be equal partners.
• (2) One goal is to achieve equal rates for both the County and the City customers.
(3) All of the County and the City water and sewer assets will be transferred to the
Authority to serve the customers for the common good of both localities.
(4) Existing City and County employees, in recognition of their history of valuable
and dedicated service and of the continuing need for their service, will be treated
as fairly as possible. All existing County and City employees will be offered a
position. Retirement benefits will continue with the present State/Local
government system.
Page 5 of 36

(5)
(6)
New Hanover County Contract No.
The costs to customers for services will not be more than if the County and the
City systems remained separate.
The geographic jurisdiction of the new Authority initially will consist of the City
of Wilmington and the District. Provisions will be made, however, for continued
relations with other jurisdictions through interlocal agreements.
WHEREAS, the County and the City formed the Water and Sewer Advisory Committee
to guide the consolidation of the County and the City water and sewer systems and to make
recommendations for a consolidated water and sewer utility authority. The Advisory Committee
made recommendations to the County and the City as follows:
(1) The Authority's mission is to provide high quality water and sewer service in an
environmentally responsible manner while maintaining the lowest practicable
cost.
(2) The County and the City elected officials shall appoint the members of the
Authority by March 31, 2007 or as soon thereafter as possible. The elected
officials select a name for the new Authority at that time such as the Cape Fear
Utility Authority.
(3) The County and the City elected officials approve the Articles of Incorporation
recommended by the Advisory Committee. The geographical limits of the new
Authority initially consist of New Hanover County Water and Sewer District and
the City of Wilmington. Active dialogue be continued with other nearby entities
to ensure that future regional opportunities are kept open.
(4) The Authority adopt the following principles in establishing utility rates and fees:
(a) Future growth in the utility systems should generally be paid for by new
development.
(b) Utility customers will pay to operate and maintain the systems, but not for
capacity built for/used by new customers.
(c) Current (January 2007) connection fees should be charged to existing
unsewered customers at the time they connect to the sewer system
provided they do not require a new building permit. Therefore, the
County's sales tax subsidy should be maintained at its current level.
(5) Internal communication be a high priority for the Authority once it is formed in
March 2007 and that answers to employee questions concerning salary, benefits
and job placement be answered as quickly as possible.
.(6) The work of the employee working groups in 2006 continue to be given full
consideration in the formation. of the new Authority. A new round of employee
workings groups be formed to address new and additional issues during 2007.
Page 6 of 36

New Hanover County Contract No.
(7) The organizational structure illustrated in Figure 1 on page 16 of the Advisory
Committee Recommendations a copy of which is marked Exhibit A and attached
hereto and made a part hereof, be adopted for the Authority.
(8) Consideration of the possible addition of stormwater management responsibilities
to the Authority be delayed for a reasonable period of time to allow the Authority
to establish a sound operating platform for its water and sewer responsibilities.
(9) Until December 31, 2009 the members of the Authority be compensated per
meeting in addition to being reimbursed for all reasonable expenses incurred
related to Authority activities. The Authority make every effort to televise all of
its meetings.
WHEREAS, the County and the City appointed *the members of the Authority and in
June 2007 by Concurrent Resolution the County and the City voted to create the Authority
pursuant to Chapter 162A, Article I of the North Carolina General Statutes, known as the North
Carolina Water and Sewer Authorities Act, as amended (the "Act").
WHEREAS, the Authority was organized to exercise all of the rights, powers and duties
granted to an authority by the Act, except stormwater unless specifically approved by the County
and the City; and the County and the City currently retain the operation and management of their
respective stormwater management systems and programs, if any, for an indefinite period.
WHEREAS, the Authority was created on July 2, 2007 at which time the North Carolina
Secretary of State issued a certificate of incorporation for the Authority.
WHEREAS, N.C.G.S. §162A-14 provides that pursuant to N.C.G.S. §160A-274 and
subject to the approval of the Local Government Commission, a county and municipality,
including a Water and Sewer District, may convey to a water and sewer authority, upon such
terms and conditions as the county or municipality and the authority deem reasonable and fair,
the whole or part of any water and sewer system.
WHEREAS, the County, the City and the District desires to convey their water and
sewer systems, except stormwater, to the Authority.
WHEREAS, the Authority desires to accept the County, City and District water and
sewer systems, except stormwater, and will use and operate these systems in accordance with the
terms of this Agreement to serve its designated service areas and such other political
subdivisions and private entities as the Authority may determine from time to time upon the.
terms and conditions established pursuant to contract in accordance with its Articles of
Incorporation and the terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements contained herein, the County, the City, the
District and the Authority agree as follows:
Page 7 of 36

New Hanover County Contract No.
ARTICLE I
DEFINITIONS
Section 1.1 Definitions
The following words and terms shall have the following meanings unless the context
otherwise requires:
"Authority" means the Cape Fear Public Utility Authority created by the City of
Wilmington and New Hanover County.
"Closing" or "Closing Date" means the date of closing of all the transactions necessary
and contemplated in this Agreement which will be on July 1, 2008, unless extended by the
parties.
"County" hereinafter means collectively the County of New Hanover, North Carolina and
the New Hanover County Water and Sewer District.
"City" means the City of Wilmington, North Carolina.
"District" means the New Hanover County Water and Sewer District.
"Improvements" means any additions, enlargements, improvements, extensions and
alterations to the System.
"Localities" means collectively the County of New Hanover, the New Hanover County
Water and Sewer District and the City of Wilmington.
"Locality" means the County, the City or the District.
"Parties" means all of the parties to this Agreement; "Party" means any party to this
Agreement.
"Real Property" means the real property as identified on Exhibit B, which is attached
hereto and made a part hereof by reference.
"Revenues" shall have the meaning set forth in N.C.G.S. §159-81.
"Rights and Privileges as to Real Property" means the rights to use all water and sanitary
sewer easements of record and any easements or any other interest in the Real Property for the
installation, location, operation and maintenance of any portion of a Locality's water and sewer
systems, excluding stormwater; all of the licenses, possessory interests, unwritten easements and
other rights and privileges, including judgments, possessed, owned or enjoyed by any of the
Localities as of the date of this Agreement and used in the current operation of their water and
sewer systems, excluding stormwater, and including, but not limited to, easement rights where
Page 8 of 36

New Hanover County Contract No.
parts of such water and sewer systems are on property owned in fee by any of the Localities or
where no formal written easements have been conveyed as these relate to any of the Real
Property.
"System" means the water and sewer systems of the Localities, excluding stormwater,
and all of the assets used by the County, the City and the District to operate and maintain the
System as operated immediately before the Closing, as follows:
(I) Real Property and Rights and Privileges as to Real Property; and
(2) Personal property identified in Exhibits C and D, and (all customer deposits, cash,
securities, and accounts receivable and other Revenues of the System, and
amounts on deposit in the County's and the City's respective water and sewer
utilities enterprise funds less any deductions therefrom authorized by this
Agreement identified in Exhibit E), and to the extent transferable the personal
property identified in Exhibit F, all of which Exhibits are attached hereto and
made a part hereof by reference; and
(3) Additional real property, rights and privileges as to real property and personal
property acquired by any of the Localities and used as part of their water and
sewer systems, excluding stormwater, prior to the Closing; and
(4) Federal, State and local governmental permits, licenses, certificates, agreements
and other authorizations and approvals (to the extent that they are transferable)
held by any of the Localities which are necessary for or used in the operation of
their water and sewer systems, including those identified in Exhibit G, which is
attached hereto and made of part hereof by reference (collectively the "Permits");
and
(5) Rights of any of the Localities under all interlocal agreements, contracts and
leases relating to their water and sewer systems to the extent that they are
transferable and as identified in Exhibit H, which is attached hereto and made a
part hereof by reference; and
(6) Indebtedness of the Localities in connection with their water and sewer systems,
including but not limited to those set forth in Exhibit I, which is attached hereto
and made a part hereof by reference; and
(7) Any and all other property, real, personal, tangible or intangible used by the
Localities exclusively in the operation of the System, and any such property used
with the System and also with other divisions or facilities of the Localities and
which are no longer needed for such divisions or facilities and which can be
reasonably subdivided or separated.
"Transition" means the period of time beginning July 2, 2007 through the Closing Date.
Page 9 of 36

