City Agrees to Sell Water System to Fairfax

November 20, 2012 by · 52 Comments 

November 20, 2012

The City of Falls Church, Fairfax Water, and Fairfax County, with the assistance of a federal mediator, have successfully negotiated terms for the sale of the Falls Church Water Utility to Fairfax Water. The terms have been approved by the Falls Church City Council, the Fairfax Water Board of Directors, and the Fairfax County Board of Supervisors. The agreement is subject to approval by the voters of the City of Falls Church by referendum in November 2013.

The settlement calls for Fairfax Water’s purchase of the Falls Church water system for $40 million, the reduction in water rates to customers in the Falls Church system’s service area, certain adjustments of the City’s boundary line with Fairfax County, the settlement of all litigation between them, and employment for Falls Church Water Utility employees. The sale will create a robust water system that combines the benefits of the three independent water treatment plants and transmission systems that now serve the area.

On November 8, at a federal mediation session presided over by Magistrate Judge Theresa Buchanan, the parties’ representatives agreed in principle on terms that they recommended to the respective governing bodies. Fairfax Water’s Board approved the proposal on November 15; Falls Church’s City Council approved it yesterday evening; and Fairfax County’s Board of Supervisors approved it this afternoon. The agreement is conditioned on a period of due diligence, the execution of a final written agreement, and the approval of a referendum by the voters of the City of Falls Church, consistent with the City’s charter. In the meantime, the litigation between the parties will be stayed so that the parties may focus their efforts on finalizing the settlement.

“The City of Falls Church is proud of its long-standing commitment to regional cooperation,” said City of Falls Church Mayor Nader Baroukh. “The potential sale of the water system is a testament to that ideal and in the best interests of its water customers, taxpayers, and utility employees.”

“Fairfax County is pleased that all parties have reached an agreement on the purchase of the Falls Church water system,” said Fairfax County Board of Supervisors Chairman Sharon Bulova. “This settlement marks a step in the right direction towards providing a better, more affordable water service for residents and ensuring a first-class water system in the long run.”

“We are excited that we reached an understanding that will benefit all of the people served by these two water systems,” said Philip Allin, Chairman of Fairfax Water. “Providing the highest quality water at the lowest rates continues to be our mission and we are delighted to add the 140,000 persons served by the Falls Church system to the nearly 1.7 million people in northern Virginia we currently have the privilege of serving.”

Principal Terms of the Settlement
• Fairfax Water will purchase the Falls Church water system assets for $40 million. The City will retain debt and pension obligations of the water system of about $30 million. The City’s Utility assets, including three undeveloped land parcels located in Fairfax County totaling approximately 9 acres, will convey to Fairfax Water.
• Fairfax Water will acquire the City’s existing water supply contract with the Washington Aqueduct and become the retail water supplier for the City’s existing customers both inside the City and in the City’s current area of service in eastern Fairfax County.
• Fairfax Water will guarantee a uniform water rate for the customers in the City’s service area to ensure that City residents are treated equally to the City’s existing Fairfax County customers.
• Fairfax Water will offer guaranteed employment (terminable only for cause) to all of the City’s water system employees at comparable pay and benefits for a period of at least three years.
• Within two years from the sale closing, Fairfax Water will reduce the water rates to all customers in the City’s service area to Fairfax Water’s rates and will thereafter maintain a uniform rate for all customers, barring any extraordinary utility requirements.
• The City’s boundary with Fairfax County will be adjusted to include within the City’s corporate limits the three parcels on which the George Mason High School and Mary Ellen Henderson Middle School complex and athletic facilities are located, a connecting parcel at the intersection of Haycock Road and Route 7 (Broad Street), as well as several City-owned parcels near the intersection of Shreve Road and Gordons Road. The land transfer amounts to approximately 42 acres. Thirty percent of the school parcels may be used for any purpose, while the remaining portion must be used for education-related purposes for fifty years.
• Fairfax Water will meet twice a year with the City of Falls Church to discuss water system issues, and will maintain a payment office in the City for payment of water bills.
• The City of Falls Church’s pending lawsuit will be stayed until the agreement can be consummated, at which time the lawsuit will be dismissed. Fairfax County will not enforce its rate regulation Ordinance against the City while the case is stayed.

Next Steps
• Fairfax Water, the City of Falls Church, and Fairfax County have entered a period of “due diligence” and will proceed to prepare and finalize the contract documents.
• The pending litigation between the parties will be stayed.
• In accordance with the City’s charter, the question whether to approve the transaction will be subject to a referendum next year in the City of Falls Church.
• If the transaction is approved, the two water systems will become one in or around January 2014.

