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HomeMy Public PortalAbout1978_06_07 C^ MINUTES OF PUBLIC HEARING ON PROPOSED WATER AND SEWER RATES AND �`� FEDERAL REVENUE SHARING FUNDS , JUNE 7 , 1978. A public hearing was held on June 7, 1978 by the Leesburg Town Council in its Chambers, 10 West Loudoun Street, Leesburg, Virginia on proposed water and sewer rates and Federal Revenue Sharing funds. The meeting w cal .dm �rorder• by the Mayor. Present were: Mayor Mary Anne New Rn9� epi r. ole, Stanley D. Herrell, Jr. and John W. Tolbert, Jr. ; also Town Manager John Niccolls, Assistant to the. Manager Jeffrey H. Minor, Director of Engineering Andrew G. Shope and Town Attorney George M. Martin. Absent from the meeting were Councilmembers Charles E. Bange, James A. Rock and C. Terry Titus. Mayor Newman prefaced the hearing by stating that Council has had a series of proposed new rates under consideration for the past five months. A new set of rates has been advertised for this hearing tonight and is as follows : For in-town users, a $3.00 quarterly bill- ing charge, plus $2. 88 per thousand gallons for water and sewer usage; for out-of-town users, a $3.00 quarterly billing charge, plus $4. 32 per thousand gallons for water and sewer usage. The' following people spoke against the proposed rates : Mr. Melvin Dore, a resident of Country Club Subdivision, protested the 50 percent surcharge on out-of-town residents and felt that the im- provements in out-of-town subdivisions should have been paid for a good E= many years ago. Both Mayor Newman and Mr. Herrell pointed out that TY the systems must be self-supporting and that the residents of Leesburg N could not be expected to subsidize those living outside the corporate Si.. limits, from whom the Town receives no real estate taxes ; also, that C when the water moratorium is lifted (hopefully sometime in the near future) ,. more money will be coming in for connection and availability fees. Mr. Summerfield, Tillett, Jr. , a resident of the Town, felt that the proposed rates are too high - his present bill would double. Mr. Niccolls said the bill should be an increase of. only about 80 percent, not double. Mr. Cole pointed out that he is on sewer only and his I bill will be tripling. Again, Mr. Herrell said the system must sup- port itself or real estate taxes will have to be raised. • Mrs. Margie Harrison, a resident of Fairview Subdivision (in-town) , asked when it is proposed to discontinue the excessive use charges? Mayor Newman agreed' that these charges should be lifted, however, at the present time, one well is out of service` and the Hospital standtank is being repaired and painted. Mrs. Harrison also re- quested that questions raised at the last hearing by Mr. McGregor be answered. Mr. Niccolls advised that a copy of a report of May 5 to the Mayor and Council concerning any conflict or discrepancies was sent to Mr. McGregor on May 6th and he has received no reply from him, other than a phone call tonight. Mr. Rob Roy McGregor, of Country Club Subdivision, was somewhat confused as to the new proposed rate as it would affect his bill per- sonally. Mr. Niccolls explained that his present bill is based on "excess use" charges and it is proposed to drop these charges when the new ones go into effect. Mr. McGregor was also concerned about the capital outlay program over the next five years of $1, 300, 000. He suggested trying to amortize this amount overa. longer period of time in order to reduce the terrible cash flow needs. He also felt that the 50 percent surcharge has been in effect for many years. In looking at the revenue sheets, he could find no entry for taxes to the utility company., nor any transfers to show revenue derived from taxes from in-town residents. He, therefore, felt it improper for the Town to charge the out-of-town users on a continuing basis over and above the normal charge. Mr. Niccolls explained in detail the reasons for the transfer of funds from the General Fund to the Utility Fund - he felt this is a very above-board and open way of doing this. Mr. Niccolls further said he did not believe it is possible to pull out a numberand say this is the exact amount that should be charged out-of-town customers because of contributions made indirectly to the tax-supported services. The surcharge has to be seen as an in- tangibly calculated level of charges added to the out-of-town bill. The Town can issue bonds at about 5-3/4 percent and he did not be- lieve that any self-supporting utility could do this unless it com- prises a part of a general purpose government such as Leesburg. 