Future of Town central water-sewer rates and fees put on table

At the first of two virtual work sessions of the week, staff led the Front Royal Town Council through a variety of topics ranging from:

1 – whether the Town has any liability for drainage-flooding issues in the Williamsburg Estates subdivision;

2 – what a consultant’s cost of service, the fee-and-rate study has recommended for the Town’s water-sewer utility’s future relationship to customers;

3 – the adjustment or waiving of some Town service fees;

4 – and how the Town may have “lucked out” as Councilman Gary Gillespie observed, regarding an initial $104,000 fine for violation of a Virginia Department of Environmental Quality (DEQ) Consent Order for improvements to infrastructure impacting the Town’s Wastewater Treatment Plant operations;

5 – not to mention an overview of the result of the “Envision” the future of downtown Village Commons/Gazebo area events, among several other items.

Of perhaps the broadest interest across the board for town citizens might be what coast-to-coast consultant Stantec has recommended on rates and fees to facilitate the Town’s ability to continue to provide and expand when necessary, its water-sewer utilities. That ability includes maintaining the operational water-sewer utility fund balance and reserves to continue to provide quality service to customers, both existing and new.

Whether those new customers should include out-of-town residential ones was a hot-button topic of debate last year as the Crooked Run 2 developers sought Town water-sewer, not for the commercial-industrial development the Town had previously agreed to without annexation for a community-wide commercial-industrial development/tax revenue benefit, but for residential development on county land outside the town limits.

Many existing in-town customers had a hard time with that pending expansion of the Town’s water-sewer utility responsibilities outside the town limits. And while Stantec representatives didn’t address the political side of that equation, the Town’s charging of double the in-town rate for water-sewer service outside the town limits as part of their three-pronged overview of rates and fees.

“Are they appropriate?” Stantec’s David Hyder asked rhetorically of the double out-of-town rate during a PowerPoint presentation. His company’s answer was “yes” – that the Town maintains its 100% surcharge, or double the in-town rate for out of town service. That recommendation was based on several industry-standard criteria revolving around cost differentials for the provision of that service.

In fact, Hyder noted that his company’s analysis including a number of customers, miles of pipe laid, debt incurred, assets involved in providing the service, and flow rates pointed to a 121.6% water surcharge and 108.2% sewer surcharge. However, given yearly fluctuations on a “weighted” basis, Stantec reasoned that maintaining the 100% surcharge appropriate.

Back in town
As for the in-town customers, there is an increase on the table over the next five years. That increase is a 2% hike to water rates annually and a 3.5% increase in sewer rates. That averages to just under 3%, at 2.9% combined. But don’t panic, the combined annual increase for the average user of 5,500 gallons monthly on a 3/4-inch line is about 65-cents for water and $1.90 for sewer, totaling a hike of just over $2.50 annually each year between FY-2021 and FY-2025.

Stantec also recommended a reduction in “system development charges” generally known as tap fees, to reflect actual costs of new connections. That decrease for water and sewer would be from $14,090 to $9,993 (from current $4,340 water to $2,663; and current $9,750 sewer to $7,330). In comparison to 12 other area jurisdictions, those suggested reductions would take Front Royal from fifth from the highest, behind only Manassas, Culpeper, Warrenton, and Manassas Park, to third from the lowest higher than only Woodstock and Waynesboro.

Hear Stantec principals David Hyder and Andrew Burnham’s detailed explanation of Stantec’s recommendations in this Royal Examiner recording of the work session, as well as other business before the council. More on the work session in forthcoming Royal Examiner stories.

Download the Agenda here.