Because of the cash on hand, RWSA officials predict wholesale water rates won’t go up in Albemarle or Charlottesville in the immediate future because of the initial water-plan projects, but what happens down the road remains unknown.
The reason: Too many variables on the plan still need to be resolved, including:
Slide from a September 2007 RWSA presentation outlining debt financing implications for three phasing scenarios of 2006 water supply plan. Since implementation has been delayed, $7.1 million in reserves have accumulated.
OUR WATER OUR FUTURE
Lonnie Wood, director of finance and administration for the RWSA, said the reserve fund has climbed to $7.1 million because of the delays in the water plan’s implementation.
“Other projects have been taken out of the capital budget or pushed into future years,” said Wood in an interview.
While Wood waits for direction on a specific water plan, his financial forecasts show future borrowing will be lessened, and that he says is good news for his two customers, the Albemarle County Service Authority and the City of Charlottesville.
“We will use more cash up front, than was anticipated in 2007,” said Wood. “That makes the need for debt service lower which means we can keep the water rate steady or reduce it a little bit.”
Dede Smith, a representative of
Citizens for a Sustainable Water Plan
, has encouraged the public to look at the long-term economics of both the costs of the water plan and what she predicts will be decreased water usage.
“Its deceptive for them to lead people on that this plan is not going to raise water rates,” said Smith in an interview. “It is going to raise rates, and people better hold on to their seats.”
The 50-year plan was originally approved by City Council and county supervisors in 2006. The estimated $142 million plan included building a taller dam at Ragged Mountain Reservoir, a new pipeline from
South Fork Rivanna Reservoir
to Ragged Mountain and associated support infrastructure.
Since 2006, the water plan has turned into one of the most contentious public policy debates in regional history.
The 2006 water plan continues to have the backing of the Albemarle Board of Supervisors, a point driven home by a decision to insert a two-page flyer in the mailing of this month’s personal property tax bills.
Supervisors said in the statement that they wanted “to speak directly to county citizens about the factual and objective reasons why our support for the Plan remains firm.”
in September City Council endorsed a revised water plan
that they say includes most of what the county wants. The city’s wants the Ragged Mountain dam to be built in phases, as water is needed, as opposed to building it all at once. It also includes dredging to restore water storage capacity at the South Fork Rivanna Reservoir.
With the city’s compromise proposal on the table, the flyer from the board of supervisors provoked a strong reaction from Councilor
“Do you intend that Charlottesville City Council should just walk away from our negotiations on the water plan?” asked Szakos in an
e-mail published by NBC29
. “That certainly seems to be the intent of your proposed flyer, which is neither factual nor objective. It draws lines in the sand before any final agreement has been reached.”
WHICH PLAN IS MOST COST EFFECTIVE?
The competing plans now have in common a new water supply pipeline that will pump water from the South Fork Rivanna Reservoir up to the Ragged Mountain Reservoir. That pipeline’s most recent cost estimate is about $62.9 million. The aging
Sugar Hollow Pipeline
will be retired restoring natural stream flows to the Moorman’s River which has had water diverted from it since 1925.
The water plans also share a commitment to upgrading the water treatment plants and related pipelines. The RWSA estimates those projects have a cost of about $39 million.
Thus about $102 million in projects have already received the backing of both localities. The lingering debate focuses on the approach to creating new water supply storage capacity.
The earthen dam preferred by the county has a high-end cost estimate of about $40.7 million which brings the capital cost of the entire 2006 water plan to about $142.6 million.
City officials say the up-front costs of the water plan can be limited while waiting to see how much water the community needs in future decades. County officials say the long-term costs could be even greater if construction on a plan doesn’t begin soon.
Faulconer Construction built the community’s previous two dams at
(1947) and South Fork (1966). Vince Derr, who retired earlier this year as Faulconer’s Executive Vice President, said in an interview that the construction market is currently very favorable.
“This is a good climate for the construction customer, and not a good climate for construction companies,” said Derr. “Prices are very low, and probably as good a bargain as someone could get in the foreseeable future.”
The costs of the city’s approach to a phased dam and dredging are both unknown. The
city hired Black & Veatch
to evaluate building on top of the existing Ragged Mountain Dam, but that firm’s preliminary cost estimates didn’t take into account the cost of phasing. Further,
are now going to be reviewed by an outside panel of dam experts in late November.
City and county officials have agreed to put out a request for proposals for more specific pricing on dredging, but as a separate project from the water plan. City council wants a commitment to dredging to keep the initial dam at Ragged Mountain as small as possible.
Smith, who said she does not personally support the city’s compromise plan, observed that the cost sharing arrangement for the water plan remains to be negotiated. She said the cost allocation could negatively impact the ratepayers, particularly in Albemarle.
“There are many other influences on the bills too, like wastewater repairs,” added Smith. “We need to understand how this whole plan will impact our rates and ask ourselves if we can afford it.”
Wood said his five-year forecast is based on the 2003 cost sharing agreement and he acknowledged that the costs in future years for the water supply was a different matter which would be impacted by a variety of factors.
For example, Wood said the costs of dredging, added to the construction of a new dam, could be a factor leading to water rates increases.
“If you are going to pay cash [for dredging]…then you are taking cash that would go to debt service and spending it on operational needs,” said Wood. “You can’t build [the water plan] and do dredging, without having more revenue.”
disagrees and says the city’s water plan, because it includes a less costly dam initially, will actually save the community money.
“If you are talking about a $40 million outlay [for the dam], plus dredging, there would certainly be greater costs,” said Norris in an interview. “I am talking about something much more modest.”
Norris says that he estimates the first phase of the Ragged Mountain Dam can be built for about $14 million and that dredging can be done on a pay as you go basis with cash for about $22 million.
“When you factor in the long term interest, I estimate you would save about $25 million,” said Norris.
When city council voted on a water plan in late September, councilor Dave Brown observed there were some financial uncertainties to the city’s approach.
“If [the opponents of the larger dam at Ragged Mountain] are right and we do a great job conserving [water], then we will have dredged some and conserved a lot and made the dam a little higher and saved money,” said Brown. “If the people are wrong, we will have spent more money, but we will have the ability to make the dam bigger.”
City and county officials plan to send a letter to the
Virginia Department of Environmental Quality
explaining the city’s proposal and seeking feedback as to whether it would receive the support of the regulators.
“If I were DEQ I would say, ‘I am tired of dealing with this,’” said Norris. “They just want to see the city and county on the same page.”
Norris said he remains optimistic that a compromise is close and the community will soon have a fifty-year water plan ready for implementation.