After delaying recommended utility rate increases and currently generating no new revenue from new water and sewer connections, the Purcellville Town Council is considering another way to deal with its shrinking utility funds—by selling the system.
The Town Council on Tuesday night is scheduled to convene in a closed session to discuss an option to sell the town’s water and sewer systems to Aqua Virginia. The discussion has been prompted by Aqua Virginia’s unsolicited proposal to purchase the systems, according to a staff report. Also present in the closed session will be Town Manager David Mekarski and Town Attorney Sally Hankins.
Aqua America is a publicly traded water and wastewater utility that serves more than 3 million people across the United States. Subsidiary Aqua Virginia serves 75,000 people through 24,160 water connections and 6,903 wastewater connections in the commonwealth.
Under Virginia law, the town is not required to disclose the proposal if town leaders claim disclosure could adversely affect “the financial interest or bargaining position of the public or private entity.”
In Fiscal Year 2020, the town’s water fund shrunk by 39 percent and its sewer fund shrunk by 16 percent—declines resulting from a need to pay tens of millions of dollars on utility projects and sewer debt and the absence of revenue from new water and sewer connections.
Stantec, the town’s utility rate consultant, advised the town it would need to increase utility rates in one of three ways—by increasing rates by one large amount in Fiscal Year 2021, followed by 4-percent increases for the remainder of the decade; by increasing rates by a moderate amount in FY21 and FY22, followed by 4-percent increases for the remainder of the decade; or by increasing rates by a lesser and steady amount each year through the decade.
On June 9, the Town Council adopted a Fiscal Year 2021 budget accounting solely for the first quarter that excluded utility rate hikes. The council is scheduled to discuss an FY21 budget accounting for the remainder of the fiscal year Tuesday night.
The July 14 meeting will be the first for newly elected council members Christopher Bertaut, Stanley Milan and Mary Jane Williams—all of whom ran on a slate with Mayor Kwasi Fraser, who also won re-election in June to serve out a fourth consecutive two-year term.
Consideration of privatizing the utility system is the latest of several options town leaders have weighed to help return the town to fiscal stability without requiring town residents and businesses to cover the needed expenses.
In 2018, Fraser, Hamilton Mayor Dave Simpson and Hillsboro Mayor Roger Vance began talking about an idea that would have seen Purcellville provide Hamilton and Hillsboro with sewer service from the excess capacity in its Basham Simms Wastewater Facility. While the treatment plant has the capacity to treat 1.5 million gallons of sewage each day, the town on average requires only 575,000 gallons of treatment each day.
The town last year also considered a deal with Hamilton in which the towns would have connected potable water lines between them to sell treated water to one another.
Hamilton ultimately decided against both ventures. There have been no public discussions with Hillsboro in recent months.
The privatization of public utilities is regulated by the State Corporation Commission through the Utility Transfer Act. On July 1, a new state law took effect requiring the SCC to adopt procedures for establishing the fair market value of utility asset acquisitions. That work must be complete by Jan. 1. The act requires the purchaser to demonstrate adequate service to the public at just and reasonable rates that will be maintained.