New Hanover County Contract No.
ARTICLE II
CONVEYANCE OF SYSTEM
Section 2.1 Purposeof Agreement
The purpose of this Agreement is to provide for the transition and transfer of the System
from the Localities to the Authority and to set forth certain rights, responsibilities and obligations
of the Parties relating to the transition, transfer, operation, maintenance, management, extension
and improvement of the System.
Section 2.2 Conveyance of System
The Localities hereby agree to lease, lend, license, grant, assign or convey and deliver the
System to the Authority, and the Authority hereby agrees to lease, borrow, purchase, accept,
acquire and assume from the Localities the System in accordance with the terms and conditions
in this Agreement. The Localities make no representations or warranties as to the physical
condition of the System or any part thereof. Any conveyance, assignment, lease or license of the
System or any part thereof is in its "AS IS" condition. Any conveyance, assignment, lease or
license of the System shall be subject to all outstanding liens, deeds of trust, easements and other
encumbrances. The value of the System is set forth in Exhibit J'', which is attached hereto and
made a part hereof by reference.
Section 2.3 Operation of System
Prior to Closing, the Localities shall continue to operate, manage, maintain and construct
their respective System. The. Parties understand that the assets and other things identified in the
Exhibits may change after the execution of this Agreement as the Localities continue operation
of the System until the Closing Date, at which time the Exhibits will be updated to reflect the
current assets of the System and other things identified in the Exhibits. Possession of the System
shall be delivered to the Authority at Closing. The Authority shall operate, manage, maintain,
and construct the System on or after the Closing Date, in accordance with the terms of this
Agreement. The Parties hereto shall undertake required actions, as necessary,
Authority will be prepared to operate the System on the Closing Date.so that the
Section 2.4 Real Property and Rights arid Privileges as to Real Property
(A) Real Property. At Closing, the Localities shall convey their respective interests
in the Real Property by non -warranty deed, subject to any and all recorded encumbrances and
easements. The Localities may reserve the right to use for governmental uses, including but not
limited to public recreation, stonnwater drainage, and/or governmental telecommunications, any
of the Real Property to be conveyed to the extent said use is not inconsistent with the operation
of the System by the Authority. If any indebtedness precludes a fee conveyance of any of the
Real Property at Closing, the Locality owner of such property shall enter into a lease, operations
agreement or other agreement for the use of the property with the Authority until the debt
obligations are discharged, and a fee conveyance is permissible. The Localities shall not extend
the maturity date of such existing indebtedness through refinancing or otherwise.
Page 10 of 36

New Hanover County Contract No.
(B) Rights and Privileges. At Closing, the Localities shall transfer, assign or license
to the Authority their respective Rights and Privileges as to Real Property and any North
Carolina Department of Transportation encroachments used in connection with the System,
however, the Localities may reserve any easements or other rights they have for other than for
the provision of water and sewer services. So long as it would not interfere with the operation of
the System, the Authority shall convey to any of the Localities upon request and at no cost such
easements for public purposes as any of the Localities need on the Real Property, any other real
property transferred by any Locality to the Authority and any other real property acquired by the
Authority.
Section 2.5 Personal Property
(A) Motor Vehicles. At Closing, the Localities shall convey by bill of sale or lease at
the Authority's discretion, and shall deliver to the Authority, at the Authority's discretion, those
motor vehicles identified in Exhibit C. These vehicles shall be transferred, conveyed or leased to
the Authority with no warranties from the Localities, but with any available manufacturer
warranties. The Authority shall maintain, and keep these vehicles in good repair. if the vehicles
are leased to the Authority, upon the sale of the motor vehicles the Authority shall be entitled to
any sale proceeds and the Authority shall be entitled to any insurance proceeds received for
damage to any of such vehicles. Any costs associated with the transfer of vehicles by bill of sale
shall be paid by the Authority.
(B) Equipment and Furnishings. At Closing, the Localities shall convey by bill of
sale and deliver to the Authority the equipment and office furnishings identified in Exhibit D.
This equipment and office furnishings shall be transferred to the Authority with no warranties
from the Localities, but with any available manufacturer warranties.
(C) Software Licenses. If transferable and if the Localities no longer need the
software for the remaining operation, at Closing the Localities 'shall transfer to the Authority
their licensesand rights to software customer information, receipting, and billing systems
utilized for the System and identified in Exhibit F. Any costs associated with such transfer shall
be paid by the Authority.
Section 2.6 Permits
The Localities shall give any required notice and request the transfer of the Permits to the
Authority. The Authority and Localities shall cooperate in obtaining the transfer of the Permits
and shall assume all rights, responsibilities and obligations of the Localities under these Permits
and any other permits for the operation of the water and sewer systems. All new, renewed or
amended permits shall be applied for and issued in the name of the Authority. After the Closing
Date, the Authority shall pay any fines, fees, penalties or costs levied on any of the Localities or
the Authority by any cognizant federal or state regulatory agency for violations of any applicable
laws, regulations or permits relating {o the System and the Permits.
Page 11 of 36

New Hanover County Contract No.
Section 2.7 Assignment of Prior Agreements
The Localities are parties to certain outstanding interlocal agreements with each other and
other political subdivisions, water and sewer authorities or other entities relating to the System
and relating to communication/antenna identified in Exhibit H. At Closing, these existing
agreement and any other agreements entered into by any of the Localities prior to Closing shall
be assigned to the Authority. The Authority shall accept the assignment and shall assume all
rights, responsibilities and obligations of the Localities under these agreements. To the extent
required by these agreements, the Localities consent and agree to the assignment of these
agreements to the Authority. The Authority's assumption of the rights, responsibilities and
obligations of the Localities under these agreements shall not be inconsistent with the terms and
obligations.of any outstanding bonds or debt documents issued to fund water and sewer services.
Section 2.8 Assumption of Claims and Liabilities
At Closing, the Authority shall assume all claims, liabilities, litigation and obligations of
the Localities relating to the System including but not limited to those set forth in Exhibit K. The
cost of the defense and resolution of any System claims presented or System litigation involving
any Locality as a defendant shall be paid by the Authority.
Section 2.9 Non-profit Corporations
The Wilmington City Council serves as the Board of Directors of Cape Fear Utilities, Inc.
and Quality Water Supplies, Inc., both North Carolina non-profit corporations, (hereinafter the
"Non-profit Corporations"). The Non-profit Corporations shall continue to exist for the purpose
• of the ownership and operation of the existing water distribution system located in New Hanover
County and providing water services within the jurisdiction of the City and its surrounding area.
The Wilmington City Council shall amend the Articles of Incorporation for the Non-profit
Corporations to increase the number of directors to eleven and to provide that the directors shall
be the members of the Authority and shall be deemed appointed and serve by virtue of their
offices as members of the Authority.
Section 2.10 Indebtedness
(A) Assumption and Payment by Authority. At and after Closing, the Authority
shall assume and/or pay all of the indebtedness of the Localities in connection with the System
including but not limited to those set forth in Exhibit l If an indebtedness of a Locality is not.
assignable by a Locality, the Authority shall pay to the respective Locality not less than thirty
(30) days in advance of such Locality due dates on the indebtedness an amount equal to the
scheduled payments of principal and interest for such indebtedness and other charges or fees
related to the indebtedness. The schedule of payments for the indebtedness that is not assignable
is included in Exhibit L Any payment due from the Authority to the County for the indebtedness
of the County shall be reduced by $1.9 million each year for the initial five years of this
Agreement after Closing; by $1.577 million for the sixth year, by $1.254 million for the seventh
year, by $950,000.00 for the eighth year, by $627,000.00 for the ninth year and by $304,000.00
for the tenth year (such amounts are referred to herein as the "debt payment reduction amounts").
If during any year of this Agreement the County does not have scheduled payments of principal
and interest on outstanding indebtedness that are equal to or greater than the debt payment
Page 12 of 36

