Council okays engineering study on redundant corridor water line

After a nearly 40-minute power point presentation and discussion of the status of the contracted study on construction of a redundant central water line extension into the county’s Route 340/522 North Corridor, the Front Royal Town Council authorized proceeding to an engineering report on the recommended option.

That option is building the redundant water line along the Electric Utility Route utilizing micro-tunneling techniques that while more expensive, are much more reliable in the involved karst river basin topography and is the preferred method of permitting agencies that will have to authorize the work. Town Manager Joe Waltz told council that the current budget allocation of $162,600 to the project would cover the cost for the Engineering Report (PER).

Assured there was no need to immediately identify additional revenue sources a council consensus was quickly achieved to move forward with the engineering report that would be scheduled to proceed in August 2019.

However, such a consensus might be a tad harder to achieve as the time to okay the actual construction project scheduled by consultant CHA to begin in December 2020 approaches. Total cost of the two-phased project being propelled forward by Dominion Power’s desire to have a backup water line in place to assure continuation of its operations should the existing line fail is $12 million dollars.

But if that cost is the bad news, Dominion’s massive water use for its power plant’s cooling systems and desire to see the project come to fruition was the good news.

Project consultant CHA’s Steve Still presented numbers indicating Dominion’s existing water usage at increased out-of-town rates scheduled to phase in at the end of 2019 and 2024, coupled with Dominion’s commitment of a $3.5 million cash contribution to the project will essentially pay for the redundant water line long term.

Still’s presented a financing chart utilizing a 30-year VRA loan of $11.3 million dollars at a 4% interest rate requiring annual debt service payments of $653,000.

And he presented numbers noting Dominion’s current in-town water rate and usage producing $550,000 of annual revenue that will increase to one-and-a-half times the in-town rate on December 29, 2019, adding $275,000 to that Dominion annual water bill; that will climb again to the normal twice-the-in-town rate for out of town service on December 29, 2024, producing another $275,000 of Dominion water bill revenue.

By plugging in a portion of Dominion’s $3.5 million commitment at $700,000 per year between 2022 and 2025, Still said he felt good about the Town’s ability to fund the project without massive rate increases to other utility customers.

He said he also was confident in the route and tunneling recommendations, even if they were on the higher cost side because they provided more project reliability and viability.

There were questions, particularly from Councilman Meza: why not use the cheaper bridge route where the existing line is? – Because the second line would be placed over the existing line and not provide redundancy because a catastrophic accident, a tractor trailer off the bridge was used to illustrate such a possibility, would take both lines out.

And why not do an interest free internal loan? – “We don’t have $12 million dollars in the necessary reserve funds,” Finance Director B. J. Wilson replied drawing laughter.

See the CHA power point presentation on the options and council’s discussion in the linked Royal Examiner video:

Click to download slides.