On the evening of September 13, 2007, about 70 people gathered in Lane Auditorium at the Albemarle County Office Building to begin a community discussion about how to pay for
the 50-year water supply plan
. That plan was endorsed by both the Charlottesville City Council and the Albemarle County Board of Supervisors in June 2006, but decisions about financing the project have so far been on hold.
The adopted plan was shaped through nine public hearings held by the
Rivanna Water and Sewer Authority
(RWSA), the quasi-governmental agency that maintains the various reservoirs, pumping and treatment facilities and other infrastructure that provides water to Charlottesville and Albemarle County residents. RWSA Executive Director Tom Frederick said officials and the public reached consensus that the selected preferred alternative should be the “least environmentally damaging, practicable alternative.”
The plan calls for a higher dam at the Ragged Mountain Reservoir to provide a pool of water 45 feet higher than the current pool. That will quadruple capacity to 2.1 billion gallons, to be partially filled by water from the South Fork Rivanna Reservoir through a new pipeline. The plan also calls for upgrades of various water treatment and pumping facilities, all towards a goal of being able to provide a safe yield of at least 18 million gallons a day (MGD).
At the meeting, Frederick revealed new financial numbers for the first time at the meeting. He said full implementation of the plan will cost $142.1 million, and is broken down as follows:
To put that figure into context, the RWSA currently has $33.5 million in assets in its urban water system. To fully implement the community water supply plan will require a quadrupling of financial resources. Additionally, Frederick said the RWSA will need an additional $11.5 million over the next five years to maintain the urban water system. Ongoing operational costs will also have to be addressed.
“We have aging infrastructure, we have a regulatory climate that continues to provide new regulations on how we do our business, and then we’ve got the community water supply plan,” Frederick said.
Right now, the RWSA pays about $3 million in debt service.
No matter which of these scenarios, there will be significant negotiations over the ability to borrow funding. Assuming an annual inflation rate of 2.8 percent and terms of 30 years at 5.25%, debt service under Scenarios 1 and 2 escalate sharply.
“We anticipate no matter which of these scenarios might be selected, there will be significant negotiations over the ability to borrow funding,” he said.
“When we start talking to finance agencies about how to borrow money, they’re going to want guarantees and assurances that we’re going to pay back that money, these numbers are going to be big numbers for them to swallow,” he said, predicting difficult negotiations.
“Deciding how to pay for these improvements will not be easy,” said RWSA Chairman Michael Gaffney. “Just as this community pulled together in the selection of the Ragged Mountain alternative, I know our community will once again meet this challenge.”
Phasing of the various improvements will affect how the debt-load will be structured. Frederick presented three scenarios.
All scenarios assume upgrades at the Observatory water treatment plant because of its age.
Frederick said Scenario 1 would build 89 percent of the full community water supply plan in five years – but it would be very expensive. Scenario 2 would be the least expensive option. Scenario 3 would assume construction of the SFRR pipeline within fifteen years.
At least one phase of the Ragged Mountain Reservoir expansion will need to be completed by 2011.
The two existing dams at Ragged Mountain were built in 1885 and 1908, and by state law, they need safety upgrades by 2011. Frederick said repairing the existing dams would not be sufficient. He added that building in two phases might be counter-productive, as the surrounding environment would be disrupted twice, and because the first phase would need be built to at least 42 feet. The second phase would only be to construct an additional 3 feet, and Frederick said that would not be cost effective.
After Frederick’s presentation, the public had the chance to ask questions and make comments. Many sidestepped the financial discussions to ask about the plan itself. Why is the Ragged Mountain expansion so high? If fully built, will the area ever be put under drought restrictions again?
Frederick said the dam expansion will allow the RWSA to maintain federally mandated safe yield requirements, and while capacity would be increased, Frederick said he could not guarantee that restrictions would never be necessary.
