Cleaning up the TCSD mess
Members of the Tuckahoe Creek Service District Advisory committee received, perhaps for the first time since the inception of the public utility project almost eight years ago, detailed information about its operation and finances at a meeting held on February 1, 2010.
It was not a pretty picture.
The TCSDAC, comprised of major landowners in the district appointed by the board of supervisors, was supposed to have received regular reports on the progress of the project. Comments made by current members who include C. B. Robertson, Ben Johnson, chairman Scott Gaeser and Thomas Pruitt indicate that the TCSDAC’s understanding of its role in the project is unclear.
While the TCSDAC met often and was treated to regular dog and pony show reports by former county officials who have since been relieved their duties to “pursue other interests” it now seems as though the group rarely received any substantive, or, for that matter, accurate, information.
County administrator Rebecca T. Dickson; VaCO, VML consultant John Wack; county engineer Gary Duval and Don Charles, Director of community development presented information gleaned from months of research.
For about a year, first Charles and then the others, have been working to obtain a true picture of all aspects of the TCSD from financing assumptions to pipes in the grounds.
That was apparently quite a challenge, because few records seem to exist and those that have been found are incomplete, contradictory or just plain confusing.
The bad news for TCSD landowners and customers of the utility is that the ad valorem tax and utility rates will increase, a lot.
Residential water and sewer rates will rise 25 percent in fiscal year 2011, which begins July 1, 2010 and another 25 percent in FY12. The ad valorem tax will increase four cents in tax years 2010 and 2011 and three cents per year through 2015 to a projected rate of 43 cents per $100 of assessed valuation in addition to the county real estate tax.
Wack presented the following illustration of the annual impact of rate increases.
A residential TCSD customer whose home is valued at $500,000 will pay $1,350 in ad valorem taxes (the 27 cent rate for calendar year 2010), $187 for water usage and $298 for sewer for an annual total of $1,835. In fiscal year 2011, that cost will be $2,079 and in FY 2012, $2,344. That assumes ad valorem rate increases effective January 1 and utility fee increases effective July 1 and usage rate of 4,000 gallons per month.
These changes will be reevaluated annually.
Wack, who has been wading through the details of the TCSD for months, explained that the Virginia Resource Authority bond issue, which was extraordinarily back loaded, was not the only debt associated with the TCSD.
Wack said that the initial rate calculation assumptions may have included periodic rate increases but that, in fact, there has been only one rate increase in the five or so years that the system has been in operation.
The true outrage is that Wack was unable to state definitively what happened with the rate structure. For a system that is so young and so small the dearth of documentation is evidence of the dreadful mismanagement of the system from the outset.
Dickson explained that the county has spent $434,000 so far trying to get its arms around the TCSD.
“We put our land up as collateral to borrow the money to build the infrastructure, “Pruitt said. “The county was obligated to manage the system and did a very poor job for the first four of five years. We (TCSD landowners) should not have to pay Goochland to figure out what it did wrong.”
County staff and consultants have worked for several months to compile a document presented by Charles that
reads a little like something compiled by troops entering an foreign city trying to understand the existing water and sewer system and creating an operational plan going forward without any help from the locals.
The TCSD was established about eight years ago, it’s only been online for about five years. All this allegedly occurred under the aegis of Goochland County. There is so little documentation of basic items like water meters and fire hydrants that a process referred to by Charles as “data mining” is being employed to figure out what is going on.
There does not seem to be a complete inventory of easements. This gives credence to rumors that some people donated easements for water and sewer trunk lines to cross their property and others were paid.
There was an assumption that landowners in the TCSD would donate easements to help keep costs down, which in turn would eventually lead to lower ad valorem taxes. Apparently that was just a rumor. Landowners who did connect to the TCSD found the experience expensive, insulting and aggravating.
On Charles’ to do list is the need to establish a fire hydrant program with the fire department. Some hydrants put in when the water lines were installed are vey hard to access. There have been reports of that at least one county volunteer firefighter was injured while attempting to access a hydrant while fighting a fire. Why wasn’t the fire-rescue department included in the design process for the water lines?
There were no schedules for routine maintenance of the system nor any costs built into rates to pay for upkeep. Pumps, meters and pipes have a useful life, which can be extended by good maintenance practices. Did the designers of the TCSD believe it would run forever or did they expect the world to end before something broke?
That’s just the nuts and bolts side of the mess.
The financing is yet another excursion into the wonderful word of smoke and mirrors.
When the TCSD was established, there was much discussion of the $63 million Virginia Resource Authority bond issue. That amount included a $6 million arbitrage account that was invested and its interest used as a cushion to ensure the county was able to meet its debt obligation. Although some landowners in the TCSD were told that the ad valorem tax would be around 15 cents per hundred, it was imposed in 2003 at 50 cents. The rate came down as assessments soared.
The repayment schedule was steeply back loaded so that payments starts out relatively small and increase over the life of the debt.
Wack said that he had never seen what Pruitt termed a “debt scheme” structured that way. Wack said that the repayment schedule seemed to have been based on the assumption that property values would increase dramatically over the life of the debt. The annual debt service for the TCSD bonds will increase from its current rate of under $3 million to nearly $6 million by FY 2018.
That’s only part of the fiscal liability picture.
As part of the TCSD, the county entered into a wastewater agreement with the City of Richmond, above and beyond the VRA debt, for $21.3 million. This debt was to be retired through charges included in sewer rates.
The projections for the number of sewer customers were undoubtedly compiled by Rosy Scenario. Unfortunately, the number of customers is so far below expectations that none of the debt has been paid in the five years that the TCSD has been online. Hence the need for hefty rate increases.
Henrico has been sending some wastewater through the TCSD pump station located on the north side of Rt. 6 just west of the Henrico county line for several years. The user fees that they paid Goochland pretty much paid for the chemicals that control odors.
That arrangement, which was in effect while a new Henrico facility could be completed, will end in the near future further reducing the wastewater revenue stream.
Charles said that no one really knows if the eventual end of Henrico’s use of the TCSD pump station was part of the initial assumptions used to establish TCSD sewage rates.
Wack said that he discovered some indication of plans for incremental increases in sewerage rates, but there was only one rate increase since the inception of the system.
As sold to the public, the TCSD was supposed to be self- sustaining through ad valorem tax, connection and usage fees. The mantra “those who benefit from the TCSD will pay for it” was heard often. That was at best an exaggeration, at worst, a lie.
So far, the county’s general fund loaned the TCSD close to $5 million. Of that only the most recent loan, about $3 million to build a water line in Henrico County pays interest to the taxpayers of Goochland.
As more details of the operation and total lack of management of the TCSD come to light it is apparent that the elementary school students at the Goochland Gifted Center could have done a much better job of building and running a public utility system.
The time has come to clean up the mess and go forward.
Sadly, the cure, whose total picture is not yet clear, will include higher ad valorem taxes and utility bills. It also includes aggressive pursuit of economic development.
Those who put the onus for the TCSD troubles on the bad economy are trying to deflect blame. The project was pretty much dead in the water when the economy was red hot. The supervisors must take responsibility for repeatedly refusing to put zoning into place that would attract business.