City Seeks to Sell Water, Sewer Systems
By CITY OFFICE OF COMMUNICATIONS
February 13, 2012
The City of Falls Church has issued a Request for Expressions of Interest (REI), seeking input from qualified utility entities that may have an interest in entering into an agreement for the purchase of the City’s utility assets. The City Council is undertaking a comprehensive evaluation of options for the future of City water and sewer systems, with the goal of providing the best possible stewardship of the City’s utility assets on behalf of its taxpayers and customers.
The City expects a wide variety of responses from industry and public water authorities. Council will review responses as it evaluates options for the future status of the water and sewer systems, including maintaining the status quo.
“Council has been considering the future of the water and sewer utilities for quite some time,” said Mayor Nader Baroukh. “Seeking industry input is the next step in the orderly, transparent, and comprehensive process where Council will consider all options.”
The City has operated a successful public water supply system since the 1930s, growing significantly beyond the City’s borders. The City’s total service area is approximately 33 square miles, with 34,500 accounts and annual revenues of approximately $20 million. The City is a wholesale customer of the Washington Aqueduct, which provides drinking water for the City of Falls Church, Arlington County, and District of Columbia. The City water system delivers an average of 17 million gallons of water to its customers each day, with a maximum capacity of approximately 38 million gallons per day. Interested organizations and the public can find information about the City Water and Sewer Systems via the City’s website.
Over the coming months, the Council will engage in deliberative process with key stakeholders and industry leaders to chart out the future of its water and sewer systems. A sale of the water system would require approval by City voters by referendum. Should that be the preferred option, it is possible that a referendum for sale of the system could be before the voters by the Nov. 6, 2012 General Election.
“By issuing this REI, we are inviting industry and public water authorities to provide us with information that will help the City evaluate the best options for the future of this critical utility service. We want to make sure that no stone is left unturned.” said Councilman Lawrence Webb, member of the Council’s Public Utilities Commission.
The full REI will be available tomorrow on the City’s website. Responses and questions are welcomed through 2 p.m. EST, Friday, March 2, 2012.
By (see byline)
February 13, 2012
This has been one of the top issues that Council has been facing since being elected in 2008. This has been a long time coming for us to begin the process of evaluating whether we stay in the business of providing top quality water to our customers or evaluate offers from private and other government utilities as to their interest in purchasing this non performing asset to us since the ruling of Judge Ney. By doing this does not mean that we are going to be selling the system but it is us beginning a process that after reviewing if it is in the best interest of the city we can quickly move forward. I invite comments from citizens on this very important conversation about the city’s future.
Does this step mean the City is concerned/afraid the newest Fx Water issue about rate setting would prevail?
So, I guess all legal avenues have been exhausted in terms of our 1970 charter change that allowed us to see a return on investment? What about other municipalities in the state that see a return? Has anybody figured out why we have been singled out and why the courts have overturned the State Legislature for allowing us to receive a return? Is it that Fairfax County Lobby and Lawyers in Richmond are just too much for us? It seems we have no fight left, no leverage in a sale and will be disappointed in what the REI brings. The public has no insight into all the executive sessions on this matter, so we don’t have the knowledge needed to understand our alternatives. Hopefully a broader discussion soon will reveal enough information to the voters so a sound and correct decision can be made at the voting machines.
My layman’s understanding about the other municipalities that also draw a ROI and transfer to General Fund is: until some entity brings it to court for challenge…they keep on doing it. Does anyone know if those other municipalities have been challenged since our case ruling?
Mr. Kaylin seemed pretty firm that the systems were now “non-performing” assets and should be turned into an asset that would reap a benefit for the city. I will look forward to more discussion but, Mr. Kaylin may have a point…if we can’t use revenue from the water system in our General Fund then why are we in the water business? Because we don’t trust the water quality supplied by another entity? Because we enjoy running a water business??
Lots of questions. Lots to think about. I hope to see an active discussion and learn from other folks with more information and perspectives.
Seems to me that paying 60 percent higher rates than Fairfax County should be all that it takes for the City to decide to sell off the assets, get some cash for the sale and have in the end lower rates for the citizens. All good.
Dave, I’m not sure it’s that simple. The Falls Church water folks have always said that the way they procure and provide the water is more expensive than the way Fairfax Water does. So, even if the City sold the service to Fairfax the costs wouldn’t go down – and I can’t imagine Fairfax spreading those extra costs over all of their customers. So, my guess is that the rates would stay the same or maybe go up.
I agree with Barry that at this point I don’t think the public has enough info to have a particularly well informed opinion on what the best thing to do is. I’m hoping that City Council and the staff have done a good job of figuring things out and will make clear suggestions should this come to a pubic referendum.
The whole thing seems odd to me. If private water utilities exist in Virginia and can make a profit then why aren’t entities like the City allowed to make a profit? It does seem like the City isn’t governed by the SCC (in terms of pricing) like a private entity would be – but why not and if the City was would that make things “fair?”
If it’s just one of those rules – that municipalities can’t make a profit from utilities that they operate – then it seems logical to me to sell the utility if we can get our return on investment (over decades) that way. It does seem like we need to, one way or another, get away from the endless headaches associated with having legal battles with Fairfax Water.
Soooo, our ever increasing bill ($204 this quarter for two people) may go down? With no PSC oversight, only answer I ever get is, “That’s normal for two people.” Funny, when it first went to $80, then over $100, and again to $190 and now…I always get the same answer. What service is going to be left to outsource? Where, exactly, are we headed?
Andy,
The City is not allowed to take a profit from the water system only because Fairfax County sued us to stop us from doing so – and even though I believe appx. 20 other localities in Virginia do it, and the State Legislature says it’s legal – Judge Ney, of Fairfax County, ruled for Fairfax County and said we couldn’t do it. Seemed to me like we’d absolutely win on appeal, but the Va. Supreme Court refused to hear the case. !?!?! To this day, I don’t understand how this makes sense.
The other localities in Virginia are still doing it – but I guess if they have a big, bad neighbor like Fairfax, they better watch out!
Gail, if we were to sell our water system, my guess is that our bills would go UP, definitely not down!
I don’t know what the anwer is.. I’m looking forward to finding out more about our options with the Request for Interest. I just hope Fairfax isn’t the only one interested!
Jody, I hear ya! I didn’t follow the legal stuff very closely but the result always seemed odd to me (if it’s true that other cities are taking returns from their systems). If a private entity can operate a utility with oversight from the SCC and take a profit then a city should be able to do the same thing.
But, other than trying to get the folks in Richmond to pass some new laws it seems like we’re not going to be able to take a return.