What It Means to the Customers
• Falls Church water system customer rates will be reduced to the same rates paid by Fairfax Water’s existing customers within two years.
• The City of Falls Church’s existing customers (inside and outside the City) will be charged the same water rates as Fairfax Water’s customers in perpetuity, barring any extraordinary utility requirements.
• The economies of scale from the consolidated system will save tens of millions of dollars in future capital improvement expenses to the water system.
• The settlement will end all pending litigation between the parties.
• Fairfax County residents’ water rates will be set by Fairfax Water, whose members are appointed by the Fairfax County Board of Supervisors
• The Washington Aqueduct water supply to Falls Church will be combined with Fairfax Water’s two existing state-of-the-art treatment plants, providing additional back-up supply and creating one of the most robust, integrated water systems in the country.
• The purchase of the City of Falls Church water system will not impact the water rates of current Fairfax Water customers.

Bulova Proposes Merger of Water Systems

May 22, 2012 by · 20 Comments 

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May 22, 2012

Sharon Bulova, chairman of the Fairfax County Board of Supervisors, has proposed that the City of Falls Church merge its water system with the County’s. 

Writing in response to recent comments by Vice Mayor Dave Snyder, Ms. Bulova states she believes such a merger would lower rates for residents of both jurisdictions.  However, she adds that if the City were to sell to its system to the “highest bidder,” rates for all its customers very well may increase substantially, as an investor-owned utility would have to charge higher rates to recover not only its purchase cost, but also the profit margin and tax obligattions that governmental uhow to get your girlfriend back

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Ms. Bulova also calls attention to a recent opinion by the Chief Counsel for the Army Corp of Engineers that the Washington Aqueduct, the provider of Falls Church’s water, is not permitted to sell water to a non-governmental entity.  The chairman adds that Virginia law does not permit the State Corporation Commission to authorize the operation of an investor-owned utility in the County without the approval of the Board of Supervisors.

The full text of the chairman’s letter is available here.


Fairfax Water Proposes Merger With Falls Church

February 29, 2012 by · 14 Comments 

Falls Church Times Staff

February 29, 2012

Fairfax Water has proposed that the City of Falls Church agree to merge its water system with Fairfax County’s.  Submitted in response to the City’s recent request for expressions of interest (REI) in its water and sewer systems, the proposal suggests that a merger would result in significantly lower water costs, provide robust system backup, and offer tens of millions of dollars in savings for Falls Church’s capital improvements program.  The City also would have a seat on Fairfax Water’s ten member Board.

Fairfax Water also lists three reasons why it would be inadvisable for the City to attempt to sell the system to the highest private bidder.  Falls Church would forego the additional reliability gained through joining Fairfax and its customers would pay considerably more for water.  The City also would likely face major regulatory hurdles, including approval of the sale by the Fairfax County Board of Supervisors.

Falls Church officials had little immediate reaction to the proposal.  “We look forward to reviewing it along with the other responses that we receive, as the City Council evaluates preferred options for the future of the City’s water and sanitary sewer systems,” said city manager Wyatt Shields.

In the proposal’s text, Fairfax Water’s general manager Charles Murray states “In short, the benefits of merging our two systems would be extraordinary.  Not only would your existing customers pay significantly less for their water but our joint water system – with two independent water treatment plants in Virginia and one in the District of Columbia – would be the most robust and reliable in the world.”

Falls Church issued the REI on February 14.  Responses are due by Friday, March 2.  Sale of the water system to a public or private utility would require citizen approval via referendum.  However, a merger with Fairfax Water might only require a majority vote by the City Council.

Falls Church’s system services around 34,000 accounts and 140,000 customers.  Most of its customers reside in Fairfax County.  Fairfax Water services 234,000 accounts and 835,000 customers.  It currently has six wholesale customers.  The City has one.

The full text of Fairfax Water’s response to the REI is available here.

INTERVIEW: City Manager Discusses Water System Sale

February 20, 2012 by · 6 Comments 

February 20, 2012

Five days after the Falls Church City Council unanimously approved the release of a request for expressions of interest (REI) in the City’s water and sewer systems, City Manager Wyatt Shields sat down with the Falls Church Times on Friday to discuss the complex and weighty subject.

The Feb. 13 vote (with Robin Gardner absent) may rank as the most significant since the City’s founding in 1948. The water system is older than the City, dating to the 1930s.  It serves over 120,000 customers, primarily in Fairfax County.  For many years, it provided Falls Church with a significant return on investment, but a 2010 Fairfax Circuit Court decision prohibited the City from transferring the system’s profits to its general fund, effectively making it a non-performing asset.

