Fluvanna Economic Development – Just Add Water (and Debt)?

By. Bryan Rothamel, Field Officer

add waterFluvanna County wants to diversify the tax base to shift less tax burden on residential homes and more on businesses. The issue a recent land development study showed, Fluvanna needs water.

RK&K Engineers has been working on a water study of the Zion Crossroads area to give the Board of Supervisors a better look at what is available and what would be most cost effective.

There have been over 10 various studies performed on the area. The latest study could be the last and still not a single resident appeared for the preliminary results consultant RK&K presented on Dec. 17 afternoon.

RK&K found various options for Fluvanna to get water to Zion Crossroads. There are using existing wells or drill new wells at the Department of Corrections Women Correctional Facility (known as DOC). Another option is buy water from Louisa County Water Authority (LCWA), Albemarle or Aqua Virginia at Lake Monticello.

Two other options would be to buy the excess capacity at the DOC’s surface water system or utilize Fluvanna’s portion of the James River Water Authority.

To get sewer service Fluvanna could use the DOC excess capacity, LCWA, Albemarle at Glenmore, Aqua, alternative drain fields, Fluvanna’s water treatment facility in Palmyra and other alternative ideas such as trading sentiment credits.

RK&K’s study shows that if the Zion Crossroads area was completely built out, it would use 1.9 million gallons a day. That would include multiple mixed use areas, retail, business parks and industrial. A complete build out would take several decades.

RK&K suggests doing water in phases to grow as the need grows. The first phase is to building five miles of pipe with one pump and tower. Sewer would have three pumps. This plan would utilize the 75,000 excess capacity DOC is offering of treated water. It would also use the 125,000 excess capacity DOC offered for sewer. Both would be purchased at a wholesale rate.

“I think DOC is a very good option,” said Jeff Kapinos of RK&K when asked which one he recommends.

He later said, “From everything I know now, DOC is a good option.”
RK&K estimates phase one for a water and sewer system would cost $8 million. If supervisors authorize this year, the new five mile system could be operating by March 2017.

A water system would move Fluvanna properties closer to being more ‘ready to developed’ based on the Timmons Group report heard in November. But $8 million means the county goes further in debt.

The county was $96.2 million in debt as of June 30, 2014, based on the annual financial audit. Some of that debt was refinanced this past year but the supervisors also authorized new debt to pay for school maintenance items.

To further complicate things, the county’s policy about debt is annual governmental debt service payments should not exceed 12 percent of the government revenues. In 2014, the ratio was 17.5 percent. With the county taking out more debt in the past six months, that ratio is not getting better.

Another stickler is Fluvanna can not just pay for $8 million of water from savings. The county’s unassigned savings is sitting at $9.5 million. The county policy is to have at least 12% of the budget in unassigned savings. That percentage converted to dollars would be $7.4 million for June 2014.

In 2009, the county’s savings were over $15 million, according to the staff yearly financial report. This upcoming fiscal year gets tighter because costs are increasing but the county still only get significant tax revenue from residents.

It becomes a chicken and egg situation for Fluvanna. In order to diversify the tax base, a water system is needed based on numerous reports. However, in order to build said water system, Fluvanna would have to further add to the debt load. For perspective, $8 million in resident tax cents would be 29 cents.

RK&K will come back to the Board of Supervisors this spring to present a more detailed report.

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bryan-rothamel.jpgThe Free Enterprise Forum’s coverage of Fluvanna County is provided by a grant from the Charlottesville Area Association of REALTORS® and by the support of readers like you.

Bryan Rothamel covers Fluvanna County for the Free Enterprise Forum

Photo Credit: World Bank

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