104 MINUTES OF JUNE 7 , 1978 PUBLIC HEARINGS . The people who shop in -Leesburg do pay sales tax, but we get a very small part of this tax - only about $70, 000 a year. Another reason is that over the years the town has made substantial contributions . to the utility operations directly through tax supported projects. For years there were no transfers. As an example, this building was bought with general fund money, but a substantial number of the meet- ings held here concern utilities. Mr. McGregor noted that 114 new connections weremade in 1975, 102 in 1976 and .130 in 1977. He asked where the 100 connections came from - ,there is no supporting data. . Mr. Niccolls replied to Mr. McGregor' s question as to the capitalizing of permanent improvements over a 15-year period - calculations for Rate Structure No. 4 indicate they would total an average of only $128, 000 -• a raw increase in rate of 46 cents. An alternative to this would be to issue larger bonds over 15 to 20 years, however, Council did not choose , to do this . Concerning the estimate of only 100 new connections as a revenue basis , Mr. Nicco-kl said he always .estimates low - you can' t predict when the buildi gyfight come. The original rate study, which has been changedseveral, times, _was pre- pared in the thicket of very serious water supply problems to which they could see no end. If the revenues come in much higher, then it is up to the incumbent Council to rethink the rate. Mr. Tillett asked if a lower rate for senior citizens has been considered? Mayor Newman replied that it has been considered - if such a rate is adopted, the rest of 'the taxpayers .will have to make it up. Mr. Tillett also asked if this same rate will apply to com- mercial and industrial users. Mayor Newman said it will. Mr. Til- lett also asked about the $3.00 charge. Mrs. Newman explained that this is a billing charge - perhaps putting the system on computer billing might cut costs later, but not at this time. Mr. Herrell said Council disagrees on a special rate for the elderly, but he feels they should look at it again. Mrs . Harrison was absolutely sure that the billing charges can- not run that high. Mr. Niccolls further explained just what is in- volved to read meters and issue the bills. Mayor. Newman added that Council is convinced that the $3. 00 billing charge is necessary. Mrs. Melvin Dore asked how many out-of-town users there are? Mayor Newman replied thatthere are 220. Mr. Kenneth McKenzie, an out-of-town user, asked why this bill- ing charge has been singed out from other expenses of operation? Mr. Niccolls explained ,this in detail, stating that all utility companies have a minimum charge. The rate study indicates very clarly why this amount was chosen. Mr. McKenzie was very adamant about the 50 percent surcharge and demanded answers as to why the out-of-town users should continue to pay this charge. Mayor Newman explained that they are trying to make the system self-supporting and that those people outside the corporate limits who receive water and sewer service from the town should pay their fair share of. the bonded indebtedness of the town that -the taxpayers inside town pay through' their taxes. Mr. Niccolls explained that a surcharge is a very common, practice.. He said it is hard' tc& justify a hard number, but explained that if the utility system should fail or there should be a major disaster. . there would be no revenues coming in, but the bonded indebtedness would continue. The taxpayers of Leesburg are pledged to pay this debt service. to a greater extent than the out-of-town users. The people outside of town get the benefit of a better rate of` interest because Leesburg has a good rating based on the fact that the tax- , payers stand behind their bonded indebtedness. - Loudoun County pays more. This is one of the practical justifications for the surcharge. Also, over the years, the General Fund (or Tax Fund) has subsidized utility operations substantially. The. non-resident user did not con- tribute to this , so the 50 percent surcharge was quite justified. Perhaps this is less true as we move away from this system - it is a contingent obligation against Town taxpayers that those out of. town do not have. This year, the Town is spending $80, 000 to improve the security of the water system in- the Country Club area by bringing a loop around through the golf course. In addition, the Town con- . structed the 1. 5 million gallon storage reservoir, ' which benefits all users, both inside and outside of town. Mr. McKenzie still did not think this is a justification for a 50 percent surcharge - they MINUTES OF JUNE 7, 1978 PUBLIC HEARING. 'o'e' `o' 105 are willing to pay a little higher rate for what they get, but not 50 percent more. Mr. Ben Lawrence said he has been paying this 50 percent sur- charge for 14 years - he did not feel that they should have to pay more for .something they did not get the benefit of. Mr. Anthony Williams, a resident of Leesburg, felt that the Town is collecting this 50 percent ahead of time - these people are being held in bondage for this contingent figure. Mr. Niccolls explained further that the rates should have gone up quite sometime ago - general fund taxes have been used to sub- sidize utility costs directly over the years. Also, the Town had substantial connection fee revenue when it was growing rapidly. He pointed out that the costs of performing utility services are held to "reasonable" levels because we share equipment, personnel , etc. and this is certainly worth something. • Mr. McKenzie said that, based on a lack of reasonable