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
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bill will be tripling. Again, Mr. Herrell said the system must sup-
port itself or real estate taxes will have to be raised.
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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.
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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.
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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.
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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.
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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.
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//l Mayor
Cler of t e Council
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