During the interview, Mr. Shields said he was “cautiously optimistic” that the water and sewer systems will be sold for a good price, but he reminded reporters, residents, and interested parties that the City won’t automatically sell the system if the offers received are inadequate. Read more

WATER WAR: Fairfax Board Approves Exclusive Service Area, Maximum Allowable Rates, Fees, & Charges

December 6, 2011 by · 7 Comments 

Falls Church Times Staff

December 6, 2011

Late this afternoon the Fairfax County Board of Supervisors unanimously approved an ordinance which amends the County Code to require that developers hook up with Fairfax Water’s system, even in cases where new lines must be built to reach sites having access to existing Falls Church City, Vienna Town, or Fairfax City lines.  This exclusive service area would apply to both new development and redevelopment.

The measure also allows the Board to fix rates and charges for water service provided to customers located in Fairfax County so that no County customer of the City of Falls Church water system will be charged rates and charges that exceed those of Fairfax Water, unless the City can demonstrate the need for higher rates and charges to the County’s satisfaction.

Falls Church repeatedly asked Fairfax County to defer a vote on the ordinance, most recently via a December 1 letter from City Manager Wyatt Shields to County Executive Anthony Griffin.  Local leaders were quick to criticize the Board’s action.

Mayor Nader Baroukh said the City had sought a deferral to allow time to respond to its serious concerns and create a mutually beneficial outcome that ensures the safety and reliability of the City water system and reflects the value of that system.  “Instead, the Board chose to rush to enact an ordinance that is anti-competitive and not in the best interests of our County water customers” said the mayor.

Vice Mayor Dave Snyder also voiced dismay. “Over the years, the City has taken on significant risk so that Seven Corners, McLean, Merrifield, and Tysons Corner—the economic engine of the County—could develop. Today’s action by the Fairfax County Board of Supervisors is a blow for regional cooperation” Snyder said.

Councilman Lawrence Webb, a member of the City’s Public Utilities Commission also was critical.  “It is unfortunate that the County Board rushed to enact this ordinance.  The effect of the new regulations will be to increase water costs for County residents, create an expensive new County bureaucracy,  [and] invite litigation” he said.  “[The action] will force County developers to construct new water mains that overlap the existing system in order to hook-up to Fairfax Water, an enormous unnecessary cost that could stop Tysons and Merrifield redevelopment effort in its tracks.”

Although the vote was unanimous, Supervisors Pat Herrity (Springfield) and John Cook (Braddock) expressed some reservations.  Herrity observed that he didn’t see how dual infrastructure would save anyone any money and said he didn’t think this was how the County should be doing business with its partners.  Cook warned of possible unintended consequences and referenced Senator Petersen’s recent suggestion that he would introduce legislation in the General Assembly to override the Board’s vote.

Representatives of several Fairfax neighborhood associations, who spoke against the City’s rate increase at Council sessions last summer, spoke today in favor of the ordinance.  All reiterated their view that County residents serviced by the City’s water system are subjected to an unconstitutional tax due to their having no means of voting in Falls Church elections.

About 92% of the Falls Church’s customers reside in the County.  However, the City does not impose a rate differential between its City and County customers.  Its water rates are lower than average for water utilities in the region, and in the lowest quartile statewide.

Over the past five years the City invested $20 million in upgrades in the Tysons, Merrifield, and Dunn Loring areas, keeping water rates flat until an 8% increase in 2011.  Fairfax Water has increased water rates by 33% since 2005.  The County has raised sewer rates 80% since then.

Background on the Board’s actioin is available here at Page 611.

Fairfax Commission Criticizes City’s Water Rates

September 21, 2011 by · 5 Comments 

Falls Church Times Staff

September 21, 2011

The Fairfax County Consumer Protection Commission (CPC) has issued a report that is highly critical of Falls Church City’s water rate structure.   The report calls on the County to fix rates and charges for water service so that no Fairfax customer of the City’s system will be charged rates and charges that exceed those of Fairfax Water, unless the City demonstrates the need for higher rates and charges to the County’s satisfaction.

The report also recommends that the County establish Fairfax Water as the exclusive water service provider for all new development and redevelopment in Fairfax County.  It cites Section 15.2-2111 of the Virginia Code as the authority in both cases.

City Councilman Lawrence Webb, a member of the Falls Church Public Utilities Commission, said the report appears to be a political document.

