Town Is Pulling The Plug

Published 6:50 pm Thursday, October 13, 2011

FARMVILLE – Town Manager Gerald Spates announced during an 11 a.m. Thursday press conference that the Town of Farmville is pulling out of negotiations with Prince Edward County on creating a regional water and sewer authority.

Instead, the Town “will establish its own authority,” Spates said 45 minutes after informing County officials, adding that Farmville “invites Prince Edward County to join as a member with a seat on the authority-with no financial obligation on the part of the County.”

County officials expressed surprise and disappointment in the immediate aftermath of the Town's announced decision but said a wait-and-see approach would be taken.

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Sandy River Reservoir

Though a pipeline from the County-owned Sandy River Reservoir was not mentioned in the press release read by Spates, when asked by The Herald where a pipeline would fit in-if it did fit in-the town manager said, “Oh, yeah, I think that that is one of the primary options. I think it's probably the number one option that we would hopefully utilize, be able to utilize, Sandy River Reservoir.”

The Sandy River Reservoir, Spates pointed out, “was not thrown into the mix with the joint authority with the Town and the County. That was kept separate and was not put into the authority with the Town and the County.”

The Bottom Line

Two Town Council members-Donald L. Hunter and David E. Whitus-attended the press conference, along with Town Clerk, Lisa Hricko, and several media representatives.

Asked how he saw the Town's authority functioning, opposed to the way the Town currently operates its water and sewer service, Spates answered, “all the assets would go into the authority and you'd have, rather than (Town) Council being the decision-maker, Council would be represented on the authority but you'd also have citizen representatives and hopefully in the future a County representative.”

The bottom line was the bottom line to the Town's decision to pull out of negotiations with the County. Finances. The Town's view is that a regional water authority would not provide equitable return to the Town and would unnecessarily raise water and sewer costs for the Town's water and sewer customers.

“The bond people said the system (under a regional authority) would be able to borrow $20-25 million but,” Spates said, in reply to another question, “you would have to do substantial (rate) increases. So if you take the number of customers that are in town right now, which is probably 95 percent of the customers in the entire system, those people are going to get hit hardest than those people out of town, which make up about five percent of the customers.”

County Reaction

When asked for a statement, Prince Edward County Administrator Wade Bartlett responding with an email which stated that on Thursday at approximately 10:45 a.m. the Town notified Board of Supervisors Chairman William G. Fore and Vice-Chairman Howard Simpson that the Town was “ending negotiations” on a regional authority.

“While the Chairman and Vice-Chairman respect the Town's authority to reach such a decision they were surprised and disappointed in this development. The Prince Edward County Board of Supervisors will need to study this development and make a determination on how to proceed,” the Bartlett-emailed statement reads.

“The Chairman of the Board wants to assure the citizens of Prince Edward County, which includes the residents of Farmville, that the objective of developing a drought-proof water supply is still his ultimate goal,” the email states.

The Town and County had been holding what to all appearances, based on periodic public comments, seemed to be very productive negotiations on creating a regional water authority that would have seen the Town paid approximately $18 million for its water and sewer infrastructure by the regional authority, which would assume ownership.

Spates said Thursday that he was sure the Town's system “is worth a lot more than $18-$20 million.” Evaluating the value of the Town's entire water sewer system, he said, summarizing an engineer's assessment, is “more or less a futile effort” because there are so many water and sewer lines in the ground that cannot be evaluated. So a value was put solely on the wastewater plant and the water plant, their capacity and how much of that capacity is left.

That valuation, Spates said, was “a number that would almost substantiate the amount of money you're going to borrow just in the two facilities themselves.”

Spates said that with a regional authority the Town would put its system into the authority “with all its customers and we would get 50 percent representation. The (Town's) revenue source would be finished. You wouldn't get any more revenue from that system. It would all go into the authority.”

And though the Town would have received $18 million from the regional authority for its infrastructure, Spates said, “the assets that the Town's generated are making it possible for them to borrow $18 million with the (regional) authority, so, really, you're not gaining anything. You're getting $18 million to consolidate your debt, which we can do by keeping it (the infrastructure) ourselves.”

Spates said the idea of an authority is a good mechanism and “there are ways the Town and the County can do an authority but the way it was originally set up…the Town was putting everything into it and getting half out.”

Town Council will decide the time-line for creating the Town's authority. It could take just a matter of weeks for council members to have the necessary language adopted for submission to the State Corporation Commission.

And council must decide on the authority's membership.

The Press Release

The Town's press release was read aloud virtually word for word by Spates prior to his taking questions from those in attendance.

The negotiations between the Town and County were described as “very beneficial and provided for good discussions among the governing bodies on issues of mutual concerns.

“One of the key issues among the Town representatives was how this (regional) authority would affect the following:

“The present customers of the Town's system.

“How this would affect the future growth of the Town's tax base.

“Is joining the authority the best course of action for the Town.

“With all these questions in mind, the Town Council hired an outside consultant, L.P. Marton and Co., of Glen Allen, to look at the project and the general scope of work and come up with an opinion. They looked at the following,” Spates said, reading the press release:

“The Town of Farmville owns outright a fully permitted and operational water and sewer system that has significant capacity for growth in the foreseeable future.

“The proposed income from the water and sewer operations will provide adequate cash flow to service the debt, with significant fee increases to the users of the current system.

“Prince Edward County has a minimal number of customers utilizing its water and sewer assets serviced by the Town.

“The cost of adding Prince Edward's water and sewer assets in a merger of the two operations is $2.5 million.

“Assuming the (regional) authority is owned equally by the Town of Farmville and Prince Edward County, the Town of Farmville water and sewer operations will have paid essentially 100 percent of the cost; but the Town of Farmville will own 50 percent of the authority,” Spates said.

“The Town of Farmville employees will initially be responsible for the water and sewer operations, subject to reimbursement by the authority.

“The merger of the water and sewer assets owned by Prince Edward County with those owned by the Town of Farmville will require the customers of the Town of Farmville to pay multiple increased water and sewer rates,” the town manager said.

Then Spates stated that “based on the initial and limited material provided, our conclusion is that the citizens and customers of the Town of Farmville will incur unnecessary increased costs in their water and sewer fees as a result of the merger with Prince Edward County water and sewer assets with the Town of Farmville assets. Joining the (regional) authority would require the Town of Farmville to give up management control of the existing system. Finally, the Town of Farmville would own 50 percent of an authority that its existing water and sewer operations essentially paid for.”

The Town's conclusion was this: “In light of the information received, the Town Council has decided to end negotiations on the water and sewer authority with Prince Edward County and establish its own authority. The Town invites Prince Edward County to join as a member with a seat on the authority-with no financial obligation on the part of the County,” Spates said.

Closing the press release, the town manager said that “Town Council would like to express our sincere appreciation to County Administrator Wade Bartlett, Chairman (Buckie) Fore, and Howard Simpson, as well as County Attorney Jim Ennis for their hard work on this project.”

And Town Council hopes, Spates said, “that even though this project will not materialize as originally envisioned, it will somehow be a catalyst for future endeavors.”