New Hanover County Contract No.
reduction amounts, the County shall remit to the Authority by the end of such year, the
difference between the scheduled payments and the debt payment reduction amount for such
year. After the tenth year, the Authority shall pay all of the scheduled payments of principal and
interest for such County indebtedness not assigned to the Authority. Nothing herein shall
prevent the Authority from pre -paying or defeasing such debt.
(B) After Closing. After Closing, neither the County nor the City shall incur any
indebtedness for the System.
ARTICLE ITC
REPRESENTATIONS AND WARRANTIES OF THE LOCALITIES
As of the date of this Agreement the Localities represent and warrant to the Authority the
following:
Section 3.1 Authorization
The Localities each have the power and authority to execute this Agreement; to lease,
lend, license, grant, assign or convey and deliver the System and any part thereof to the
Authority as set forth in this Agreement; and to consummate the transactions as set forth in this
Agreement. The execution of this Agreement by the Localities has been duly authorized by the
governing bodies of the Localities. The Localities shall obtain all necessary consents, approvals
and agreements required by each of them to consummate the transactions set forth in this
Agreement.
Section 3.2 Non -contravention
The execution by the Localities of this Agreement does not, and the consummation of
any of the transactions set forth herein will not (a) violate or result in a breach of any provision
of any applicable Locality charter; (b) violate or constitute a default under the terms, conditions
or provisions of any note, bond, mortgage, lien, lease, agreement, license, indenture, instrument,
or other instrument or obligation to which any of the Localities is a party or by which any. of the
Localities or the System is bound; or (c) violate any order, writ, injunction, arbitration award,
judgment, decree, statute, rule or regulation applicable to any of the Localities or the System.
Section 3.3 Notice
No notice or other action of any of the Localities is required for the execution of this
Agreement by the Localities or in connection with the consummation of any of the transactions
set forth herein except those identified herein.
Section 3.4 Known Orders, Decrees and Litigation
There are no known existing fines, penalties, notices, actions, controversies, judgments,
orders or decrees of any court, arbitrator, governmental department, commission, agency or other
instrumentality, or any litigation regarding ownership and operation of the System except those
identified in Exhibit K which is attached hereto and made a part hereof by reference.
Page 13 of 36

