F.C. Council Votes To Postpone Rate Hike to September
With political pressure growing in Fairfax County to compel the City of Falls Church to sell or otherwise divest itself of its extensive water system, the Falls Church City Council called a “time out” Monday to delay implementation of a rate hike.
By a 3-2 vote, with two members absent, the Council voted to postpone its final approval of a water rate increase until September 11. It had planned to vote Monday on the eight-percent rate increase for all users of its system, to to into effect Aug. 1, but now it will pursue more assurances that the rate hike is legally OK.
Meanwhile, John Foust, Dranesville District representative on the Fairfax County Board of Supervisors joined other county elected officials and candidates calling for Falls Church to, one way or the other, hand over control of its system, which serves over 100,000 customers in the county. Falls Church Vice Mayor David Snyder shot back Monday night that politics should have no place in the discussion.
In making his motion to postpone the rate hike Monday, F.C. Council member Ira Kaylin said, “I believe the proposed rate increase is justified, appropriate and proper, and that Council should adopt it effective immediately. However, he went on to say, “This is a unique situation” due to legal entanglements with Fairfax Water during recent years, including the Jan. 2009 decision by the Fairfax Circuit Court prohibiting Falls Church from taking a “return on investment” from its water fund.
Kaylin, reading from a written statement, said, “Adoption of the proposed rate increase does not constitute and will not result in any transfer of funds to the City’s general fund,” and added the court decision “specifically provided that the City was allowed to transfer…an amount that corresponds to compensation of the City ‘for reasonable direct and indirect costs” of the water system, and “this is all that will be done by the City here if the proposed rate increase is approved.”
The decree, he added, also provided that the City may set water rates “that, in the judgment of the City Council, will result in receipts equal to expense, including any future expense of the system.”
However, he said that rather than vote the rate increase this week, “I believe the more prudent course of action is to request that the Fairfax County Water Authority agree that the adoption of the rate increase will be in compliance with the Court’s final decree” (even though that Authority had issued a letter urging the City not to implement the rate increase), and to request that the Fairfax Circuit Court enter a decree that the adoption of the rate increase complies with that final decree.
F.C. City Attorney John Foster recommended passage of the motion, and votes by Mayor Nader Baroukh, Ron Peppe and Kaylin were enough to pass it. Vice Mayor David Snyder and Lawrence Webb voted against it, both saying they were satisfied that the City is fully within its legal rights to implement the rate increase.
Meanwhile, political pressure from Fairfax County was turned up on the Falls Church water system. With 90 percent of the City water system’s customers residing in Fairfax County, F.C. City Manager Wyatt Shields was invited to speak to last week’s business meeting of the McLean Citizens Association at the McLean Community Center.
There, Shields presented the parameters of the increased costs and requirements of the Falls Church system to explain why the rate increase, which amounts to pennies a day for the average user, was needed, being the first rate increase in six years.
Present in the audience were Fairfax County Supervisor John Foust, 34th District State Delegate Barbara Comstock and Comstock’s Democratic challenger in this November’s election, Pamela Danner. In hallway comments following Shields’ session with the association, Foust remarked that Fairfax County should buy the Falls Church water system. “It would be to our advantage,” he said.
Foust added, in comments reported by the McLean Patch, “I believe the Fairfax Board of Supervisors would be supportive of Fairfax Water purchasing Falls Church Water. I know I would be. However, the purchaser would be Fairfax Water, which has its own independent board of directors.” In a follow-up e-mail, Foust said, “I feel this is a good time for the City and Fairfax Water to try to resolve this long-running issue.”
Comstock reported that she and Del. Jim Scott invited Falls Church officials to a meeting on the subject last spring, and that she reiterated her request to the City officials at the McLean meeting.
Danner chimed in as “a 12-year former member of the Fairfax Water Board” favoring the county acquisition of the Falls Church system.
Danner’s husband appeared on the candidate’s behalf at Monday’s F.C. Council meeting, questioning whether the City’s plan to create a reserve fund for its water system was designed for funding pending legal costs. He said that the Fairfax Board of Supervisors should be empowered to fix the rate Fairfax customers are charged for their water.
But Falls Church Vice Mayor Snyder responded strongly against the introduction of politics into the water rate issue. “As for the political comments,” he said, “This is not a political matter and I won’t engage in that. I will accept no manipulation of the facts for political purposes.”
Snyder said, “The landscape of the U.S. is littered with inadequate funding for maintenance of infrastructure…We won’t permit this here,” insisting the City of Falls Church is dedicated to providing an adequately maintained water delivery system to the benefit of its Fairfax County customers, noting that Falls Church citizens have been willing to take on “an unusual risk” to achieve this by assuming responsibility for bonded indebtedness and natural disasters.
Ed Donahue of the Municipal Finance Services Group that prepared the study for Falls Church recommending the rate increase spoke to some of the issues raised by a number of Fairfax County users of the F.C. system who spoke at Monday’s meeting.
He noted that the uniform rate Falls Church charges all its customers, in the City or the county, is in contrast to differential rates that are in play all over the state.
He reiterated that there is no “return on investment” taken in the Falls Church plan, and that “tap fees” are designed to cover “all growth-related capital costs,” and nothing more.
As far as setting up reserve funds, he said the City should have had them all along, in accord with the standard of keeping 90 days’ operating cash in reserve. Otherwise, as it is now, he said, the City lacks the ability to reinvest in the system at it should. As for a debt service reserve, it is required by bonding companies, he added. He said the City had been “negligent” by holding back any rate increase for the last six years, and that “not one cent” of the money in the plan is designated for refunds to customers for alleged past overcharges.
He said that if the State Corporation Commission was given control over Falls Church rates that “the rates would be considerably higher.” And while the F.C. system now takes no “return on investment,” if its system fell into the hands of a private operator, such returns would be allowed anywhere from nine to 17 percent, driving prices up dramatically.
He conceded the Falls Church system “would be a prime acquisition for an investor-owned utility,” noting that while rates for current F.C. system users might drop slightly at first, they would rise quickly for all other water users in the county as all would have the share the higher cost of water provided by the Washington Aqueduct.