A presentation at Thursday’s specially called meeting of the Norwood Town Council led the board to pass a change in the town’s sewer rates.

Alicia Melton of the North Carolina Rural Water Association presented a rate study to the council showing the town’s sewer expenses are greater than its revenue generated.

Projections showed the town will lose $385,480 on the sewer system in the current fiscal year. The number would have jumped to $445,937 in the proposed budget for next year without an increase.

Melton recommended to the board a 30 percent increase in the sewer base rate, from $25.01 to $32.51. Wes Hartsell made the motion, seconded by Betty Harrison, which passed 4-0. Councilman Robbie Cohen did not vote on the motion because he was forced to leave the meeting early because of a prior commitment.

In Melton’s report, Norwood has only replaced 3,000 feet of line, or 1.5 percent of the system’s total line, in the last 10 years. The presentation also said 59 percent of the plant’s treated water volume was not sold to customers.

The sewer system also treats 66 percent more wastewater than what is billed to customers, which Melton said “indicates significant inflow and infiltration.”

Melton said Norwood is considered a “financially distressed” water system with a score of 11 on a scoring metric which takes criteria such as infrastructure, organization, population, debt and other factors.

The system, part of water and wastewater public enterprise reform signed into law by Gov. Roy Cooper in 2020, assesses and identifies distressed systems. According to the system, a score of nine or more is a distressed system which has both water and wastewater plants.

Local boards must come up with short- and long-term plans to ensure the viability of a system or they can be taken over by the state.

“Unfortunately, it looks to me like for many years your system was neglected,” Melton said.

Norwood’s base water rate, at $25.01, will not go up in next year’s budget. Projections by Melton showed the town’s water fund revenue will be just under $100,000 more than expenditures for the system.

The sewer rate, however, will have to continue to increase over the next four years in order for the system to be in the black. Melton recommended 15 percent increases for three years starting with the 2022-23 budget and one final increase of 7 percent in 2025-26. If the town council passes the recommended rate increases each year in future budget preparations, the base rate in the 2025-26 fiscal year would be $52.91.

Norwood’s Town Council will have a public hearing at its next regular meeting, June 7, regarding the 2021-22 budget.