LITTLE ROCK — Work on five significant road-construction projects on U.S. highways in Arkansas faces delays because small water utilities cannot afford to move their lines out of the way at a collective cost of nearly $1.8 million, the state’s top highway official said.
“That means those construction contracts are on hold,” said Scott Bennett, the director of the Arkansas Highway and Transportation Department. “We can’t do anything with them until the utilities get out of the way.”
The projects include widening a section of U.S. 65 near Bee Branch in Van Buren County, widening a section of U.S. 63 near Mammoth Spring in Fulton County and three widening projects on U.S. 167 in Union and Calhoun counties.
That list could grow as the Highway Department gears up for work under the $1.8 billion road-construction program voters approved last month. The program, financed in part by a 10-year, 0.5 percent increase in the statewide sales tax, focuses on widening major highways that fit into the Arkansas Highway Commission’s four-lane grid system meant to connect major cities to interstates.
If the water utility relocation issue “is going to hold up important jobs, we have to address it,” said Randy Ort, a department spokesman.
Under Arkansas law, all utility companies are allowed to use highway rights of way to put down their lines. A highway right of way typically extends several yards beyond both sides of a highway.
“One of the reasons they want to locate within the right of way [is] so they don’t have to buy their own easement so it saves them a ton of money to be able to locate utilities within our right of way,” Bennett said in a presentation on the utility issue last week at a meeting of the Arkansas Highway Commission.
But when utilities use the highway right of way, they have to have a permit, which says they are required to pay to relocate their lines if the department ever needs it.
“If it’s a utility line outside our right of way, and we have to buy that area for a highway improvement, we will reimburse them for that relocation,” Bennett said. But “when they have gotten the benefit of using our right of way to locate their utilities and we need it, they have to pay.”
That is easier said than done for the small water associations that dot rural Arkansas. More than 80 percent of the 311 nonprofit water associations have fewer than 4,000 customers, Bennett said. Eighty percent of the 399 public-works utilities, which are city-run, have fewer than 4,000 customers.
The department has found that utilities of that size don’t have the financial wherewithal to relocate their lines. That is the predicament in which the Bee Branch Water Association finds itself.
The association provides service to 1,387 meters in the area of Bee Branch, an unincorporated community 11 miles south of Clinton, which sells its water to the association, said Nick Palangio, chairman of the association’s board and an area cattle rancher.
The community’s water lines are in the way of a 3.6-mile project to widen U.S. 65 to four lanes from just south of the community of Southside to just north of Bee Branch. It is part of a long-range plan to widen U.S. 65 from Conway north to Missouri.
The construction costs associated with the project are estimated to be between $12 million and $14 million. The total cost of relocating the water utility’s line in and out of the right of way is nearly $1 million. Of that, the department says the utility must pay more than $230,000, with the department picking up the balance.
The department recently told the utility its estimated cost was down to $192,000, but Palangio said that amount remains too exorbitant.
“We’re tapped out,” he said.
While the utility makes some money, it is returned for maintenance. It loses as much as 30 percent of the water it uses to leaks, Palangio said. The utility is still paying on the loan it received at its start 35 years ago. In addition, the city of Clinton has raised its rates in the past five years.
If the board raised its rates to cover the cost of relocating the lines, “I’d have to move out of town,” Palangio said.
According to the department, three other water associations face even more daunting situations, given how small they are and the size of their unreimbursable costs.
Mammoth Spring Water, with 1,487 customers, has unreimbursable costs of moving its lines totaling $179,200 on the U.S. 63 project.
To move the lines of the Quinn Water Association, which has 744 customers, out of the department’s right of way on two of the three projects on U.S. 167 in Union County would cost the tiny utility $573,831, according to the department. Calion Waterworks, with 498 customers, also has lines in the way of one of the Union County projects and another project on U.S. 167 in Union and Calhoun counties. Total unreimbursable costs: $794,204.
A look at what 33 states have done offers little guidance. Nineteen states pay for utility relocation as part of the cost of the project, Bennett said.
“What that means is you have less money to do construction,” he said.
Seven states offer financial assistance. “The problem we heard from all of those is they usually don’t pay them back,” Bennett said. “But then you have the extra administrative cost of being able to loan the money, track it and try to get the money back from them.”
Arkansas is one of eight states that offers no assistance. The state has tried to get cities and counties to pay for the loan, but it hasn’t received any takers so far, Bennett said.
He suggested the state could pick up the cost for the small utilities on projects that are on the four-lane grid system, bridge projects and safety projects, which could cost the department $5 million annually.
“If it gets out of hand, we can revisit it later,” Bennett said.
Or the department could ask cities or counties to agree to accept responsibility and maintenance for some of the low-use state highways in their area in exchange for shouldering the cost of the maintenance.
R. Madison Murphy of El Dorado, who completed a two-year term as chairman last month, asked the staff to “put some flesh on these ideas. We’ve got to figure out how to deal with it.”
Arkansas, Pages 7 on 12/03/2012