New Hanover County Contract No.
Section 3.5 No Violations of Law
To the best of the Localities' knowledge, their participation in this Agreement does not
violate any Federal, State or local law, statute, rule, regulation or ordinance.
Section 3.6 Permits, Licenses and Certificates
The Localities have applied for or hold all governmental permits, licenses, certificates,
agreements and other authorizations, approvals from appropriate Federal, State or other public
authorities required to own and/or operate their respective system. These permits are identified
in Exhibit G.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE AUTHORITY
As of the date of this Agreement, the Authority represents and warrants to the Localities
the following:
Section 4.1 Authorization
The Authority has the power and authority to execute this Agreement; to lease, borrow,
purchase or accept, acquire and assume the System and any part thereof as set forth in this
Agreement and to consummate the transactions set forth in this Agreement. The execution of
this Agreement by the Authority has been duly authorized by the Authority. The Authority shall
obtain all necessary consents, franchises, approvals and agreements required on its part to
consummate the transactions set forth in this Agreement.
Section 4.2 Non -contravention
The execution by the Authority of this Agreement does not, and the consummation of any
of the transactions set forth herein will not (a) violate or result in a breach of any provisions of
the Authority's Articles of Incorporation and Bylaws; (b) violate or constitute a default under the
terms, conditions or provisions of any note, bond, mortgage, lien, lease, agreement, license,
indenture, instrument, or other instrument or obligation to which the Authority is a party or by
which the Authority or the System is bound; or (c) violate any order, writ, injunction, arbitration
award, judgment, decree, statute, rule or regulation applicable to the Authority or the System.
Section 4.3 Notice
No notice or other action of the Authority is required for the execution of this Agreement
by the Authority or in connection with the consummation of any of the transactions set forth
herein except those identified herein.
Section 4.4 No Known Litigation
There are no known existing notices, actions, controversies, judgments, orders or decrees
of any court, arbitrator, governmental department, commission, agency or other instrumentality,
or any litigation against the Authority regarding its potential ownership and operation of the
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New Hanover County Contract No.
System. No litigation, proceeding or controversy is pending against the Authority before any
court or any governmental agency which may have any adverse effect upon the Authority.
Section 4.5 No Violations of Law
To the best of the Authority's knowledge, its participation in this Agreement does not
violate any Federal, State or local law, statute, rule, regulation or ordinance.
ARTICLE V
COVENANTS OF THE LOCALITIES
Section 5.1 Access to Information
From the date hereof until Closing, the Localities shall afford the Authority and its
authorized representatives reasonable access, during normal business hours and upon reasonable
notice, to all of the assets, properties, books, records, drawings, plans, as-builts, specifications,
plats, maps, customer history and agreements of the Localities relating to the System, subject to
North Carolina law.
Section 5.2 Fiscal Agent
From the date hereof until Closing, at the option of the Authority and with the consent of
the respective Locality, one of the Localities may choose to act, for such time as agreed upon by
such Party, as fiscal agent for the Authority with cost paid from the respective Locality's water
and sewer enterprise fund. As fiscal agent, the Locality shall process accounting and all
disbursements including payroll, purchasing, general ledger and accounts payable. The
Authority shall provide necessary information to the Locality. All cash of the Authority may be
invested by the Locality Finance Officer in a pooled cash arrangement. Investment income will
be allocated to the Authority on a monthly basis. Separate long term investments may be made
in the name of the Authority.
Section 5.3 Additional Services
With costs paid from the respective Locality's water and sewer enterprise fund, the
Localities will continue to provide services for the Authority as necessary for operations at the
Authority's request until Closing. After Closing, the Authority may choose to contract with the
Localities for selected services.
Section 5.4 Cooperation
(A) Transactions. The Localities shall cooperate with each other and the Authority
in consummating the transactions set forth in and contemplated by this Agreement. The
Localities will, at the request of each other and the Authority, join in taking any action which,
though not specified herein, may be reasonably required to be taken in order to consummate the
transactions set forth in and contemplated by this Agreement.
(B) Permits. The Localities and the Authority shall cooperate in transferring the
Permits, licenses and certificates necessary for the operation of the System to the Authority.
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New Hanover County Contract No.
(C) Authority Review. Prior to Closing, agreements undertaken or incurred by the
Localities that materially impact the future operation and/or maintenance of the System shall be
submitted to the Authority for a fifteen (15) day review and comment period. In addition,
consents, decrees or judgments undertaken or incurred by any Locality that impacts the future
operation and/or maintenance of the System shall be submitted to the Authority for a fifteen (15)
day review and comment period.
Section 5.5 Authority to Provide All Utility Service
So long as the Authority is meeting the water and sewer needs of the residents and
businesses in the City and the District, the Localities shall not without the prior written consent
of the Authority acquire or produce potable water or sewer collection and treatment capacity
from any source other than the Authority or engage in water or sewer collection/treatment
enterprises.
ARTICLE VI
COVENANTS OF THE AUTHORITY
Section 6.1 Access to Information
From the date hereof until Closing, the Authority shall afford the Localities and their
authorized representatives reasonable access, during normal business hours and upon reasonable
notice, to all of the assets, properties, books, records, drawings, plans, as-builts, specifications,
plats, maps, customer history and agreements of the Authority, subject to North Carolina law.
The Authority shall provide the County Clerk and the City Clerk a copy of the Authority's
calendar of regular meetings, its membership list with contact information as updated from time
to time, timely notices of all meetings, agendas, agenda packages with all attached documents
and minutes of all meetings, including committee meetings.
Section 6.2 Expenses of Authority
The Authority shall pay all costs for professional services related to contracts entered into
by the Authority for the consolidation effort. The County and the City will deduct from their
respective water and sewer enterprise funds their costs incurred for the creation and operation of
the Authority and the transfer of the System to the Authority through the Closing Date. The
Authority shall pay to the County and the City any costs incurred by the County and the City
after Closing relating to such creation, operation and transfer.
Section 6.3 Billing and Collection of Accounts Receivable
(A) Billing for Stormwater and Solid Waste. The Authority sha11 bill the
Localities' residents and customers for stormwater and solid waste services provided by the
Localities at the incremental cost of the Authority. Billing shall include customer services
relating to the bill. If full payment is not received by the Authority from residents and customers
for all of the services billed, the amount received shall be applied first to stormwater, second to
solid waste, third to sewer and last to water. All amounts collected by the Authority for
stormwater and solid waste services shall be paid to the Localities weekly.
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New Hanover County Contract No.
(B) Collection of Stormwater and Solid Waste Accounts Receivable. If authorized
by law, the Authority shall collect on behalf of the Localities and at the incremental cost of the
Authority any delinquent amounts due for stormwater and solid waste services and pay the
amount of delinquency collected to the Locality to which it was due.
(C) Collection after Closing of Outstanding Accounts Receivable. The Authority
shall collect and receive all payments for services furnished by the System not yet collected by
the Localities prior to or on or after the Closing Date. The Authority shall collect and remit to
the Localities weekly until. fully collected, along with current collections, any outstanding
accounts receivable for stormwater and solid waste services existing before Closing.
Section 6.4 Rates, Fees and Charges
(A) Rate Schedule. On and after Closing, the Authority shall establish and revise
from time -to -time schedules of rents, rates, fees, charges and penalties for the use of the services
of the Authority. Such schedules may vary according to classes of service in accordance with
applicable law. The Authority's initial rate schedule shall consider the Municipal Financial
Services Group, LLC ("MFSG") rate study. Provided, however, at all times, rents, rates, fees,
charges and penalties shall generate sufficient revenue to meet all costs of operating and
maintaining the water and sewer systems, all debt service costs, all operating capital, a
reasonable reserve for improvements and enlargements, and all other direct or indirect costs or
expenses necessary or desirable for the provision of water and sewer services in the service area.
In addition, rents, rates, fees, charges and penalties shall satisfy any rate covenants in any
revenue indebtedness of the County, the City or the Authority.
(B) Rate Equalization. Wastewater and water rates charged to the residents and
customers of the City and the District by the Authority shall be equalized for equal services
within one (1) year of the Closing Date. Once equalized, such rates shall remain equal for equal
services for System users in the City and the District.
(C) Fire Hydrants. The Authority may not impose fire hydrant rentals or a fire
protection charge on either the County, the City or the New Hanover County Fire District.
Section 6.5 Financing, Budgeting and Compliance
(A) Fiscal Year. The fiscal year of the Authority shall commence on July 1 of each
year and shall terminate on the following June 30.
(B) Finance and Budget. The Authority shall establish guidelines, policies and/or
procedures for the efficient and sound fiscal management of the Authority not inconsistent with
the Local Government Budget and Fiscal Control Act (hereinafter "Budget Control Act"). The
Authority shall prepare an annual budget for the operation of the System in accordance with the
Budget Control Act. Should the Localities propose to fund or otherwise sponsor a project or
projects that impacts the budget of. the Authority, a detailed budget for this work must be
submitted to the Authority in accordance with the Authority's budget schedule.
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New Hanover County Contract No.
(C) Compliance. The Authority shall comply with all covenants, conditions and
requirements of the indebtedness in connection with the System including, but not limited to, the
satisfaction of all rate covenants.
Section 6.6 Provision of Services
(A) Services. The Authority shall operate the System for the primary benefit of the
Authority's service area and shall provide water and sewer utility services to the areas of the City
and the District currently being served by the System. The Authority shall meet any additional
sewer collection/treatment and potable water supply, treatment and distribution needs of the
residents and businesses of the City and the District that are not currently provided water or
sewer by any other governmental entity or private or public utility, subject to limitations upon
the Authority's ability to do so caused by (a) the amount of potable water supply, treatment
capacity and distribution lines and sewer treatment capacity and collection lines available to the
Authority, (b) lack of discharge capacity for the Authority's sewer system, (c) completion of any
improvements the Authority elects to make to enable it to provide water and sewer service, and
(d) compliance with any applicable laws and governmental regulations.
The Authority shall use reasonable efforts to develop additional potable water supply,
treatment and distribution facilities and sewer collection/treatment capacity to meet the needs of
all of its customers and will use financial planning practices, policies and procedures that are in
the opinion of the Authority reasonably sound to provide funds, through water and sewer user
rates, impact fees and related charges, loans, and other available funds, necessary to provide the
facilities to meet such needs.
Except for existing Interlocal Agreements in Exhibit H, the Authority shall not provide
water and sewer utility services outside the City and the District if providing such service, in the
opinion of the Authority's Staff or consulting engineer licensed in the State of North Carolina,
the City Engineer or the County Engineer will adversely affect the Authority's ability to meet the
water and wastewater needs of the City and the District. To assist in making this determination,
the Authority shall submit to the Localities a report containing a complete description of the
proposed utility service and the available water supply/distribution and sewer
collection/treatment capacity. If the City Engineer or the County Engineer is of the opinion that
such utility services will decrease the ability of the Authority to meet the water and wastewater
needs of the City or the District or that such services cannot be provided with full cost recovery
payment for the proposed service, without delay in the capital improvement projects or
development in the City and the County, or without an increase in rates to the City and District
customers, then the Authority shall not provide such services.
03) Permits. The Authority shall maintain in good standing the Permits and any
other operation permits from the State of North Carolina Division of Water Quality and any
other applicable Federal, State and local governmental permits, licenses, certificates, agreements
and other authorizations and approvals necessary for the operation of the water and sewer
systems, excluding stormwater.
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New Hanover County Contract No.
(C) Business. The Authority shall operate, maintain and manage the System in a
prudent, economical and efficient manner and in a good and businesslike manner, making all
necessary and proper repairs, replacements and renewals consistent with good business and
operating practices for comparable facilities in accordance with applicable standards of
regulatory bodies.
(D) Non-profit Corporations. The Authority shall operate the Non-profit
Corporations and their water distribution system so as to be consistent with the terms of certain
United States Internal Revenue Service Private Letter Rulings dated February 13, 1998 and
August 31, 1998 and in accordance with the Water System Management Agreement between the
City and the Non-profit Corporations dated July 8, 1999, as amended from time to time.
(E) Standards. The Authority shall operate, maintain, manage, extend and improve
the System and shall provide water and sewer utility service in accordance with the following
standards:
(1) Extensions. The Authority shall develop utility extension policies and
determine the share of costs of extensions to be paid by owners of
property served by any new water and sewer extensions. The Authority
shall not extend service to parts of the City of Wilmington or New
Hanover County that are not designated for service under the adopted land
use plans of the City and the County, respectively. The Authority shall
provide the County and the City a quarterly report of extensions approved
by the Authority during the prior calendar quarter.
(2) Capacity Management. The Authority in cooperation with the Localities
shall develop a capacity planning, allocation and management process for
proposed and permitted allocations of the capacities of the Authority's
potable water supply, treatment and distribution lines and sewer treatment
and collection system. The process shall consider existing and anticipated
development patterns in the Authority's service area based on adopted
City and County land use ordinances and adopted land use plans and
policies including the Wilmington -New Hanover County CAMA Land
Use Plan Update, Comprehensive Plan, 1997-2010; the Wilmington
Future Land Use Plan 2004-2025; and the Wilmington Vision 2020 Plan
for downtown Wilmington, as such ordinances and plans may be amended
from time to time. The process, at a minimum, shall include the ability to
(a) readily assess remaining capacity within all system components, (b)
track committed capacity, (c) track conversion of permitted capacity to
actual system connections and activations, and (d) authorize and rescind
service allocations . as part of the process. The Parties agree to cooperate
and assist each other in the review of long-range planning and of specific
development proposals and modifications to land use ordinances and land
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New Hanover County Contract No.
use plans to ensure that developments meet applicable technical standards
and that needed utility infrastructure is available.
(3) Capital Improvement Program. The Authority shall develop and adopt a
Capital Improvements Program (hereinafter "CIP") for the maintenance,
improvement and expansion of the water and sewer systems, covering at
least a ten (10) year period. The initial CIP shall include those
improvements related to the Northeast Interceptor set forth in Exhibit L,
which is attached hereto and made a part hereof by reference. The CIP
shall be up -dated at least bi-annually during . the preparation of the
Authority budget. The CIP shall consider the extension of trunk water
mains, sewer outfalls, service lines and related appurtenances and services
in accordance with City annexation plans and the land use plans of the
City and the County.
(F) Future Expansions. Any of the Localities may elect to fund future expansion of
the System, including but not limited to extension of water and/or sewer services to County and
City residents and any area annexed by the City as well as incentive for industrial development;
and the Authority shall include such new construction in its CIP so long as adequate funding is
provided by such Locality for the expansion and system capacity exists and the added facilities
do not create an undue operational expense to the Authority.
(G) Fire Hydrants. The Authority shall operate and maintain the System fire
hydrants to make available to the County and the City the necessary water supply and pressure
for fire flow so as to maintain at a minimum the flow and pressure levels provided by the
Localities on the Closing Date.
(H) Stormwater Management. The Authority shall not engage in stormwater
management services in the County or the City without the consent of the County and the City.
Section 6.7 Personnel
(A) Transition until Closing. For the period of transition following the creation of
the Authority until Closing, the Locality shall cooperate with the Authority to make available to
the Authority such employees of the Localities necessary to assist in the performance of tasks as
requested by the Authority, without cost to the Authority unless the Locality hires employees to
handle the duties of such loaned Locality employees, then the Locality shall be reimbursed these
costs from its water and sewer enterprise fund.
(B) . Transition after Closing. After Closing, the Authority may enter into an
agreement with any of the Localities for the use of Locality employees necessary to operate the
System, and such Localities may make employees available to the Authority on terms mutually
agreed upon.
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New Hanover County Contract No.
(C) LocalityEmployees Immunities. The jurisdiction, authority, rights, privileges,
andimmunities (including coverage under the worker's compensation laws) that the employees
of the Localities enjoy within the Localities shall also be enjoyed by them outside the Localities,
during the Transition, when they are acting pursuant to the terms of this Agreement and within
the scope of their authority and the course of their employment.
(D) Authority Employees and Compensation. All of the employees of the
Localities currently employed to operate the System who are in good standing with their
respective Locality as of the Closing Date identified in Exhibit , which is attached hereto and
made a part hereof by reference will become employees of the Authority on the Closing Date in
positions commensurate with their skills, knowledge and ability or at such other time as mutually
agreed upon by the respective Locality but in no event more than ninety (90) days after Closing.
The Authority shall employ such employees, without a break in service and without a reduction
in the amount of direct compensation paid to such employees by such Locality; however, the
Authority shall have full discretion to change positions and modify or implement any pay and
classification plan for its employees without a reduction in direct compensation, subject to
performance standards. Neither the County nor the City shall be responsible for any further
compensation of those Locality employees who are employed by the Authority as a result of the
Authority undertaking water and sewer services. The Localities reserve the right to retain any
employees for such Locality employment. Nothing herein contained shall create an employment
contract or third party beneficiaries to this Agreement.
(E) Benefits. For Locality employees identified in Exhibit M who are employed by
the Authority, the Authority shall provide benefits comparable to those benefits currently
enjoyed by Locality employees. Neither the County nor the City shall be responsible for any
further benefits of those Locality employees who are employed by the Authority as a result of the
Authority undertaking water and sewer services.
(I) Retirement. Locality employees identified in Exhibit M who are employed by
the Authority shall be covered under the North Carolina Local Government Retirement System
(NCLGRS) and shall remain so covered for the duration of their employment with the Authority.
(G) Post -retirement Health Care. City employees who have completed five (5)
years of continuous service with the City, who are currently vested in the NCLGRS retirement
plan and who are identified in Exhibit M and employed by the Authority, shall receive post -
retirement health care benefits if they retire from Authority employment into the North Carolina
Retirement System from a trust established to fund these benefits based on the actuarial
calculation of these benefits as defined and shown in the Actuarial Valuation of City of
Wilmington Other Post Employment Benefits Study to be completed by the Closing Date.
County employees identified in Exhibit Mwho are employed by the Authority shall
receive post -retirement health care benefits if they retire from Authority employment into the
North Carolina Retirement System from a trust established to fund these benefits based on a
County actuarial calculation, as follows:
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New Hanover County Contract No.
(1) An Employee with at least five years but less than fifteen years of service will be
allowed to continue insurance coverage and the Employee shall pay 100% of the
total coverage cost.
(2) An Employee with at least fifteen years but less than twenty years of service will
be allowed to continue insurance coverage and the Employee shall pay 75% of the
total coverage cost.
(3) An Employee with at least twenty years but less than twenty-five years of service
will be allowed to continue insurance coverage and the Employee shall pay 50%
of the total coverage cost.
(4) An Employee with at least twenty-five years but less than thirty years of service
will be allowed to continue insurance coverage and shall pay 25% of the total
coverage cost.
(5) An Employee with at least thirty years of service will pay the prevailing payroll
rate for individual insurance coverage.
(a) Accrued Vacation. For Locality employees identified in Exhibit M who are
employed by the Authority, vacation accrued by such employees while a Locality employee shall
be transferred to the Authority.
(I) Accrued Sick Leave. For Locality employees identified in Exhibit M who are
employed by the Authority, sick leave accrued by such employees while a Locality employee
shall be transferred to the Authority, except that the City will pay 25% of unused sick leave to
such regular employees who have at least five (5) years of continuous service with the City.
(J) Accrued Holidays. For Locality employees identified in Exhibit M who are
employed by the Authority, 'the Localities shall pay such respective employees for accrued
holidays.
(K) Personnel Records. The personnel records of the Locality employees who are
employed by the Authority shall be maintained by the respective Locality and disclosed only as
provided in N.C.G.S. §153A-98 and N.C.G.S. §160A-168, as amended, respectively. The
personnel records of the employees of the Authority shall be maintained and disclosed only as
provided in N.C.G.S. §162A-6.1, as amended.
Section 6.8 Insurance
(A) Coverages. The Authority shall take out and maintain the following minimum
insurance coverages:
(1)
General Liability. Commercial General Liability providing liability limits at least
in the amount of $2,000,000.00 per occurrence applicable to claims for bodily
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New Hanover County Contract No.
injury and/or property damage. The Localities shall be included as additional
insureds under this policy as their interests may appear.
Fidelity Bond. Employee Blanket Fidelity Bond coverage or insurance protecting
the Localities and Authority with limits at least in the amount of the maximum
potential exposure to loss of monies for which the Authority is responsible.
Workers Compensation. Worker's Compensation coverage providing statutory
benefits and Employers Liability Insurance, including the Broad Form All States
Endorsement shall be maintained, protecting all employees of the Authority
against occupational injury or disease.
(4) Auto Liability. Automobile Liability Insurance applicable to claims arising from
the use, operation and maintenance of vehicles owned, leased or operated by, on
behalf of or for the benefit of the Authority providing liability limits at least in the
amount of $2,000,000.00 per occurrence combined single limits bodily injury
and/or property damage shall be maintained for use and operation of private
passenger vehicles and service vehicles owned, leased or operated by, on behalf
of or for the benefit of the Authority. The Localities shall be named as additional
insureds as their interests may appear.
Auto Collision and Comprehensive. Automobile Collision and Comprehensive
Insurance covering all vehicles owned, leased or operated by, on behalf of or for
the benefit of the Authority with a value of $30,000.00 or greater. The Localities
shall be named as loss payees as their interests may appear.
(6) Property. All risk Property Insurance covering loss or damage to personal
property and equipment located with premises leased to or occupied by the
Authority. The Localities shall be named as loss payees as their interests may
appear.
(5)
Inland Marine. Inland Marine Insurance protecting against all risks of direct
physical loss must be maintained for communications equipment and other
movable equipment of high value.
Public Official Liability Insurance. The Authority shall, maintain Public Official
Liability Insurance in the amount of $2,000,000.00.
Umbrella Liability Policy. The Authority shall maintain an umbrella liability
insurance policy of $3,000,000.00 excess over General Liability, Automobile
Liability and Public Officials Liability insurance. The Localities shall be amed
as additional insureds as their interests may appear.
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New Hanover County Contract No.
(10) Pollution Liability Insurance. The Authority may maintain Pollution Liability
Insurance if determined to be necessary by the Authority.
(B) Self Insured Retention. The Authority may adopt a self insured retention should
its evaluation of the premium and projection of losses within the retention indicate a cost
effective self insurance retention program. The Authority shall provide the Localities with an
annual report as to claims status and incurred liabilities within any self insurance retention if the
Authority leases motor vehicles from the Localities.
(C) Certificates. The Authority shall provide the County and the City with insurance
certificates certifying that the foregoing insurance is in force and names the Localities as
additional insureds and loss payees as their interests may appear as set forth in Subsection (A)
hereinabove; and such insurance certificates shall include provisions that the insurance should
not be cancelled,allowed to expire or changed without giving the County and the City sixty (60)
days written notice by certified mail. A current insurance certificate(s) for the Authority is
attached as Exhibit N and is made a part hereof by reference.
Section 6.9 Franchise •
The Authority shall obtain a franchise from the City to use the City's rights -of -way to
operate and maintain as well as construct additions and expansions to the System subject to the
terms and conditions established by the City pursuant to the ordinance and the franchise.
Section 6.10 Hold Harmless and Indemnity
To the extent permitted by law and without waiving any statutory or governmental
immunity, the Authority shall indemnify and save harmless the Localities and their officers,
agents, and employees from all suits, actions or claims of any character brought for any injury or
damages received or sustained by any person, persons, or property by reason of any act of the
Authority, its members, officers, agents or employees, in maintaining, operating and expanding
the System and water and sewer services.
Section 6.11 Cooperation
The Authority shall cooperate with the Localities in consummating the transactions set
forth in and contemplated by this Agreement. The Authority will, at the request of any of the
Localities, join in taking any action that, though not specified herein, may be reasonably required
to be taken in order to consummate the transactions contemplated in this Agreement. The
Authority shall cooperate in the annual audit of each of the Localities.
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New Hanover County Contract No.
Section 6.12 Regulation, Compliance with Laws and Agreements
(A) Ordinances and Regulations. By the time of Closing, the Authority shall adopt
adequate and reasonable rules, regulations and ordinances to protect and regulate the System,
including pretreatment program regulations consistent with Article Br of Chapter 12 of the
Wilmington City Code and cross connection control regulations consistent with Section 12-31 of
the City Code. In addition, such regulations shall provide for the mandatory connection of
properties in the Authority's service area to water lines and sewer collection lines of the
Authority consistent with the provisions of N.C.G.S. §153A-284 and N.C.G.S. §160A-317. The
Authority shall submit its proposed ordinances to the County and the City for review, comment
and suggestions at least sixty (60) days prior to adoption by the Authority. All rules, regulations
and ordinances adopted by the Authority shall be enforced by the appropriate officers and
employees of the Authority throughout the Authority's service area.
(B) Compliance with Law. The Authority shall comply with any and all applicable
Federal, State and local standards, regulations, laws, statutes and ordinances regarding toxic,
hazardous and solid waste and any other pollutants; public and private nuisances; health or
safety; and zoning, subdivision and other land use controls. The Authority shall take all
reasonably necessary, proper or required safety, preventive and remedial measures in accordance
with any and all regulations from the North Carolina Department of Environment and Natural
Resources, the United States Environmental Protection Agency, and any other Federal, State or
local agency having jurisdiction, to ensure the prevention or cessation (now or in the future) of
violations of either the applicable provisions of such standards, regulations, laws, statutes, and
ordinances or any permits, orders or conditions issued thereunder. The Authority shall comply
with all applicable laws relating to the operation of the water and sewer systems. The Authority
shall comply with the North Carolina Local Government Budget and Fiscal Control Act.
(C) Compliance with Agreements. The Authority shall comply with the terms and
conditions of all agreements regarding the System, including but not limited to those agreements
assigned to the Authority by any Locality and any Rights and Privileges as to Real Property and
any North Carolina Department of Transportation encroachments used in connection with the
System.
ARTICLE VII
CLOSING AND EFFECTIVE DATE
Section 7.1 Closing
The Closing shall consist of the execution and delivery by the Localities to the Authority
of non -warranty deeds for the transfer of Real Property, leases for the use of Real Property,
easements and other documents necessary for the transfer of the remainder of the System as set
forth in this Agreement. A pre -closing, at which time all documents, instruments and conditions
required to be delivered or satisfied by this Agreement shall be delivered and satisfied but held in
escrow pending the Closing, shall take place at such time, date and place as may be mutually
agreed upon in writing by the Localities and the Authority. The Authority shall be responsible
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• New Hanover County Contract No.
for all recording fees, if any, incurred in connection with the conveyances of the System and any
part thereof to the Authority.
Section 7.2 Time and Place of Closing
The Closing shall take place on the Closing Date at the office of the City Attorney or
such other place as the Localities and the Authority may mutually agree. The Closing Date may
be extended by mutual consent of the Localities and the Authority.
Section 7.3 Conditions of Closing
Without limiting any other provisions hereof, the obligations of the Parties to close this
transaction are subject to the following conditions and in the event any of the following
conditions are not met, the Closing shall be continued until the following conditions are satisfied
or waived in writing by amendment to this Agreement.
(A) Local Government Commission Approval. Pursuant to N.C.G.S § 162A-14 the
Local Government Commission shall have approved the transfer of the Localities' System to the
Authority.
(B) Transfer of Permits. The Authority shall have secured the transfer of the
Permits and any additional required environmental permits to operate the System, or such other
authorizations that allows operation of the System. The form of transfer, assignment, or license
regarding the Rights and Privileges as to Real Property referred to in Section 2.4(13) hereof must
be acceptable to the Authority.
(C) Consents to Assignments of Agreements. The Localities shall have secured any
other required consent(s) to the assignment of the agreements identified in Exhibit H.
(D) Transfer of Consent Order. To the extent required, the Authority shall have
secured the transfer of any consent decrees or orders relating to the System identified in Exhibit
K.
(E) Trustee and Bond Insurer Consent. The Trustee(s) and bond insurer(s) on the
Localities' bond and installment financing obligations shall have given written consent to the
transfer of the System. Such consent is specifically subject to each of the following:
(1) Financial Consultant Report. A report prepared by a financial consultant
satisfactory to the trustee(s) that shows there is no material adverse effect
on the ability of the water and sewer system to produce revenues to satisfy
rate covenants.
(2) Evidence of Rating. Written evidence from any rating agency then rating
any bonds that such transfer will not adversely affect its rating then in
effect on the bonds (without regard to graduation within category).
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(3)
New Hanover County Contract No.
Legal Counsel Opinion. An opinion of legal counsel to the affected
Localities that such disposition has been properly authorized.
(4) Bond Counsel Opinion. An opinion of the affected Localities' bond
counsel that such disposition will not adversely affect the federal or state
income tax treatment of interest on the bonds.
(F) Insurance. The Authority shall have obtained all Insurance as set forth in Section
6.8 of this Agreement and certificates of insurances indicating such coverage.
(G) Pending Legal Proceedings. To the extent required, the Authority shall have
been added/substituted as a party in any pending legal proceedings involving the System,
including but not limited to those identified in Exhibit K.
(R) Budget, Rate Schedules, Utility Extension Policies, CIP, Ordinances and
Regulations. The Authority shall have provided evidence to the County and the City of the
adoption of a budget, rate schedules, utility extension policies, a Capacity Management Process,
a Capital Improvements Program and ordinances and regulations in compliance with this
Agreement.
MFSG (I) MFSG Opinion. The County and the City shall have received. the opinion of
that the Authority has the capability to operate the System on the Closing Date in full
compliance with this Agreement.
(J) Non-profit Corporation Articles of Incorporation. The Articles of
Incorporation for Cape Fear Utilities, Inc. and Quality Water Supply, Inc. shall have been
amended in accordance with the terms of this Agreement.
• () Representations and Warranties. The representations and warranties of the
Parties shall be true and correct as of Closing.
Section 7.4 Remedies and Effective Date
(A) Effective Date and Duration. This Agreement shall take effect when executed
by the Localities and the Authority and shall continue until terminated pursuant to law or as
provided in this Section 7.4.
(B) Termination Prior to Closing. The conditions of Closing set forth in Section 7.3
subsections (A), (B), (C), (D) and (E) are not waivable and if it is determined that any of such
conditions can not be satisfied, any Party shall have the right to terminate this Agreement upon
thirty (30) days written notice to the other parties.
(C) Judicial Action. If any Party fails to keep and perform each and all of the
covenants, agreements and conditions contained herein, then and in that event, the other party or
parties, after notifying the non -conforming party or parties in writing not less than sixty (60)
Page 27 of 36

