News

F.C. Council Unanimous in Rejection of All User Demands for Water Refunds

Judge’s Ruling Did Not Permit Refund Claims, F.C. Says

The Falls Church City Council acted tersely based on a statement read by Vice Mayor David Snyder Monday night, voting unanimously to instruct City Manager Wyatt Shields to summarily deny all requests and demands for refunds from the City’s water system.

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FALLS CHURCH Mayor Nader Baroukh (left), City Manager Wyatt Shields (center) and City Attorney John Foster had a pow-wow during Monday night’s F.C. City Council meeting after the Council voted to affirm the City’s commitment not to provide refunds to its water customers. (Photo: News-Press)
Judge’s Ruling Did Not Permit Refund Claims, F.C. Says

The Falls Church City Council acted tersely based on a statement read by Vice Mayor David Snyder Monday night, voting unanimously to instruct City Manager Wyatt Shields to summarily deny all requests and demands for refunds from the City’s water system.

Following Judge R. Terrence Nye’s ruling against the City’s water fund in the Fairfax Circuit Court last year, upheld by the Virginia Supreme Court last November, over 400 users of the F.C. system residing in Fairfax County have demanded a refund for what they contend were overcharges on their water.

Some actions took the form of lawsuits and others of letters demanding refunds, including from the Fairfax County Board of Supervisors.

Since these letters and suit began piling up late last fall, the City had not formally responded prior to this week, although insisting that Judge Nye’s order made no stipulation for refunds to individual users, nor did it suggest that the rate charged by Falls Church for its water was out of line.

Judge Nye ruled that the City could not take a $2.2 million annual “return on investment” (ROI) from its water system to buoy its general fund, and he ordered the City to return ROI revenues transferred to the City for two fiscal years.

Snyder’s statement, which he read Monday night, said that all requests and demands are based on a misreading of the court order rendered against the City water system recently.

Falls Church Director of Communications Barbara Gordon told the News-Press yesterday that as a result of the Council’s action to uphold Snyder’s statement as the official position of the City, a letter was being prepared to be sent to all the City’s water customers who’ve demanded refunds.

While a number of lawsuits have been filed, some on behalf of all residents in some apartment complexes, no dates have been set for moving the legal actions forward, Gordon said, and it remains to be seen where any of them will go from here. It is assumed, however, that the City is braced for an intensified legal response to this week’s action.

In what blew up into a hotly-contested legal dispute over four years ago, in February 2007 the Falls Church City Council sued to prevent the Fairfax Water System from violating traditional service area boundaries in Fairfax County. Falls Church’s water system, much older than Fairfax’s, serves over 100,000 customers in Fairfax County. Until 2006, both system respected an historical service area boundary, which Fairfax suddenly began to ignore.

In response to the Falls Church legal action then, Fairfax counter-sued Falls Church, alleging its practice of taking an annual ROI from its system was tantamount to “double taxation” on county users, even though there is a demonstrable pattern of local jurisdictions taking reasonable ROIs from utility services they provide. Judge Nye ruled in favor of Fairfax.
In his remarks Monday, Snyder said the following:

“I much prefer dialog to litigation with regard to other local governments. That is not the case here. Late in 2010 and early 2011, the City received a number of requests for refunds from City water customers. Tonight, the City Council will be voting on a motion to direct the City Manager to deny these refund requests. I will be supporting this motion on these claims for the following reasons:

“The refund requests, we believe, stem from an incorrect reading of a Fairfax Circuit Court ruling last year in the case of Fairfax County Water Authority v. City of Falls Church. That ruling enjoined the City from “transferring any moneys from its water fund to its general fund for purposes unrelated to the water system, including the ‘management fee’ transfer for the City’s Fiscal Years 2009 and 2010.”

“The ruling did not call for refunds.

“The City disagrees with this ruling as it runs counter to the clear language of the City Charter, as adopted by the Virginia General Assembly, and to established practice across the state. Nonetheless, the City has complied with it in all respects, and remains in full compliance today.

“Today, there are several cases pending in court where plaintiffs have come forward to demand refunds. In addition, the City has received letters from other customers requesting refunds.
“After discussing the merits of these claims with the City Attorney and outside legal counsel, we believe there are issues here that are important and have not been specifically addressed by the courts, and that have important implications for the financial management of the City and for public service utilities statewide.

“For the City to make any payment of public funds to a private party outside the bounds of established law and precedent would be irresponsible.

“The City has viable, legitimate legal defenses to the claims of customers seeking refunds. It is the Council’s responsibility to protect the City’s financial interests on behalf of its water utility ratepayers and the taxpayers of the City, and this motion does that.

“Make no mistake, our highest priority is providing safe and reliable water on equal terms to our customers, whether they live in the City or in the County.”
Monday’s vote on this motion was 6-0, with Council member Ron Peppe absent.