Most meetings of the
Rivanna Water and Sewer Authority
last under an hour, but the Board of Directors meeting on May 18, 2009 lasted over two hours. The newly-expanded RWSA Board adopted an operational budget for FY2010, approved a wholesale rate increase, and approved the issuing of an RFP for dredging feasibility study on the condition that the Charlottesville City Council pay for studies not supported by the
Albemarle County Service Authority
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The RWSA has voted to increase the wholesale water and sewer rates charged to the City of Charlottesville and the Albemarle County Service Authority. The action came as the Board adopted the RWSA’s operating budget for the fiscal year beginning on July 1, 2009.
City water rates will increase from $2.285 to $2.461 per 1,000 gallons, a 7.7% increase. The County water rates will increase from $2.983 to $3.32 per 1,000 gallons, an 11.3% increase.
The RWSA also increased the wholesale sewer rates. City wastewater rates were raised from $2.466 to $2.784 per 1,000 gallons, a 12.9% increase. County wastewater rates were raised from $2.722 to $3.063 per 1,000 gallons, a 12.53% increase.
The operational budget has been decreased by 3.7% from last year’s level. However, the rates are being raised to support increased debt service to pay for the community water supply plan.
“Future funding needs of the
Capital Improvement Program (CIP)
and existing debt service costs remain a large portion of our total budget at roughly 48%,” staff wrote in the report announcing the budget.
Several members of
Citizens for a Sustainable Water Plan
called upon the RWSA to keep rates flat so that ratepayers would not be burdened with higher water bills during difficult economic times. Kevin Lynch argued that there was no justification for raising the rates. He claimed that the RWSA has accumulated over $30 million in cash reserves over the past six years by diverting a quarter of its revenues into a fund.
“When I was on Council, we passed a water plan back in 2002,” Lynch said. “We raised rates by 70% over two years to pay for that water plan… and so now you’re sitting on $30 million that another board took the political heat over and you’re planning to spend it on something else, something I believe you don’t need.”
RWSA Finance Director Lonnie Wood was asked by RWSA Chair Michael Gaffney to give a summary of how the cash reserves are used. While Wood could not address the specifics without the specific accounts in front of him, he was able to provide a general overview. He said that the RWSA currently has about $50 million in debt that was incurred through the sale of bonds. Woods said that a certain amount of money has to be set aside to guarantee one year’s debt service on those bonds. Right now, the RWSA spends about $5.5 million a year on debt service, requiring an equal match to be held in reserve.
“We can’t touch it,” Wood said. “We can’t even invest it anything reasonable like a local government investment pool.” Additionally, the RWSA has to set aside other $2 million funds to cover principal and interest payments. Wood said the RWSA also has a goal of having at least 60 days of operating funds in reserve to make sure there is sufficient cash flow to pay vendors for large capital projects. Wood said at some point, he would ask the Board for permission to expand that reserve to 90 days. Additionally, the large capital projects called for in the CIP will require the RWSA to expand its debt load, which is why rates are being increased.
“We’ve got a goal of funding a $150 million CIP with 10% cash, which is $14 million dollars, so we’re kind of trying to give a level rate of increase,” Wood said. He also explained how wholesale rates are much different than retail rates.
ACSA Executive Director Gary Fern said that the average residential customer would see rates increase by about 9% under the ACSA’s proposed budget. Gary O’Connell said the City’s rate increases would look different from the County’s. He also said the RWSA put a rate stabilization measure in place in order to keep rates from escalating sharply in one year.
“This authority a number of years ago put in a rate stablilization in because we saw a huge jump [in 2002],” O’Connell said. “The only way you can do that is to put some reserves up front.”
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