New Hanover County Contract No.
days in advance, and upon the failure of the other party or parties to comply within such period,
may at its or their option maintain an action in a court of competent jurisdiction for specific
performance and/or injunctive relief. No breach of this Agreement by a Party shall subject the
Party to any damages, award of attorney fees or costs of court.
(D) Rights upon Dissolution or Failure to Operate. If the Authority is dissolved or
otherwise ceases to operate the System and no successor or governmental agency of which the
County and the City are members has been designated to operate such facilities, then and subject
to any bond indentures and other documents evidencing indebtedness of the Authority, the
Authority's Real Property and personal property transferred by the Localities to the Authority
shall be returned to the respective Locality that owned such property prior to the transfer. Any
additional assets of the Authority shall revert in ownership to the County and the City with each
owning a fifty percent (50%) undivided interest therein.
ARTICLE 'VIII
MISCELLANEOUS
Section 8.1 Expenses
Except as otherwise provided in this Agreement, all expenses incurred by or on behalf of
the Parties hereto in connection with the authorization, preparation, execution and consummation
of this Agreement, including, without limitation, all fees and expense of agents, representatives,
legal counsel and accountants employed by the Parties hereto, shall be borne solely by the Party
who shall have incurred the same.
Section 8.2 Severability
If any section, subsection, paragraph, sentence, clause, phrase or portion of this
Agreement is for any reason held invalid, unlawful, unenforceable or unconstitutional by
operation of law or by any court of competent jurisdiction, such portion shall be deemed
severable and such holding shall not affect the validity of the remaining portions of this
Agreement.
Section 8.3 Notices_
Any and all notices, requests and other communications regarding this Agreement shall
be in writing and shall be deemed to have been sufficiently given if delivered by hand or mailed,
postage prepaid, by first class mail, addressed to each Locality and the Authority as follows:
To the County: County Manager
County of New Hanover
230 Government Center Drive -- Suite 195
Wilmington, NC 28403
Page 28 of 36

