Powhatan supervisors not giving up on idea to acquire utility company

Ramona Carter, director of public works, gives the board an update on the Founders Bridge Utility Company issue.

POWHATAN – After more than two years of work and negotiation, the Powhatan County Board of Supervisors still has the question hanging over its head of whether to acquire the Founders Bridge Utility Company.

During the board’s meeting on Monday, Oct. 28, supervisors heard a presentation from Ramona Carter, director of public works, about why county staff was recommending the board not move forward on acquiring the private utility company, which operates in the northeast end of the county near the Chesterfield County line.

The county has been considering the acquisition of Founders Bridge Utility Company (FBUC) since fall 2016, when it began researching the idea of taking it over from Gray Land and Development Co. (GrayCo), the developer leasing the infrastructure of water and sewer to the utility company. At that time, the company indicated it wanted to get out of the water business and sell or transfer ownership of FBUC.

FBUC provides water and sewer services to residents/businesses of Founders Bridge, Founders Bridge Golf Villas, Bel Crest, Bel Bridge, Brookstone, and Winterfield I and II.

Chesterfield County has an agreement with FBUC to sell it 180,000 gallons per day (GPD) of treated water. Powhatan was in negotiations to transfer 55,000 GPD of its allocation from Chesterfield to the Winterfield area, which was part of the consideration.

The proposed acquisition of the utility company’s system was presented to Powhatan as a potential economic development benefit and a way to increase the county’s customer base to help offset the subsidizing of the Powhatan Utility from the General Fund. Currently, the county subsidizes its own utilities by about $2.2 million each year.

But as Carter explained it last week, due diligence has revealed four main reasons why the county staff is recommending Powhatan not move forward on the project.

The final draft water agreement with Chesterfield increases the cost of water in both the FBUC area and Route 60. Chesterfield agreed to a one-time transfer of 55,000 GPD from Route 60 to the Winterfield area but wouldn’t allow the terms of the existing contract to remain in place. Changing the terms would cost $32,000 more per year for the water on Route 60. Chesterfield also limited future development to within the FBUC service boundary and only allowed Winterfield II for future development.

Another reason was the potential revenue margin was much less than the county was anticipating, Carter said. A third party engineering company evaluated all of FBUC’s financial records. They determined that taking on the additional customers does not significantly increase revenue because the system at FBUC comes with added maintenance costs, meter reading, repairs, billing, electrical costs, and reporting. Even applying Powhatan’s rates only provides about $65,000 in revenue per year, and one water or sewer repair could easily use up $65,000.

A third reason she listed was that the GIS mapping and easement plats revealed several areas of concern where lines were shown to be located very close to or under buildings and structures or outside of the easement.

The final reason was that the maintenance records kept by Sydnor Hydro lacked detail regarding water breaks and how the repairs were completed. The records did indicate that water main repairs are costly due to the asphalt and concrete located overtop of the mains, meaning they are located in a road right-of-way. The records indicated that no maintenance or repairs have been performed on the sanitary sewer system.

Carson Tucker, who represents District 5, asked Carter a series of questions meant to flush out the staff recommendation and show why it was so different from the one they have been seriously considering for the past two years. He said it was not an indictment of staff’s work but an effort to get at whether the issue was going anywhere, and if not, make a final decision.

Carter said that what changed was the due diligence staff did to find all of the information they have been steadily pursuing since the acquisition was first proposed.

County administrator Ted Voorhees pointed out the county made a few assumptions early in the process that FBUC was making money and solvent already, so they thought “a rate increase would just make it that much more financially viable.”

The company is not failing business, but it is “behind in rate increases and it does have some future capacity questions hanging out there and there are some locations of lines that might subject us to longer term expenses than we would want to see. That wasn’t really known to us up front,” Voorhees said.

There was also the presumption that Chesterfield “would be eager to have us consolidate the management of utility relationships in Powhatan,” but that has not been the case, he said.

Staff and the board had a lengthy discussion about staff efforts, projected maintenance costs and funding them, and the age and condition of the system and how replacing it works.

After some discussion, Carter said that the biggest factor really was the agreement with Chesterfield County that she and Voorhees have been working on with corresponding staff members. Even if changes were made to diminish costs associated with the other three reasons, if the Chesterfield agreement doesn’t become more favorable to Powhatan, the acquisition still isn’t recommended.

“We have nothing to bring to the table; we are at their mercy. If they say we can’t meet this month, we can’t meet for six weeks, we have to say OK. We can’t press them for anything because we have nothing to offer,” Carter said.

Discussion continued with the board considering what route to take next, including continued negotiations with Chesterfield staff and the merits of possibly having the supervisors reach out to board members in Chesterfield as well.

During the public comment periods, a handful of people spoke about the FBUC acquisition.

Floyd Greene said he had no opinion on the acquisition but did raise concerns about diverting public water that was set up on the Route 60 corridor for commercial development to the Winterfield area for residential development.

Tom Gitchel said he was “shocked and dismayed” at the history of this inadequate water supply and that the county has “not taken urgent and aggressive steps to resolve the issue.” With this known ongoing issue, he said it is “unconscionable” that the county continues to expand development, which will further worsen the issue.

“Community interests are better served when a utility is run by a local government rather than by a private party,” he said.

The county did not adequately vet the original development plans at full build out and is “now faced with rectifying the problem, yet they do not want to acquire the utility company due to expense and liability,” he said.

Another resident, Tom Napier, said the news that the county may not pursue the acquisition has been disappointing and frustrating for residents in that area. He also felt the county didn’t adequately vet the plans for the development so the area wouldn’t be in the position of not having the water capacity for current and future customers. Residents are concerned not having a favorable conclusion to the situation will have a negative impact on their property values, which ultimately affects the county through taxes.

Casey Sowers, owner of Riverton Associations, the developer for many of the developments in that area, said efforts have been ongoing for many years to help with efforts to improve the irrigation systems. Recent efforts dramatically reduced the consumption of potable water in the past two years, he said.

Sowers said that in summer 2019, the peak demand of FBUC hit 155,000 GPD only twice, and not once did it exceed the 180,000 GPD it is allowed. Total projections for the Winterphase II apartments and businesses are 19,000 GPD, which still doesn’t push FBUC over its allowance on a peak day, he said.

He asked the supervisors to look at the issue again and said he didn’t think a new agreement with Chesterfield was necessary.

Laura McFarland may be reached at Lmcfarland@powhatantoday.com.

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