Council Votes 'No' To Town Authority

Published 3:57 pm Thursday, January 12, 2012

FARMVILLE – The Town of Farmville has turned its water authority plans off at the tap.

Three months after pulling out of negotiations with Prince Edward County over a joint water authority to pursue its own authority-with an offered seat for the County-Town officials now apparently believe the best water authority is no water authority at all.

Town Council voted unanimously Wednesday night to keep its water and sewer system operating just as it is-a department within the Town of Farmville.

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The door was left open, however, to resume some form of water discussion with the County, which inquired this week about such a possibility (see accompanying page one story).

The Town's reason for deciding an authority is not best for Farmville residents matches its chief concern regarding the proposed joint authority-excessive, and otherwise unnecessary, water and sewer rate hikes and associated expenses for Town residents.

Town Council's decision during its January meeting-attended by Prince Edward County Supervisors Howard Simpson and Jim Wilck-is based on the advice of legal and financial advisers who have been meeting with Town officials for the past few months.

“We have discussed the regional authority and then the (Town's) October press release…and then since October we have been meeting with our financial consultants at Davenport and with our Farmville and Richmond attorneys and we have sought a lot of guidance and direction,” council member David E. Whitus explained. “And after going through a number of exercises and deliberations we have determined that it is in the best interests of the taxpayers of the Town of Farmville not to form a single-member authority.

“Actually, there is no significant benefit to forming a single-member authority,” said Whitus, who had made the motion not to form a single-member authority, “and the Town would continue to operate its water and sewer department as a department within the Town.”

But, he continued, “there is significant, significant savings for the Town in not forming a single-member authority. The first one is the cost to form the authority is $200,000 to $400,000. I appreciate our attorneys being candid and up front with us about the cost and that's a cost that the taxpayers do not need to bear.

“The other thing that we looked at was water rates. We have increased water rates 10 to 12 percent…twice now. In forming an authority, and all the costs associated with that, water rates would have to be increased again and again and again,” Whitus said. “And we hope there will not be any increases in the foreseeable future.”

Council member Donald L. Hunter who, with Whitus, has been directly involved in water discussions with the County for a long time, noted that the increases in 2011 and 2012 are giving the Town “sort of a surplus, maybe in the coming year. And we received many complaints about the increases that we have done so this was one of the things that was mainly in our best interests not to even look at because the citizens are the ones who are going to continue to pay for these increases and we didn't see the benefit in reference to the increases matching up (if an authority were created).”

Town Manager Gerald Spates pointed out that the “revenue of an authority has to stand on its own. Historically, the general fund has helped the water and sewer fund…If you go to an authority, the revenue from the authority's got to take care of it.”

Which puts more fiscal pressure on raising water rates to generate that stand-alone self-sufficient revenue stream.

“There were some potential significant water (rate) increases in (forming an authority),” Whitus pointed out, “that would be extremely burdensome on our citizens.”

Hunter was heard to suggest that one authority scenario would have required a 25 percent rate hike.

Spates had announced during the October press conference that the Town of Farmville was pulling out of negotiations with Prince Edward County on creating a regional water and sewer authority.

Instead, the Town would “establish its own authority,” Spates said three months ago, 45 minutes after informing County officials, adding then 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.”

Had the Town followed through on those October intentions and created a single-member authority all the Town's water and sewer assets would have gone into the authority and the authority, rather than Town Council, would make decisions on rates and expanded service areas.

The Town's view in October was that a regional water authority with Prince Edward County would not provide equitable return to the Town and would unnecessarily raise water and sewer costs for the Town's water and sewer customers.

After collecting financial and legal facts, the Town believes those same concerns hold true for the Town's proposed single-member authority.

“So we concluded,” Whitus said Wednesday night, “and I think our fellow council members are in unanimous agreement, that it is in the best interests of the Town to continue operating the water and sewer as an interdepartmental agency” within the Town.

Town officials, meanwhile, will look into refinancing some of the Town's debt.

“Now's a great time, given interest rates, to do that,” Whitus said.

Addressing County's Letter

Noting the presence of Supervisors Wilck and Simpson, Whitus took the opportunity to address a water-related letter sent to the Town by the County and pledge an open door for dialogue between the two governing bodies.

“We received today a letter from the County, which is a very nice letter, saying that the County would like to continue water and sewer discussions and discussions of an authority with the Town. The Town is always,” Whitus said, “willing to hold discussions and to talk. I think that is a given. We are more than willing to talk to the County or representatives from the County about solutions that are beneficial to the Town and County.”

Hunter said, “I concur with what you said. We're always open, so hopefully we can proceed on. But we just knew that forming an authority ourselves was not in our best interests.”

(The vote Wednesday night was unanimous, with council members Dr. Edward I. Gordon and Otto S. Overton absent).