New Hanover County Contract No.
To the City: City Manager
City of Wilmington
P.O. Box 1810
Wilmington, NC 28402
To the District: County Manager
New Hanover County Water and Sewer District
230 Government Center Drive — Suite 195
Wilmington, NC 28403
To the Authority: Chief Executive Officer
Cape Fear Public Utility Authority
c/o William Q.J. Lynch, Esquire
Hogue, Hill, Jones, Nash & Lynch
101 South 3rd Street
Wilmington, NC 28401
Section 8.4 Headings
Section and subsection headings in this Agreement are for convenience only and are not
to be construed as a part hereof and do not define, describe, extend or limit the scope or intent of
this Agreement.
Section 8.5 Entire Agreement
This Agreement constitutes and contains the entire agreement and understanding of the
Parties and supersedes any and all prior negotiations, correspondence, understandings, and
agreements between the Parties regarding the subject matter hereof.
Section 8.6 Amendment
This Agreement may not lie modified, altered or changed in any manner whatsoever
except by a written agreement signed by all of the Parties. After the issuance of any bond
indebtedness or other indebtedness by the Authority, the amendment of this Agreement shall be
approved by the bond trustee or the holder of any other security interest given in accordance with
any bond indenture of the Authority.
Section 8.7 Counterparts
This Agreement may be executed in several counterparts, each of which will be deemed
an original, but all of which together will constitute one and the same instrument.
Section 8.8 Assignment
The rights and duties under this Agreement shall not be assigned by any of the Parties
without the written consent of the other Parties. 'None of the Parties hereto shall assign,
subcontract or otherwise transfer any interest in this Agreement without the prior written
approval of the other Parties, except by operation of law.
Page 29 of 36

