PSA appeals order to repay federal funds

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Carroll had to give back $280,000 used for sewer extension

By Christopher Brooke, Reporter

HILLSVILLE — Carroll Public Service Authority officials say that the lack of an environmental report for the Joy Ranch Road sewer line led to Rural Development asking the county to return $266,000 in federal funding.
The authority, after repaying the money, has appealed the federal agency’s ruling, PSA Chairman Tom Littrell told The Gazette. The appeal is still in process.
Carroll citizen Stephen Gregson raised questions about the procedures that the local utilities authority used to extend sewer service from the new Fancy Gap system to Joy Ranch Road, a place he described as “over the mountains, seven miles away as a crow flies” from the original project area.
Gregson sent correspondence to federal and state officials about his concerns, asking how a $4.2 million sewer project could be done without any procurement for a design and how the separate Joy Ranch Road sewer project could be added to the work.
A review of the project by federal officials found the Carroll PSA in error in terms of the Joy Ranch Road extension, according to Vernon Orrell, assistant to the Virginia state director of Rural Development.
Rural Development provided a $2 million loan and a $2.37 million grant to fund the Fancy Gap sewer project in December 2011, he told The Gazette.
Carroll PSA officials — Littrell and County Administrator Gary Larrowe — supplied a written response Friday evening to questions about this matter from The Gazette.
“The Joy Ranch Sewer project has been part of the Fancy Gap project all along,” according to the response, citing a section of the bid documents that included the extension.
Originally, the line that ran along Joy Ranch Road would have been a part of a “force main” route to send the sewage for treatment, authority officials said.
That was the plan “until a right of way issue surfaced and the force main had to take a different route.”
Due to the nature of a force main not allowing service to individual customers, and due to a need for sewer service at Joy Ranch Christian children’s home and other locations, the authority decided to put in a gravity sewer line in that area, according to the PSA’s response. “Therefore, the gravity piece of the project was constructed and is in service today.”
This item allowed the authority to “avoid pumping the Fancy Gap sewage one additional time through the [Interstate 77] Exit 14 pump station,” according to the response. “Every time sewage is pumped, there is a cost.”
Plus, the PSA was able to pick up the Joy Ranch Inc. children’s home and residents as customers using the gravity system.
This bid documents that included the Joy Ranch Road sewer extension received a review by federal funding agency Rural Development and the federal officials allowed the project to proceed, PSA officials said. Project contracts and payouts also went for approval through Rural Development, also referred to as USDA-RD.
“The PSA relies upon USDA-RD to make the PSA aware of any issues throughout the projects,” according to the authority’s response. “In the Joy Ranch Road gravity sewer project, USDA-RD never provided any information that the PSA was not in compliance in any manner throughout the entire construction or payment process.”
Authority officials put the Joy Ranch Road construction cost to be paid back to the federal agency at $280,176, instead of the $266,167 figure given to The Gazette by Rural Development.
“The project was built and had been placed into service when USDA-RD notified the PSA that Stephen Gregson had been searching for any negative issues associated with the construction of the Fancy Gap project,” the authority response said. “At that point, USDA-RD and the PSA (in conjunction) found that an environmental assessment had not been conducted on the particular project.”
The Carroll authority then got the needed assessment, which found no environmental impact by that part of the project, authority officials said.
“The PSA has filed an informal appeal with USDA-RD to reverse the payment and has not received any word about the status of the appeal to this date,” authority officials said. “The PSA feels confident in our efforts concerning the appeal, and especially since the matters were taken care of in such a quick format and the environmental assessment was concluded and submitted to USDA-RD for their review.”
The Fancy Gap sewer project received both loan and grant funds, and loan funds have to be used before grants, the authority officials said.
“Therefore, the funds that were placed in jeopardy by Mr. Gregson were 100 percent grant dollars and without a reversal of the USDA-RD decision, the funds will have been lost to Carroll County,” according to the authority response.
“Due to the nature of the complaint, the entire $280,176 was taken from the construction project and it is a shame that Carroll County has potentially lost these funds in major part due to the private investigation of Mr. Stephen Gregson.”
The authority repaid the Rural Development monies out of reserve funds, officials say.
In response to a Gazette question about whether these funds will need to be replaced through user fees, authority officials say there has been no discussion held “with regard to any fee or rate increase to cover any loss.”