“That’s disappointing,” said Webb.  “Where is the Commission’s research into water rates of other water systems in Fairfax County, all of which have raised water rates in recent years?   Where is the Commission’s research into Fairfax County’s own sewer rates, which have gone up 80% since 2005, a rate of growth ten times higher than City of Falls Church’s water rates?”

Webb added that the report raises questions about the Commission’s independence.

“Certain Fairfax County Board members have been very outspoken that they want to take over the City’s Water Utility,” he said.  “A professional and objective consumer commission should not be involved in raw politics.  We had hoped that Fairfax County would move away from this litigious, confrontational approach after its water refund cases were summarily dismissed in Fairfax County Circuit Court last month.”

On April 25 the Fairfax County Board of Supervisors authorized the CPC to undertake a comprehensive review of the City’s water rate making practices.  The measure was introduced via a motion by Supervisor Linda Smyth (Providence).  The motion was approved by voice vote.

Smyth asked the Commission to determine the basis for Falls Church’s rates; whether it was in compliance with the rate making principles established by the Board in May 2010; the nature, location, and cost of any capital improvements made over the past five years and how those improvements were funded;, and the location and cost of projected improvements.

The Board’s action followed the City Council’s initial discussion of a rate increase, which was unanimously approved on September 12.  The 8% increase, which will take effect on October 1, will add from $2.00 to $7.00 to the average customer’s quarterly bill, based on usage.  Over 90% of the system’s customers reside in Fairfax County.

The complete CPC report is available here.

Eden Center Reps Call for Better Policing,
Council Approves 8% Water Rate Increase

September 12, 2011 by · 4 Comments 

Falls Church Times Staff

September 12, 2011

Leaders of the Vietnamese-American Chamber of Commerce and several Eden Center patrons this evening criticized recent actions of the Falls Church police and called on the City Council to improve the relationship between the Center and the FCPD.  The comments came in the wake of last month’s raid on the Center, which allegedly uncovered gambling operations at numerous establishments.

The speakers charged that the raid has given people a false image of the Eden Center, which in turn has hurt business.  They criticized police procedures and conduct, before, during, and after the raid.  Several said they had never heard of the Dragon family, which police alleged ran the gambling racket.  Some maintained that suspects were not read their rights or were banned from the Center without due process.

Spokesman Ty Nguyen offered the Council a list of suggestions for better policing.  He recommended establishing a drug free zone; creating an Eden Center community watch; designating an FCPD liaison, which he termed a full time bridge to Vietnamese community; appointing a City Council liaison, who would sit in at Council meetings; permitting “walk along volunteers” to assist the police; and having Miranda rights texts available in English and Vietnamese, while providing translators to read suspects their rights whenever a warrant is being served.

Vice Mayor Dave Snyder stated that he had never heard of the issues presented tonight, but called the speakers’ comments constructive.  “We cherish and highly value our relationship with the Eden Center and will work to assure a safe and prosperous environment for all concerned,” he said, to considerable applause.

Mayor Nader Baroukh added that he felt the vice mayor’s comments summed up the feelings of the entire Council and pledged to continue the dialogue and outreach to the Eden Center community.

Councilwoman Robin Gardner pointed out that at one time the police had maintained a sub-station at the Center.   “I’m glad we’re taking this as seriously as we are,” she said.  “Some of the stories are extremely disturbing.”

City Manager Wyatt Shields said that Falls Church is committed to community policing.  “The police are there to protect and to serve and I have no doubt about that,” he said.

Water Rates Rising

The Council approved an ordinance authorizing an 8% water rate increase, effective October 1.  The measure was adopted, 6-0, with Councilman Lawrence Webb absent.  According to Mr. Shields, the impact to the average customer would vary from $2.00 to $7.00 per quarter, based on usage.

The monies received through the increase will remain in the City’s water fund in accordance with a 2010 order of the Fairfax Circuit Court.   That order did not enjoin the City from setting its rates, only from transferring water system profits to its general fund.

Prior to the vote, Councilman Ira Kaylin noted that Fairfax Water had advised Falls Church in writing that it would not challenge the rate increase.  Many Fairfax County residents have protested the measure, which they regarded as unfair.  Over 90% of the water system’s customers reside in the county.

City “Bailing Out” on the Voting Rights Act

At the request of the Electoral Board and the General Registrar, the Council approved, 5-1, a resolution to begin the process of “bailing out” from the pre-clearance requirements of the Voting Rights Act of 1965.  Ms. Gardner cast the only negative vote.

