F.C. Announces Talks With Fairfax On Sale of Water System Are Over

UPDATE: City of Falls Church officials did not unilaterally withdraw from negotiations with Fairfax County and the Fairfax Water Authority over the possible sale of the Falls Church Water System, F.C. officials clarified today in a telephone communique to the News-Press, following yesterday’s announcement that the talks had ended. “To clarify, both sides put their best deal on the table, and they simply didn’t match up,” Susan Finarelli, F.C. Director of Communications, reported to the News-Press.

The City of Falls Church announced in a press release issued late today that negotiations with Fairfax County and Fairfax Water for the sale of the City’s water utility have been discontinued. The City will continue to operate, its statement said, “a world class water system by delivering safe, dependable drinking water at a competitive price.”

“The City took a business approach to these negotiations,” said Mayor Nader Baroukh. “The goal was to explore the possibility of a sale agreement that would benefit City taxpayers and all of the customers of the water system. We did not reach such an agreement and we are happy to continue to provide vital public water services to the City and County as we have for over 80 years.”

The Falls Church Water Utility currently provides water service to McLean, Tysons Corner, and Merrifield as well as the City of Falls Church. “Falls Church Water has an 80 year track record of excellent water service with rates below average for the region and in the bottom quartile statewide,” according to the City’s statement.

The City’s representatives had three meetings in July with Fairfax County and Fairfax Water to discuss a possible sale of the City’s system. “They were clear throughout the discussions that any sale agreement would based on the value of the City’s utility assets using standard utility valuation methods,” the City statement read.

“It was worthwhile discussing the matter with Fairfax Water. However, we could not justify selling the system below what it is objectively worth. Accordingly, there was no basis for an agreement,” said Ira Kaylin, F.C. City Council member and member of the City’s Public Utility Commission.

The decision was reached after two lengthy closed sessions of the Council held last Friday morning and Monday night.

In December 2011, Fairfax County adopted an ordinance that would force new development to incur millions in additional costs in order to connect to Fairfax Water, and would have the County attempt to regulate water rates duly enacted by the municipal water systems operating in the County.

In June 2012, U.S. District Judge Liam O’Grady issued an order to stay any enforcement of the Fairfax County water ordinance for a period of 90 days. The stay was jointly requested by the City, Fairfax Water, and Fairfax County.

The City used the 90 day period to explore possible resolution of issues with Fairfax County. The stay also applied to enforcement of the ordinance with respect to the water utilities owned by the City of Fairfax, Town of Vienna, and Town of Herndon.

With the termination of negotiations, the City will resume its effort to overturn the County ordinance in court at the end of the 90 day period in September, according to the City statement.