Local Commentary

Guest Commentary: Falls Church Should Let the Water Business Go

Happy New Year readers.

The unfortunate story of Falls Church’s position between the immovable object of Fairfax County and the irresistable force of Fairfax Water is well known: our state legislature was accused of unconstitutionally authorizing the City of Falls Church to earn a profit on the sale of water and to transfer those profits to its General Fund, which the City duly did and which the Court decreed to be unconstitutional in January 2010. I am writing to suggest that we concede to Fairfax Water, provided we are allowed a due process where we are compensated for the value of our property, and we have the opportunity to address other points of mutual interest with the various stakeholders.

First, though, I would digress to clarify the public record. It is true that Falls Church’s “retail commodity rate” is higher than Fairfax Water’s, yet not a single developer building a project in Fairfax County has voluntarily hooked up to Fairfax Water given the choice. Falls Church’s connection fees are lower that Fairfax Water’s, by huge sums in the case of sizeable projects. For instance, in the Halstead project on Gallows road which gave rise to the recent litigation, the difference was a cool million dollars, meaning that, until the project used about a billion gallons of water, Falls Church water would be less costly to the property owner. While that litigation caused terrible consequences for the City as noted, it did result in the County withdrawing their “mandatory proffer” that the developer connect to Fairfax Water, the reason the City had refused to sign off on the construction plans. So now Fairfax Water has apparently come up with a more comprehensive way to compel developers to connect to Fairfax Water. Senator Petersen, the editor and many others feel is illegal, so I do not need to harp on this point.

 

Not a single developer building a project in Fairfax County has voluntarily hooked up to Fairfax Water given the choice.

In our age of transparency in government, the “current” financial statements published by Fairfax Water are for the period ended December 31, 2007. These statements report that Fairfax Water earned approximately the same sum for selling 55% of its product to Fairfax County Customers, while selling 45% to wholesale customers. Those wholesale customers, representing essentially all of the residents of Prince William County, Loudoun County, and Alexandria, pay generally more than the Fairfax County residents who use Falls Church Water, and considerably more than the rate charged by Fairfax Water to Fairfax County customers. So, albeit by a different mechanism, Fairfax County residents are benefited by the diversion of millions of dollars from surrounding communities. This annual transfer, which could be $20 million+, represents the unjustified and unregulated differential in the water rate charged to wholesale customers, plus the administrative expenses which are not ordinarily chargeable to wholesale customers (adding injury to insult, the end-user pays another layer of administrative costs, resulting in the higher costs cited). While the presentation of the numbers does not allow precise calculations, it would appear that the majority of the differential is attributable to this “hidden subsidy,” which reduces the Fairfax Water rate by perhaps 1/3. In other words, in technical jargon, this is the pot factory calling the kettle black.

Hopefully this data will help balance the public knowledge base and serve as a basis for the well-justified inquiry by our state legislature or others into whether the County’s proposal serves the public interest generally.

I am sure the reader finds these arcane financial debates scintillating, but other than the Zen fascination with water, I fail to see the transcendent importance of water as a commodity to the City of Falls Church. We are surrounded by competent agencies that are devoted to the purification, delivery, disposal and processing of water, and truth be told we have no special recipe or formula in a guarded vault that will allow our grandchildren to profit from our unique brand of the liquid. In fact a cogent argument can be made that our obsession with water can only serve to dilute our focus on the things that have made this such a great place to live and raise our families. Given the limited resources, financial and managerial, of our Little City, it is high time for us to do whatever is necessary to extricate ourselves from this morass and allow others with no emotional attachment to determine the proper course for our region.

Letting go will bring the not so incidental benefit of allowing us to re-engage with our neighbors in a more constructive way, to discuss issues like the development or even annexation of the High School property, which would bring the City far more benefit than the dramatically underperforming water assets, without any real cost to the County. Surely there is no reason not to have the discussion.

 

 


 

Dan Maller is a former member of the Falls Church City Council.


Leave a Comment

Your email address will not be published. Required fields are marked *

*