The Act requires certain jurisdictions, including the City of Falls Church, to notify the U.S. Department of Justice before making changes in their local voting procedures, such as changing a precinct/ward location, adding an absentee voting location, or conducting registration drives.  Exemption from the requirement will provide overall financial and personnel efficiencies, while continuing to abide by the letter and spirit of the Act.

Congress amended the Act in 1982 to establish a process for local governments to be exempted or “bailed out” from the pre-clearance requirements if they have demonstrated a positive record of protecting voter rights in their jurisdiction for a period of at least ten years.  Since 1982 over 18 counties or cities in the Commonwealth have successfully gone through the process.

City Manager’s Report

Mr. Shields stated that the City received over 8 inches of rain during last week’s storm, something that could be expected only once every 85 years.  He said that the storm management system was well maintained but that it had been overwhelmed by an event it was not designed to handle.  Many homeowners have reported flooded basements, especially along Sherrow Avenue, Timber Lane, W. Columbia St., and lower portions of Broadmont.

The City is waiving the excess trash fees for the next two pickups but is not waiving the bulk pickup fee.  Mr. Shields cautioned that appliances under water should be replaced rather than repaired.   Only qualified contractors should be hired to deal with sewer backflows.  A list is available on the City’s website.

Mayor Baroukh suggested that the City hold a town hall meeting to address the flooding problems and other emergency management issues.

Cox Cable soon will be shifting FCC-TV from Channel 12 to Channel 11.  The new channel will be available throughout the City and Fairfax County.  Channel 12 is only available in eastern portions of the county.

Mr. Shields cited Gary La Porta for his recent work in conjunction with the City’s planning efforts.

Vision Statement and Work Plan

The Council passed resolutions, 6-0, approving its vision statement and the work plan for the current term.  The Council amended the work plan prior to the vote to include references to the Eden Center.

Council Defers Final Vote on Water Rate Increase Until September

July 11, 2011 by · 2 Comments 

Falls Church Times Staff

July 11, 2011

Facing continued criticism from Fairfax County residents, the Falls Church City Council this evening declined to approve the second reading of a water rate increase. 

The Council adopted a motion introduced by Councilman Ira Kaylin to defer a vote on the proposed ordinance until September 12.   The motion also directs City Attorney John Foster and the City’s outside counsel to request that Fairfax Water agree that the proposed increase, if adopted, is in compliance with the final decree issued by Fairfax Circuit Court Judge R. Terrence Ney on January 6, 2010 in the case of Fairfax County Water Authority vs. City of Falls Church. 

That decree enjoined the City from transferring profits from its water system to its general fund.  It also ordered that Falls Church must comply with its Charter, which states that “water rates .  .  will result in receipts equal to expense (including any future expense of the water system).”  

The motion further directs that if an agreement is obtained, Mr. Foster then is to seek a decree from the Court resolving that the rate increase complies with the 2010 ruling.   If Fairfax Water declines to join in securing the Court’s concurrence, then the City will seek it unilaterally.  

The motion was approved, 3-2, with members Johannah Barry and Robin Gardner absent.          

Mayor Nader Baroukh and Councilman Ron Peppe voted with Mr. Kaylin to approve the motion.  The mayor and Mr. Kaylin both urged caution, given the prior litigation with Fairfax Water. 

Vice Mayor Dave Snyder and Councilman Lawrence Webb opposed the motion.  Mr. Snyder cited the pressing need to maintain the system’s infrastructure.  Mr. Webb concurred, stating that the City was only seeking to charge what it takes to run the system and that deferring action only served to delay what is inevitable.

Before the vote seven Fairfax County residents spoke against the rate increase, maintaining that it violated Judge Ney’s decree.  Some called on the City to merge its system with Fairfax Water in order to achieve greater economies of scale.  Others were visibly angry.  One called on Fairfax customers to boycot Falls Church businesses if the increase were approved.

Falls Church is proposing an 8% increase.  The City has not raised its rates since 2005.  Ninety-two percent of the system’s customers reside in Fairfax County.

CDC Task Force  –  The Council unanimously approved a resolution extending the Child Development Center Task Force’s deadline until August 8. 

City Manager’s Report  –  Mr. Shields announced that Falls Church’s recycling rate has risen from 57% of solid waste in 2009 to 60% in 2010.  The state average in 38.6.  The annual hazardous waste collection will be held Saturday, July 23.  Residents are encouraged to  

Closed Session Cancelled  –  At the end of the meeting the Council removed the session from the evening’s agenda, presumably due to the earlier decision to defer action on the water rate increase.

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