Complaint filed with NC Utilities Commission over Kinnakeet Shores wastewater plant

Published 7:15 am Wednesday, January 5, 2022

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Greater Kinnakeet Shores Home Owners Inc. has formally filed a complaint against Outer Banks/Kinnakeet Associates, LLC with the North Carolina Utilities Commission.

The complaint was filed Dec. 13. Ray E. Hollowell Jr., the principal owner of Outer Banks/Kinnakeet Associates LLC, had until Dec. 28 to respond to the complaint. However, an order extending the time to file an answer was entered Dec. 22. Hollowell’s deadline is now Jan. 27, 2022.

On Oct. 13, 2021, the North Carolina Division of Water Resources placed a sewer moratorium on Kinnakeet Shores Soundside.

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According to the notification letter sent to Hollowell, the wastewater “treatment system can no longer treat or assimilate the wastewater that is received from the system . . .”

The notification letter from Robert Tankard, assistant regional supervisor with the Division of Water Resources, states that “major treatment units are no longer functional. Both clarifiers, the tertiary filter, spray irrigation system and back-up generator are not functional. Biosolids have not been removed from the plant for at least seven years.”

The sewer moratorium means that since Oct. 13, no new sewer taps, sewer extensions or additional flow have been permitted. The moratorium can be suspended when the treatment plant is repaired and all conditions of the existing water quality permit are met.

The moratorium comes at a time of “exceptional growth in the real estate market within the Outer Banks in general and Kinnakeet Shores in particular . . . During an 11 month period in 2021, Kinnakeet Shores recorded 48 property sales” in the wastewater treatment plant service area, reports the complaint.

The complaint also states that “more than a dozen owners and contractors have engaged in the process of obtaining building permits for construction immediately or by the first of 2022.”

None of those building plans can move forward until the moratorium is lifted.

Put on hold is a residential development of Otter Point and the planned building of 24 units where the vacant movie theater sits plus those individuals who have started the building permit process.

The complaint charges that the wastewater treatment plant problems come from years of neglect, not undertaking appropriate maintenance and not adequately funding the system operations.

The rates charged by the wastewater system have not been raised since the Utilities Commission granted a franchise in 2000.

Hollowell told the Dare County commissioners during public comment on Nov. 15 that the rates have been in place since 1989 when the original package treatment plant was installed.

The flat rates are $120 per quarter for a three-bedroom house and $150 per quarter for four or more bedrooms. The system has operated at a loss.

The complaint states that Hollowell told association members “that he lacks appropriate financial resources to make the needed repairs and improvements.”

Hollowell told the Dare commissioners he would seek an emergency rate increase from the North Carolina Utilities Commission.

In a follow-up telephone interview on Dec. 30, 2021, Hollowell said he was working on the necessary documents to file with the Utilities Commission for the emergency rate increase.

The complaint asks the Utilities Commission to:

– Require a comprehensive investigation into Outer Banks/Kinnakeet Association’s suitability to own and operate the wastewater system.

– Require Outer Banks/Kinnakeet Associates to take immediate steps to rectify the deficiencies causing the moratorium.

– If the commission determines that the business is incapable financially or operationally to operate the wastewater system, appoint an emergency operator.

– Revoke the corporation’s $75,000 bond.

– Investigate the possibility of identifying a potential new owner “that is willing to acquire and operate the system on terms that would not result in unreasonable rates to ratepayers.”

– If the commission thinks Outer Banks/Kinnakeet Associates LLC should continue to own and operate the system, require a substantial increase in bond to be forfeited and revoked should “the pattern of inadequate service be repeated . . .”

Details about Kinnakeet Shores, Avon

Phases 3 through 5 are Oceanside and use septic systems.

Soundside Phases 6 through 22 use the Wastewater Treatment Plant, owned by Outer Banks/Kinnakeet Associates, LLC, principal owner Ray Hollowell.

The system also serves the U.S. Post Office in Avon, Hatteras Island Plaza shopping center and the Ace store in Avon.

The soundside phases have 379 home sites with 177 homes and 202 vacant lots, states the complaint filed with the North Carolina Utilities Commission.

Lots in Phases 6 through 11 and Phase 15 are gravity fed into the wastewater treatment plant.

Lots in Phases 12 through 15 and 17 through 22 are on a step system with an on-site underground holding tank and pump to send waste stream to a lift station.

Phase 16 is used as a sand repository.

According to Bissell Professional Group, “the Kinnakeet Shores Reclaimed Water Irrigation System is a Non-Conjunctive Wastewater Treatment & Reclaimed Water Utilization System.

“The system was expanded from a 50,000 gallons per day facility to a 350,000 gallons per day facility.

“The disposal system was converted from a conventional to a reclaimed water disposal system, using a combination of irrigation and infiltration with the aid of a 5,100,000- gallon storage/infiltration pond.”