New Hanover County Contract No.
Section 8.9 Binding Effect
This Agreement shall be binding upon the successors, assigns, agents, officials,
employees, independent contractors, and subcontractors of the Parties.
Section 8.10 Governing Law
This Agreement and the transactions contemplated hereby will be governed by and
construed and enforced in accordance with the laws of the State of North Carolina. In the event
of a conflict between the various terms, provisions and conditions contained in this Agreement or
between these terms and other applicable provisions, then the more particular shall prevail over
the general and the more stringent or higher standards shall prevail over the less stringent or
lower standards.
Section 8.11 Continuing Obligation
From time to time after the Closing, the Localities and the Authority will execute such
additional instruments of assignment, lease, license, conveyance and other documents and take
such other actions as may be necessary or appropriate to further the purposes and intent of this
Agreement and to vest title or convey rights in and to any part of the System in the Authority.
Section 8.12 Survival of Representations, Warranties, Covenants and Agreements
The representations, warranties, covenants and continuing agreements of the Localities
and the representations, warranties, covenants and continuing agreements of the Authority made
in this Agreement and in the documents executed pursuant hereto will survive the execution of
this Agreement and the consummation of the transactions contemplated hereby.
Section 8.13 Reference
Use of the masculine in this Agreement•includes the feminine and neuter, and singular
includes plural.
Section 8.14 Immunity Not Waived .
This Agreement is governmental in nature, for the benefit of the public, and is not
intended to be for private profit or gain. Any fees charged in connection with the terms of this
Agreement are intended to reflect as closely as possible each party's actual cost, and the Parties
do not intend to waive their sovereign immunity by reason of this Agreement.
Section 8.15 Waiver
er
Any Party's failure to insist upon the strict performance of any provision of this
Agreement, or to exercise any right based upon a breach thereof, or the acceptance of any
performance during such breach, shall not constitute a waiver of any rights under this
Agreement.
IN WITNESS WHEREOF, the County, the City, the District and the Authority have
caused this Interlocal Transition and Operating Agreement to be executed in their names by their
duly authorized officers as of the date first above written.
Page 30 of 36

%\kkx.\1,
Clerk to Board
This instrument has been pre -
audited in the manner required
by the Local Government Budget
and Fiscal Control Act.
Aft ` •1_64(6, - pj jc /01
Coun Finance Director
STATE OF NORTH CAROLINA
New Hanover County Contract No.
NEW HANOVER COUNTY
By:
a 0,A,42„.
Chairman
New Hanover County Board of
Commissioners
Appro - d as to form:
ounty Attorney
COUNTY OF NEW HANOVER
gertswee a Notary Public in and for the State and County aforesaid,
cer
tify that heila L hult personally came before me this day and acknowledged that she is
Clerk to the Board of Commissioners of New Hanover County, and that by authority duly given
and as the act of the Board, the foregoing instrument was signed in its name by its Chairman,
sealed with its corporate seal and attested by herself as its Clerk.
Witness my hand anbaffioi414eal, this the r day#�
...
v•��c
o
......................
..... Qi
o ..y�
R
� : �10cQmcn•
\
My Commission Expires: ' : ��Z1t?4ilanoNEitoe
C,s c,
ary Public
200Y
()JAN&
Page 31 of 36

[CORP
This instrument has been pre -
audited in the manner required
by the Local Government Budget
and Fiscal Control Act.
-\,s,„..-1,.'(\k,cir„._
City Finance Director
New Hanover County Contract No.
CITY OF WILMINGTON
By: Ail 5 lettrti
Mayor
Approved as to form:
STATE OF NORTH CAROLINA
COUNTY OF NEW HANOVER
1 ,
I, � ..: e - n a NotaryPublic in and
for the State and County aforesaid,
certify that Penelope Spice • idbury personally came before me this day and acknowledged that
she is City Clerk for the City of Wilmington, North Carolina, and that by authority duly given
and as the act of the City Council of the City of Wilmington, the foregoing instrument was
signed in its name by its Mayor, sealed with its corporate seal and attested by herself as its Clerk.
Witness my hand and official seal, this the . 0da of �� 8
My Commission Expires: M — / 9 --05
Notary Public
OFFICIAL SEAL
Nottvy Public • North Carolina
COUNTY OF PENDER 1
DIANE E. DAYTON i
Page 32 of 36

i
NOV ER CQ
[C"roe.
• w��� •A, •
' E►
/fr� ,� sgwat °�>���
� �a/1mm ,
Clerk to the Board
This instrument has been pre -audited
in the manner required by the Local
Government Budget and Fiscal Control Act.
1,11(1,10
ounty Finance Director
STATE OF NORTH CAROLINA
COUNTY OF NEW HANO R
New Hanover County Contract No.
NEW HANOVER COUNTY WATER
By;
SEWER DISTRICT
Chairman
Approv as to form:
County -Attorney
I, :tl 1 (tfd a Notary Public in and for the State and County
aforesaid c- � :�
Sheila L. Schuh personally came before me this day and acknowledged that
she is the Clerk to the New Hanover County Water and Sewer District and that by authority duly
given and as the act of the District, the foregoing instrument was signed in its name by its
Chairman, sealed with its corporate seal and attested by her as its Clerk.
Witness by hand and official seal, this the day of 2007.
81
00414 Nri l i t }; t ►��i��i
•
4*. 'i OTAR''''
.
•r• : My Comm. -
• .
s Expires 's
My Commission Expire: 312412011
%PUBLIC;
ri,,' fo11et 0°'s0`��
Page 33 of 36

