‘Dead in the water’: Durham developers frustrated by lack of notice in sewer halt

The city of Durham is growing too fast for its sewer system, putting hundreds of new homes planned for southeast Durham on hold.

Local developers, many of them small builders, are frustrated after the city revealed that a key sewer line is maxed out, effectively freezing nearly 700 future housing units for the next five years.

For years, the city determined the capacity of sewer lines using limited flow gauges and general system knowledge. However, a new $30 million computer model, the first of its kind for a major utility in the state, recently showed that Durham’s Goose Creek basin is at its limit and can’t be connected to any new sewer lines.

“We were not expecting the results to show that one of our basins was at capacity,” Donald Greeley, the director of the Durham’s Water Management Department, told the Durham City Council at a Thursday afternoon meeting.

While the city has invested hundreds of millions of dollars in infrastructure since 1986, this specific shortfall caught officials, and landowners, completely off guard.

The moratorium, communicated in a “Letter to Industry” posted on the city’s website just before Christmas, has sparked outrage among local builders.

“To say we were caught by surprise is the understatement of the year,” said John Warasila, whose 23-acre project is now “dead in the water” after two years of planning.

“I’m sure a lot of these people will go out of business. We’re going to struggle mightily,” he said. “And the pool that you’re working with here is all local Durham investors ... We’re local people who are working from the ground up to revitalize neighborhoods that have seen no improvements for decades.”

The city is moving to replace the outfall, which is a ditch where wastewater is discharged, but the complexities of building through a developed urban corridor means a lengthy wait.

The project will be completed in two phases, the first by summer 2029 and the second by summer 2030, and will cost an estimated $30 million.

‘Lack of trust’

Five local developers aired their concerns during the City Council meeting.

The Goose Creek Outfall Improvement Project, as the fix is being called, affects the areas east of North Mangum Street to Junction Road and between Camden Avenue to the north and the train tracks along Alston Avenue to the south.

Thomas Hennessy, who manages the housing development company West 4th, expressed frustration over the lack of notice, saying he was in the middle of designing a “cottage court” project when he learned of the letter from a friend. Cottage courts cluster small homes around a shared courtyard, a form of “missing middle” housing.

“You send letters when we forget to cut the grass,” he said. “We’re doing a new UDO, we sent letters out. You have the ability to send letters out. You didn’t. That is extremely concerning ... A lack of transparency, lack of trust, that’s huge for any city on any issue.”

Trans Perry, who grew up in Durham and builds multifamily and commercial projects, said his properties on Mallard Avenue are “hindered” due to the moratorium.

“This [presents] a significant hardship for me to provide for my family, grow my business,” he said. “ It should not be the responsibility of property owners to bear the consequences of the city’s over capacity and issues with the Goose Creek outfall.”

Blake Anderson is frustrated that there will be no compensation for properties that will be sitting untouched for several years.

“How many of these lots would I not have bought? How many of the hundreds of thousands of dollars of design fees would I’ve not paid for? Now, I’ve got five years to hold on to something that isn’t going to be relevant for a while,” he said. “And you can’t sell your property because it can’t be built upon.”

More communication moving forward

City Council members stressed that, moving forward, there needs to be better communication between the water department and developers. The current method of notifying local developers by website postings and newsletters is insufficient.

Greeley said residents in the affected areas will also be getting more communication about where the outfall project stands.

“We’ll have some initial outreach to the communities that are affected before we even start sending surveyors out,” he said.

So, what happens now?

City Manager Bo Ferguson and Water Management officials said they are looking for ways to accelerate the timelines, including early easement acquisitions (or legally obtaining access to another property) and breaking the work into multiple construction contracts.

The city is also reviewing projects on a case-by-case basis. So far:

• 14 projects have been allowed to move forward fully (they were already considered in the Goose Creek basin capacity)
• 11 projects are moving forward partially
• 2 projects have been completely halted.

Additionally, projects are allowed to bypass the restrictions if they meet one of the following conditions:

• Vested Rights: Projects that got Construction Drawing approval permits before the Letter to Industry was sent out
• Existing Permits: Any building permits that were already issued before the Letter to Industry was sent out
• No Increase in Flow: Developments that result in equal or less wastewater flow (like replacing a single home with another of the same size)
• Alternate Discharge: Smaller or larger projects that have the engineering capability to flow wastewater outside the Goose Creek basin (like through another pump)
• Timelines: A project with construction and completion timelines that align with the completion of the basin improvements

NC Reality Check is an N&O series holding those in power accountable and shining a light on public issues that affect the Triangle or North Carolina. Have a suggestion for a future story? Email realitycheck@newsobserver.com.

This story was originally published March 5, 2026 at 5:51 PM.

Kristen Johnson

The News & Observer

919-829-4532

Kristen Johnson is a local government reporter covering Durham for The News & Observer. She previously covered Cary and western Wake County. Prior to coming home to the Triangle, she reported for The Fayetteville Observer and spent time covering politics and culture in Washington, D.C. She is an alumna of UNC at Charlotte and American University.