answers from this Council, he requests Council to reconsider this and drop the surcharge to a 10 percent figure, rather than 50. • Mr. Tillett asked if Council has considered raising the rates by steps? Mr. I4errell said the cost of operating the system is going to be the same, so it must be paid for. Mrs. Harrison asked if each member of Council has actually sat down and worked out these figures,. or have they taken Mr. Niccolls' figures and accepted them? Mayor Newman, Mr. Herrell and Mr. Cole all replied that they have done this and, although they are not 100 percent satisfied with these results, this is what it is going to take to operate the system. Mr. McKenzie asked if it is true that Leesburg will have the highest rate in the Washington Metropolitan area? Mayor Newman said "one of the highest. " Mr. McKenzie suggested consulting some of the more successful utility companies or towns to see how they are getting by cheaper than we are. Mayor Newman said they have had figures from other jurisdictions and they have spent five months on this. She pointed out that you can' t always make comparisons with other jurisdictions - some of them have more sophi-sticated systems than we have. Mr. Herrell also pointed out that we have found water but it is on the other side of the highway and we have to get it over to the town. Mr. Niccolls said he has a copy of the study done for the Loudoun County Sanitation Authority (this is available from the Authority or they can see his copy). Their rates are scheduled to increase a percentage each year over a five-year period from $7. 50 for water alone in 1975 for 6, 000 gallons to $13. 46 in 1980. The cost of utility service all over the United States is going up at a remarkably fast pace. The Washington Suburban Sanitary Commis- sion can operate at a cheaper rate because they have more customers and they have an old treatment plant. They are paying this back with inflated dollars. We think we run an efficient, non-wasteful water and sewer service - we have not added any personnel to these operations so it is a difficult question to answer. Mr. Anthony Williams felt that the primary cause for our problem is that we don' t have enough hook-ups. This means that the Town has to literally have endless growth - it can never pay for itself with- out hook-ups. He said "All business has to grow in order to make a profit, but it doesn' t have to grow to break even. " He said "economy of scale" seems misleading in government. He felt that the town is telling those out-of-town residents that they might as well get ready to be a part of the town and for that "economy of scale" and increased property taxes because, as the town grows and additional hook-ups are made, more demands will be made for the proper public facilities. He believed the town has an erroneous philosophy - "economy of scale" falls on its face when you have to provide all the other necessary services. Mr. McGregor asked if the town will get 400 more out-of-towners out of the apartment complex? Mayor Newman and Mr. Niccolls said he is one customer - he gets six bills - he has six meters. = 'y`e' = = MINUTES OF JUNE 7, 1978 PUBLIC HEARING. 106 Mr. McGregor was still opposed to the 50 percent surcharge - over a 10-year period, he will be paying $1, 000 °extra above the in-town user - he felt .the Budget should reflect an equivalent amount of income from them. Even though the General Fund has in the past supported the utility company, this is discriminating against them for past, practices to which they were not a party. The 50 per- cent surcharge is grossly unfair. It is the out-of-towners who are protesting the increase in rates, not those in-town. He further suggested that the needed increase be spread over those in-town as well as out-of-town and buy an insurance policy against the pos- sibility that the town might not survive. The public hearing on the water and sewer rates was• closed. Council recessed briefly and reconvened at 10: 20 P.M. Public Hearing on use of Federal Revenue Sharing Funds. A public hearing was held on the expenditure of Federal Revenue Sharing Funds during the fiscal year ending June 30, 1979, with Mayor Newman reading the Notice. She explained that Federal Revenue Sharing Funds received by the Town are used for public safety expenditures through the Police Department. It is expected to receive approxi- mately $96,000, which will be quite helpful against the $208, 000 ex- pected expenditures for the next fiscal year. Mrs. Margie Harrison asked if the placing of a STOP• sign at the intersection of Wilson Avenue and Dodd - Drive might come under this funding? Mayor Newman said this would come under Public Works. She requested the Manager to place a resolution on the next° Agenda in- structing him to erect this sign. Mr. Anthony Williams suggested that perhaps a speed bump might be more effective than a STOP sign. There was -no-one to speak either for or against the expenditure of Revenue Sharing Funds for public safety items. The public hearing was, therefore, closed at 10: 30 P.M. • //l Mayor Cler of t e Council • • • • • • I/