Barry Hutton of Keswick wanted to know how the plan would address storage capacity. Currently, the urban water system can contain can handle an annual demand of 10.6 MGD, stored in three reservoirs which can have a full capacity of 1.6 billion gallons of water. Frederick said when the community water supply plan is fully implemented, there will be enough capacity for 2.7 billion gallons.
One person asked how much rates would increase to help pay for the plan. Frederick responded that the RWSA does not set the rates paid by homes and businesses. The RWSA has two customers – the City of Charlottesville and the
Albemarle County Service Authority
– and that they will have to determine what exact rate to set. Another person followed up and asked if it was assumed that increased debt service would be covered by ratepayers. Frederick said he would prefer if the RWSA not get involved in discussions about retail rates, but that the cost of implementing the community water supply plan would likely raise rates.
Former City Planning Commissioner Betty Mooney said she represents the Friends of the Ragged Mountain Reservoir, a group that is planning a campaign to fight the expansion. “Our group feels that City residents have had inadequate time to respond to the loss of this land,” she said. “Why would a City resident support a plan that takes away 142 acres of City-owned land?” Mooney said City residents have not had the chance to weigh in at a public hearing. Several other city residents also expressed their opposition.
City resident Jack Brown suggested a more suitable option for the community would be to dredge the South Fork Rivanna Reservoir to add more capacity. That option was previously ruled out, in part because of the high costs. Dredging at South Fork is anticipated by some analysts to be more cost effective after the community water supply plan is fully implemented and the reservoir can be lowered.
City Resident DeDe Smith suggested that poor City residents will unfairly bear the cost of growth through higher water rates.
Keswick resident Jim Colbaugh said he was in support of scenario 3, but said that he wasn’t as concerned about when the construction of the South Fork Rivanna Reservoir pipeline would occur. “New customers [have to] pay their fair share of these future growth costs,” he said. Colbaugh suggested that the ACSA and the City of Charlottesville can also pass on some of the cost through higher connection fees.
Local water activist John Martin commended the RWSA for the Plan, but said that the real discussion about financing needed to be held during a special meeting of the City Council, the Board of Supervisors, the ACSA and the RWSA.
“For whatever reason, a meeting of the four boards has never come about. This meeting is a substitute. This is not a town meeting in New Hampshire. While we in this room are capable of making decisions on financing the future water supply by ourselves, that’s why we elect people to public office.”
Martin then noted that no member of the Charlottesville City Council was present at the meeting, but did acknowledge the presence of Albemarle County Supervisors Ken Boyd and Dennis Rooker. During the meeting, Supervisor David Wyant and his challenger Ann Mallek were involved in a candidate forum in Crozet.
Ridge Schuyler of the
noted that water supply issues often can pit people together.
“I think this community really ought to be commended to come up with a plan, that while not perfect, really does address the needs both of the river and the people.” He noted that the flow on the Moormans River will be restored to 90 percent of its original flow after the reservoir is built. Today a 100-year old pipeline diverts much of the flow of the Moorman’s River from Sugar Hollow to the Ragged Mountain Reservoir. Without that pipeline as a water source, the Ragged Mountain’s small watershed area would not provide enough water to keep it filled. The new pipeline proposed in the community water supply plan would replace that source drinking water.
Don Wagner, chair of the Albemarle County Service Authority , said that when upgrades are made to facilities that serve only the County, the rates can be structured so that only County residents pay.
“Any time something new is done, the City and the ACSA sit down and negotiate how much of this is to the benefit of the city, and how much is for the benefit of ACSA customers. And the cost is split between them. For example, the treatment plant out at the South Fork Rivanna Reservoir was enlarged several years ago. And all of the cost of that went to the ACSA, because the ACSA is assuming they’re going to have growth and needed capacity. None of the cost of that increase went to City customers whatsoever.”
Wagner continued his explanation of financing by explaining that these capital projects will not be paid for using property taxes.
While the question of financing remains to be answered, the RWSA has begun obtaining the various permits required from the Army Corps of Engineering as well as the State Department of Environmental Quality to proceed with the building of the new dam. Frederick predicts approval by the end of the year.
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