By Brian Wheeler

Charlottesville Tomorrow

Friday, July 29, 2011

While the national debt crisis has the U.S. credit rating on the brink of a downgrade and Washington politicians tied up in knots in search of compromise, Charlottesville-Albemarle officials received a more optimistic report this week about local financial planning.

Financial consultant Davenport & Co. told the

Rivanna Water & Sewer Authority

board that it was well positioned to take on more debt to fund its capital improvement budget while maintaining its credit rating.

At the RWSA board meeting Tuesday, city and county officials also said negotiations on the cost-sharing agreement for water and sewer services were progressing and could be finalized in September or October.

Ted Cole and Courtney Rodgers, senior vice presidents with Davenport & Co., were asked to evaluate the RWSA’s financial condition and ability to fund capital projects.

“The strongest municipal credit is a AAA rated credit, that’s the best credit [rating] that the municipal market recognizes,” Cole said. “[Standard and Poor’s] upgraded the authority just this spring from AA to AA+, which is a very strong accomplishment in this economy.”

“You are in very good position as it relates to your bond ratings,” Cole added. “You have over the last several years worked your way up toward that AAA level, and we’d be hopeful over time with continued strong financial performance and management that you can achieve that goal.”

Rebecca Quinn, chairwoman of

Citizens for a Sustainable Water Plan

, said that when it comes to long-term financing, her group wants to know specifics about the impact the approved $140 million water plan will have on ratepayers.

Quinn’s group opposes the approved 50-year water plan, and advocates for more study of whether dredging the South Fork Rivanna Reservoir could provide enough water for the region or play a bigger role in any long-term strategy.

“I haven’t looked closely at it,” Quinn said referring to Davenport’s presentation materials. “It wasn’t clear on the surface whether it anticipates the water plan. I don’t know if all of the water plan elements are even in the CIP?”

Last year, the RWSA approved a $173 million, five-year capital improvement budget, of which about 70 percent is for sewer projects. About $44 million, or 25 percent, was budgeted for the water plan’s implementation, most of that for construction of the earthen dam at the Ragged Mountain Reservoir.

In an interview, Rodgers said Davenport didn’t get into the details of rates or specific elements of the water plan. The report did indicate the RWSA would need to secure another $84.2 million to fully fund the five-year capital plan.

Davenport recommended the RWSA seek 5 percent to 7 percent annual growth in revenues to service additional debt in the range of $65 million to $86.6 million.

“We are seeing these types of revenue increases throughout the state,” said Rodgers. “It’s not going to be uncommon.”


An open question for the past year has been how costs for the water plan and any dredging project will be split between the

Albemarle County Service Authority

and the city of Charlottesville, RWSA’s two customers.

The current cost-sharing agreement dates to 2003 and the ACSA and the city have been negotiating new terms since this time last year.

“The cost [sharing agreement] probably won’t be coming to the county service authority board or to the City Council for approval until September at the earliest,” said City Manager

Maurice Jones


“We’ve had active discussions between our board, the City Council and the two staffs,” said

Gary O’Connell

, the ACSA executive director. “Our attorneys have been working on various options and I’m hopeful that we are arriving at the point where there will be an agreement.

“We’ve worked through drafts on probably 15 issues in a fairly complicated property use agreement, and most of those items are agreed to,” O’Connell added. “The biggest question is whether there will be support on City Council to move the whole [water plan] forward and stand up and vote for that, and hopefully that’s where we will be in September.”

Quinn said any agreement should consider which parts of the water plan are classified as maintenance vs. new infrastructure for growth. For example, Quinn said the new supply pipeline, projected to cost about $63 million, should not fall completely in the maintenance category just because a pipeline in use today is being retired.

“We are concerned about comments about [maintaining] the

Sugar Hollow Pipeline

costing about the same as a new pipeline from South Fork to Ragged Mountain,” Quinn said. “On the face of it, it just doesn’t make sense.”

O’Connell said the agreement’s conditions and triggers related to a future increase in height of the new earthen dam were among the less complicated issues being discussed.

In February, City Council and the Albemarle supervisors agreed to have the earthen dam’s first phase raise the water level at the reservoir by 30 feet. The foundation will be built to support a future increase of another 12 feet, or 42 feet overall.

More complicated, according to O’Connell, is fixing the percentages each locality will pay.

“The pipeline and the dam create future new [water storage] capacity,” O’Connell said. “Who owns that and who pays for how much of that capacity? That’s another issue we are trying to work through.”

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Charlottesville Tomorrow

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