Residents Will Soon Officially Be Fairfax Water Customers

After nearly a year of back-and-forth, it appears Fairfax City residents will finally officially become customers of the state's largest water utility, Fairfax Water, soon.

After last week's public hearing, the City of Fairfax, Fairfax Water, and Fairfax County agreed upon a framework under which all current City water customers would become retail customers of Fairfax Water. 

The framework has been approved unanimously by the City of Fairfax City Council, the Fairfax Water Board of Directors, and the Fairfax County Board of Supervisors.

The final agreement is subject to approval by all three bodies.

The state of the City's water service has been under debate for nearly a year, particularly heating up during the 2012 election.

While Fairfax City maintaining its own water services has been a point of "civic pride and emotional attachment" for the city, as Mayor Scott Silverthorne said in February, the City would undoubtedly have faced some challenges - and rate hikes - had the city continued to go it on its own.

The future rate hikes would likely have come as a result of the city losing its Loudoun County customers once the County is done building its own treatment plant, and also from upgrades the federal government would have soon required the City to make, costing it millions.

The City said, recently, that signing with Fairfax Water would likely bring about reduced water rates for residents within three years. Currently, the average resident pays about $4.61 per 1,000 gallons with city water. Fairfax Water's average rate is $2.51. After the future required upgrades, the average Fairfax City customer would be paying more than double what the average Fairfax Water customer pays annually.

Therefore, after receiving an "improved" offer from Fairfax Water in February, the City said it finally decided to do business with the utility.

"After a multi-year process of carefully exploring future options for the City’s water system, including wholesale and retail alternatives, we are pleased to have an agreement that will  benefit our residents for decades to come," said Mayor Silverthorne."

"While the financial advantages to City residents are immediate and improve after three years, it is the cost avoidance of additional significant capital expenditures 20 years out that affords the greatest benefit to the City of Fairfax," he added.

The agreement calls for the City of Fairfax water customers to become retail customers of Fairfax Water; the reduction in water rates to customers in the City of Fairfax’s system service area; the settlement of all litigation between the City of Fairfax, Fairfax County and Fairfax Water; and employment guarantees for City of Fairfax Water Utility employees.

"Fairfax County is pleased that all parties have reached an agreement for water to be provided to the City of Fairfax area by Fairfax Water," said Fairfax County Board of Supervisors Chairman Sharon Bulova. "This agreement is a major step in the right direction toward ensuring water service that is affordable and reliable for our residents and corporate neighbors, ensuring a first-class water system for customers for the long-run."

"I thank the Mayor and City Council of the City of Fairfax for their leadership and the time they took to engage their constituents in reaching this decision," Bulova added.

"We are excited that we reached an understanding that will benefit all of the people served by these two water systems," said Philip Allin, chairman of Fairfax Water. "Providing the highest quality water at the lowest rates continues to be our mission and we are delighted to add the 40,000 persons served by the City of Fairfax system to the nearly 1.7 million people in northern Virginia we currently have the privilege of serving."

The Principal Terms of the Settlement:

• City of Fairfax water customers will become retail water customers of Fairfax Water. The City will pay the sum of $20 million  (off-set by the sale of other water system assets) as a net capacity buy-in to Fairfax Water’s system. The City will pay that obligation through a seven-year note, with the first five years being interest-free and the last two years at 3 percent interest. There will be no pre-payment penalty. The note will have a balloon payment at the end of its term, at which time the principal portion of the note becomes due.

• Fairfax Water will establish rate uniformity between the City’s existing water customers and those of Fairfax Water within three years following the execution of the final agreement. There will remain rate uniformity between the City’s existing customers within its boundaries and the City’s existing customers outside its boundaries.

• Fairfax Water will offer employment to all of the City’s approximately 30 water system employees and guarantee employment for three years following the date of such employment terminable only for cause, and with no less compensation than the employees currently earn; provided that, with regard to the Goose Creek treatment plant employees, Fairfax Water will offer employment to those employees only if Goose Creek ceases production, but not later than three years following execution of the final agreement. The City will ensure that such employees’ pension and benefit obligations are brought current.

• Fairfax Water will acquire all pipe, storage facilities and appurtenances within the city and in the county needed to operate the water system, including the transmission mains within Fairfax County. The City shall retain all assets in Loudoun County (including but not limited to the Goose Creek Plant and Goose Creek and Beaverdam Reservoirs, dams and all related land).

• The City will retain all debt associated with its water system, unless immediate upgrade improvements are needed and agreed to by Fairfax Water.

• The City, the County and Fairfax Water will seek dismissal of pending litigation regarding Fairfax County’s rate regulation ordinance upon approval by the City, the County and Fairfax Water, of a final agreement between the parties. Fairfax County will not enforce its rate regulation ordinance pending approval and execution of the final agreement by all parties.

• The City is still examining the merit of an offer by the County to consider adjusting a portion of the boundary between the City and the County and will reach a decision in the near future.

 The Next Steps

• Fairfax Water, the City of Fairfax, and Fairfax County will proceed to prepare and approve the final agreement.

• The pending litigation between the parties will be dismissed once the final agreement is approved by all parties. 

What It Means to the Customers

• City of Fairfax water system customer rates will be reduced to the same rates paid by Fairfax Water’s existing customers within three years.

• The City of Fairfax’s existing customers (inside and outside the City) will be charged the same water rates as Fairfax Water’s customers in perpetuity.

• The City will not have to spend tens of millions of dollars in future capital improvement expenses to improve its water treatment plant.

• The agreement will end all pending litigation between the parties.

• Fairfax Water providing retail service to the City’s water customers will not impact the water rates of current Fairfax Water customers.

Visit the following websites for more information:

www.fairfaxva.gov

www.fairfaxwater.org

www.fairfaxcounty.gov

PATCH WANTS TO KNOW - What do you think of this deal? Are you happy about it? Do you think it's good for Fairfax City? Tell us in the comments below.

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