ATTEST:
Authority Secretary
This instrument has been pre -audited
in the manner required by the Local
Government Budget
and Fiscal Control Act.
New Hanover County Contract No.
CAPE FEAR PUBLIC UTILITY
AUTHORITY
By:7441C4-1
Chairperson
Approved as to form•
Authority Finance Officer Authority aney
STATE OF NORTH CAROLINA
COUNTY OF NEW HANOVER
I, VicrotIA / a NotaryPublic in and r , for the State and County aforesaid,
certify that Sfroh¢n �. Monks personally came before me this day and acknowledged that
he/she is the Secretary of the Cape Fear Public Utility Authority, and that by authority duly given
and as the act of the Authority the foregoing instrument was signed in its name by its
Chairperson, sealed with its corporate seal and attested by himself/herself as its Secretary.
00
Witness My hand and official seal, this the IS day of
My Commission Expires: 02 '02 o2o/(
Notary Public
VICTORIA M. STRACHAN
Notary Public
New Hpnover County, NC
Page 34 of 36

e
New Hanover County Contract No.
EXHIBITS
A. Advisory Committee recommended organizational structure for Authority
B. Real Property
B-1 Real Property - County
B-2 Real Property - City
C. Personal Property/Motor Vehicles
C-1 Personal Property/Motor Vehicles — County
C-2 Personal Property/Motor Vehicles - City
D. Personal Property/Equipment and Furnishing
D-1 Personal Property/Equipment and Furnishing -County
D-2 Personal Property/Equipment and Furnishings -City
E. Personal Property/Customers deposits, cash, securities and accounts receivable
E-1 Personal Property/Customers deposits, cash, securities and accounts receivable -County
E-2 Personal Property/Customers deposits, cash, securities and accounts receivable -City
F. Personal Property/Information Technology
F-1 Personal Property/Information Technology -County
F-2 Personal Property/Information Technology -City
G. Permits
G 1 Permits -County
G-2 Permits -City
H. Agreements
H-1 Agreements -County
H-2 Agreements -City '
I. Indebtedness
1-1 Indebtedness -County
I-2 Indebtedness -City
J. Book Value of the System
J-1 Book Value of the System — County
1-2 Book Value of the System - City
Page 35 of 36

•
New Hanover County Contract No.
K. Known Orders, Decrees, and Pending Legal Proceedings
K-1 Known Orders Decrees, and Pending Legal Proceedings -County
Ralph Hodge Construction v. New Hanover County Water and Sewer District, 06
CVS 3 859
Leon Elam and wife Rachel Elam v. New Hanover County Water and Sewer
District, 07 CVS 2467
New Hanover County Water and Sewer District v. Coswald, LLC, 07CVS 2785
Jonathan Costa v. Colorado Coastal Development, LLC and New Hanover
County (construction of District utilities within dedicated easements)
New Hanover County Water and Sewer District v. James Ray Thompson, 06 CVS
2583
K-2. Known Orders, Decrees, and Pending Legal Proceedings -City
NCDENR, DWQ 12/8/06 NOV
NCDENR, DWQ 5/27/06 Moratorium
NCDENR, DWQ 5/8/07 Moratorium
USEPA, CWMA
USEPA Show Cause 5/4/07
L. Northeast Interceptor Improvements
M. Employees/Positions
M-1 Employee Positions -County
M-2 Employee Positions -City
N. Insurance Certificates of Authority
ILA.W&S.Rev11.07.2007
Page 36 of 36

Cape Fear Public Utility Authority
127 Racine Drive, Suite 201, Wilmington, NC 28403
May 1, 2008
Mr. Gil Vinzani
NCDENR-DWQ/Point Source Branch
512 N. Salisbury Street, 9th Floor-PSB
Raleigh, NC 27604
Lr
MAY 2 2008
DV R - VIATER QUALITY
POINI
RE: Transfer of Ownership of NPDES Permit No. NC0023965 issued for the operation of the James A.
Laughlin (Northside) Wastewater Treatment Plant
Dear Mr. Vinzani:
The City of Wilmington Water and Sewer Department is merging with New Hanover County Water and
Sewer District to form the new Cape Fear Public Utility Authority (CFPUA). The CFPUA has been created
and incorporated; please see the attached Articles of Incorporation. The consolidation work to
facilitate this merger is currently underway and an Inter -Local Agreement has been executed by all three
parties; please see attached Inter -Local Agreement.
At this time, the CFPUA and the City of Wilmington would like to request via the attached "PERMIT
NAME/OWNERSHIP CHANGE FORM" that NPDES permit number NC0023965, currently owned and
operated by the City of Wilmington, be transferred to the Cape Fear Public Utility Authority effective
July 1, 2008. The transfer of this permit is a condition of the closing for this merger and the closing is
scheduled to accommodate the July 1 effective date. Therefore, as discussed with your staff, CFPUA is
requesting the transfer and re -issuance of this permit in the Authority's name on or before June 30,
2008.
If you need anything further to complete this transfer of ownership and the re -issuance of this permit
prior to June 30th please feel free to contact me at 910-799-6064 or [e-mail].
Beth Eckert
Environmental and Safety Management Director
Cape Fear Public Utility Authority

Michael F. Easley, Governor
William G. Ross Jr., Secretary
North Carolina Department of Environment and Natural Resources
Alan W. Klimek, P.E. Director
Division of Water Quality
SURFACE WATER PROTECTION SECTION
PERMIT NAME/OWNERSHIP CHANGE FORM
I.
Please enter the permit number for which the change is requested.
NPDES Permit
0
3
R
II. Permit status prior to status change.
a. Permit issued to (company name):
b. Person legally responsiblefor permit:
c. Facility name (discharge):
d. Facility address:
e. Facility contact person:
(or)
Certificate of Coverage
c
G
w �n
U. Bj 1 � ✓1� r ,ti
5L l�first / /YL'PGt
J Last
AEI &lace
Title
Po e r2 I o
Permit Holder Mailing Address
, nti i 'to ion 11l C. -ka!O
City ) State Zip
c�1/o) 3tit- —7 DO
(910) -341/.- 5g3
Phone /( ) t l Fax
' l , - l p
aA,..es A A. Lbuu5 `i t'l 1N o41,5r de%W��1
IN) 3rtik 23 S %tree+
Address
City Statc Zip
ei-Nn 04v VOs+ '1W) 341 oct°6
First / MI / Last Phone
III. Please provide the following for the requested change (revised permit).
a. Request for change is a result of: ' Change in ownership of the facility
0 Name change of the facility or owner
If other please explain:
b. Permit issued to (company name):
c. Person legally responsible for permit:
d. Facility name (discharge):
e. Facility address:
f. Facility contact person:
Cap& l c.r P o--o h t` L(4, I . '{-4 A t.t._4-t,o t'' J
Mci.i-Eh-etL to, -Sa raa-,n
First / MI / Last
e n ,e rcL I Ao nci3e (-
Title
( —2_71 Rcic i t-.. Dr 7 5 L,4 C ?° 1
'' '' 11 Permit Holder G
1PMailing Address
w' Ivk `State ZipsL'b3
City/�
Id) '-7 1 `7-GO& y rna .O Srd�,.0 Q.cc
Phone E-mail Address
t 3( 1 N 01 4-G. 2 `S'=� S �Ye e_f cf
Address
46 t• 140- 2- Noa
City State Zip
KPnne. VJ +
First / MI / Last
0 10) `7Ci C7 — (o QLL(
Phone E-mail Address
Revised 7/2005

PERMIT NAME/OWNERSHIP CHANGE FORM
Page 2 of 2
IV. Permit contact information: (if different from the person legally responsible for the permit)
First / MI / Last 1
to �p `3{ t _ DZ-€ ,e f �e—+rvke A--45 uf et ; rt-4-eg'tei4
Title
o c� rti - • S� -� - /
Mailing Address
Lk.) I nel Rt 4646r‘. ate
cf6o2
City J ate Zip
(g//O) r7 7G1— (P CIC2
Phone
Permit contact:
E-mail Address
V. Will the permitted facility continue to conduct the same industrial activities conducted prior to
this ownership or name change?
Ti Yes
❑ No (please explain)
VI. Required Items: THIS APPLICATION WILL BE RETURNED UNPROCESSED IF ITEMS ARE
INCOMPLETE OR MISSING:
This completed application is required for both name change and/or ownership change requests.
eg, Legal documentation of the transfer of ownership (such as relevant pages of a contract deed, or a bill
of sale) is required for an ownership change request. Articles of incorporation are not sufficient for
an ownership change.
The certifications below must be completed and signed by both the permit holder prior to the change, and the new
applicant in the case of an ownership change request. For a name change request, the signed Applicant's Certification
is sufficient.
PERMITTEE CERTIFICATION (Permit holder prior to ownership change):
attest that this application for a name/ownership
change has been reviewe t . d is accurate and complete to the best of my knowledge. I understand that if all required
parts of this application are not completed and that if all required supporting information is not included, this
application package will be returned as incomplete.
/to °Itt°1—
Signature
?6`cip
Date
APPLICANT CERTIFICATION:
GO . J rGQQ n , attest that this application for a name/ownership
change has been reviewed and is accurate and complete to the best of my knowledge. I understand that if all required
parts of this application are not completed and that if all required supporting infonnation is not included, this
application package will be returned as incomple
Date
PLEASE SEND THE COMPLETE APPLICATION PACKAGE TO:
Division of Water Quality
Surface Water Protection Section
1617 Mail Service Center
Raleigh, North Carolina 27699-1617
Revised 7/2005