F.C. Council Authorizes Issuance of Requests of Interest on Water System

Following on a lengthy closed-door session last week, the Falls Church City Council added a late item to its agenda tonight in the first step toward what could become a public referendum by November to sell its much-beseiged water system.

In particular, the Council voted tonight to authorize City Manager Wyatt Shields to issue a “Request for Expressions of Interest” to the public, which he said he will be ready to do tomorrow. His target audience to receive the request will be both investor-owned and government-owned utility entities, and will apply to both its water and sewer utility systems.

The step followed on the recent years’ constraints against the operations of the Falls Church water system, which began in the 1930s serving a wide area of Northern Virginia. The system now serves over 120,000 residential and commercial customers, including over 100,000 in Fairfax County.

A court decision two years denied Falls Church an ability to take a reasonable “return on investment” from the operation of its system, and recent moves by the Fairfax County Board of Supervisors required all new hook-ups in the county to be with Fairfax Water and to regulate the price Falls Church can charge for water. Facing the prospect of an inability to yield a profit in exchange for risk, to expand or to charge a price required to cover costs, the continued viability of Falls Church’s operation of the system has come under question.

Ironically, should Falls Church decide to sell its system (a move that would require a public referendum), it could place it in the hands of entities exempt from the constraints against its water system, and capable of taking a robust return on investment. A private investor-owned entity, for example, would be under the control of the State Corporation Commission concerning the rate of return it could charge and other matters. With the prospect of a new owner capable to operating at a profit, the sale value of the Falls Church system could be considerable.

In a background briefing to the News-Press earlier today, Shields said that the Council intends to have the Falls Church citizenry deeply involved in the decision-making process about how to move forward on the matter. He did not rule out that the “status quo” could result, and he hopes that responses to the “request for expressions of interest” will include examples of how similar situations have been handled elsewhere in the U.S. as well as advice and interest by parties interested in acquiring the system.

He said that an early March 2 deadline for request replies is in order to enable adequate opportunity for public involvement in the ultimate decision. He noted that if there is an interest in selling the system, it may involve timing that will enable a public referendum on this November’s ballot.

Tonight, Shields called the “request for expressions of interest” the onset of “an evaluation” of the situation.

A special City website has been created for this purpose under the City’s site, called “Water Future.”

In the draft letter that Shields presented tonight, the request involves the City “gauging the level of interest within the investor-owned and government-owned utility market for acquisition of the City’s water supply and sewer system assets, or some other alternative.”

Mayor Nader Baroukh said he will welcome “the first opportunity for a public dialogue” on the future of the water system. Vice Mayor David Snyder said tonight’s move came strongly recommended from City legal counsel and staff and that the ultimate goal will be to ensure “the safety, reliability and financial soundness of the system.”

Council member Ira Kaylin said he strongly supported the move, given that the constraints on the system turned it into a “non-performing asset” from the standpoint of the City’s needs.

The vote was unanimous, with Council member Robin Gardner absent.