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Report says revenues would not support sewer

by Tom Chillemi

The Urbanna Town Council has some financial questions about the proposed wastewater treatment plant for Saluda, and on Monday voted to invite Middlesex County Administrator Charles Culley to its April 20 meeting to review the financial aspects of the proposed plant.

A financial update submitted to Middlesex County on November 4, 2008 by financial advisors Davenport and Company of Richmond, assumes the county will contribute money from its general fund to the “sewer fund” to subsidize the first 10 years of operation and debt service.

The report contains three “Key Assumptions.” First, the report estimates the initial cost of the 39,900 gallons per day (gpd) wastewater treatment plant at $6 million. The report states the cost is “to be financed by the County/System” in 2009.

The second of three “Key Assumptions” is that in 2012 it will cost “$1 million to bring Christchurch School into the system. (Funding source to be determined.).”

The third assumption of the Davenport report is that it will cost $1 million to increase the treatment plant’s capacity from “40,000 gpd to 100,000” in 2017.

Davenport’s analysis includes the county transferring $218,000 from the general fund into the “sewer fund” starting in 2011. Davenport assumes this subsidy would increase by 3 percent each year until the county’s contribution in 2020 is $285,200, while the plant’s operating revenue would be $259,400.

Davenport assumes that one cent on the real estate tax rate was worth $250,000 in 2008. The report suggests that “one cent” of the county real estate tax rate should go into the sewer “Rate Stabilization Fund” annually.

“Because of the minimal initial flows and users, the Operating Revenues alone are insufficient to continuously cover Operating Expenses and Debt Service,” states the Davenport report.

“We have assumed that over the next several years, the County will provide some support from the General Fund,” according to one of the “observations” in the report.

“These County Contributions could be ‘Repaid’ by the System once it reaches Operating Stability,” states the report, which notes that it is for “discussion purposes only.”

Projected connection fees in 2011 range from $8,000 for a residential unit, to $20,000 for the Industrial Rate I, to $38,000 for Industrial Rate II.

It also assumes connection growth at 5 percent annually.

The user rates per 1,000 gallons in 2011 would be $8.10 and grow at 9 percent annually.

Former councilman Bob Henkel told council at Monday’s meeting that the treatment plant cost is a county-wide situation and not just an Urbanna issue. “We should get involved as citizens of Middlesex,” he said.

The town council has gone on record as opposing the proposed plant discharge of effluent into Urbanna Creek.

The town’s treatment plant, now owned by the Hampton Roads Sanitation District, has discharged into Urbanna Creek since the early 1970s.

The State Water Control Board could make a decision on the county’s proposed discharge permit application for the sewage plant when it meets on April 27-28.

posted 03.18.2009

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