Selling F.C. Water System to Private Entity ‘Unlikely’
In the article “Falls Church Officials Lash Out at ‘Illegal’ Fairfax County Water Move”, City Council members present their oft-repeated threat to sell the City’s water system (presumably to a for-profit privately owned utility) if the water ordinance that the Fairfax County Board of Supervisors passed on December 6 withstands the City’s challenges in the Virginia General Assembly and/or courts. I believe that such a sale is highly unlikely.
A for-profit utility purchases assets only if they have earning potential. Under standard utility practice, the acquiring utility’s future profits are based on the original cost/net book value (i.e., depreciated value) of the acquired assets. No book value means no profit – no profit means no incentive to buy. Falls Church’s water assets have very little value because they are old and highly depreciated. In fact, much of the asset base has zero book value because it was constructed by real estate developers and donated to the City’s water department at zero cost. Who would buy assets with little or no earning power?
The simple fact is that the City needs its Fairfax County customers a lot more than they need the City. The City needs them to provide economies of scale because larger water systems are more efficient and have lower rates than smaller systems. As it is, 92% of the City water department’s administrative and general expenses (or overhead) is paid by Fairfax County customers. If the Fairfax County part of the system were sold, all of the water department’s overhead expenses would have to be paid by City customers. Rates, which are already significantly higher than in surrounding jurisdictions, would skyrocket for City residents.
The City has reaped many tens of millions of dollars off its Fairfax County customers over the past half century. After losing in court, City Council’s inventing new rate-making techniques to keep the gravy train rolling is counterproductive. They pushed its Fairfax County customers too far with September’s five-step 34% rate increase which replaced illegal profits with so-called “reserves.” The Board of Supervisors responded with an ordinance which simply requires that Falls Church charge water rates that are “fair and reasonable” and can be rationally explained. What could possibly be wrong with that?
Kirk F. Randall
Is FCNP Bound By Party Pledge Of Its Editor?
I noticed in last week’s “Falls Church News Briefs” that the “owner-editor” of the News-Press is a member of the recently reconstituted Falls Church City Democratic Committee, and as such has publicly “pledged not to support any candidate opposed to a Democratic nominee and ‘believing in the principles of the Democratic Party.’ ” Hopefully he will then understand why it will not be possible for readers to take seriously any political endorsements he makes through the News-Press for the foreseeable future. Can we assume that he will always include a disclaimer with any endorsements he does run, stating that because of his FCCDC membership, he is obligated to support only Democrats?
The Society of Professional Journalists, through its Ethics Committee, has stated unequivocally that journalists should “avoid conflicts of interest, real or perceived,” and should “remain free of associations that may compromise integrity or damage credibility,” in terms of involvement in political activity. It concludes its position paper on this subject by stating: “Ironically, journalism is a profession protected by the same First Amendment that grants to all citizens the right to run for office or to support, by word, deed, or cash, the people they would like to see elected. But journalists who want to be perceived as impartial must avoid any display of partisanship.”
(Editor replies– News-Press politlcal endorsements are made on behalf of the newspaper, not Mr. Benton personally.)
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