Falls Church Gives Preliminary Approval to Water Rate Increase

Update: The Falls Church City Council voted unanimously  Monday night to give preliminary approval to increasing  water rates by nearly 25 cents per 1,000 gallons. All of McLean is served by the Falls Church Water service.

The City Council is scheduled to take a final vote at its July 11 meeting and the new rates would take effect Aug. 1. If approved the rates would rise from $3.03 to $3.27/1,000 gallons of use. This marks the first rate increase since 2005.

Eighty percent of the Falls Church customers live in Fairfax County.  Water rates are a huge point of contention between the City of Falls Church, Fairfax County and McLean residents. The county has taken the city to court over the rates. A Fairfax Circuit Court judge ruled that Falls Church could no longer transfer  surplus water revenues into its general fund.

Rob Jackson, president of the McLean Citizens Association in an e-mail Tuesday morning, said, "Last evening, I attended the city council meeting for the City of Falls Church.  I spoke against the rate increase, explaining it was inconsistent with both the circuit court and state supreme court decisions and that the rate study has been determined to be deficient by Fairfax Water.  I indicated that I had studied Fairfax Water’s comments and found them to be correct in my view."

Falls Church City Manager Wyatt Shields is scheduled to  attend the July 6 MCA meeting to answer  questions about the water issue.

Earlier at Monday's public hearing on the rate increase,  Tracy Mowher of the Municipal & Financial Services Group (MSFG) presented the results of her firm’s evaluation of the Falls Church water service rates, claiming that the rates have not increased since 2005 and during that six year period the operating and capital costs associated with the city’s water system have increased.

“Our proposed financial plan will establish a reasonable water fund balance over several years,” said Mowher, as she presented MSFG’s five-year plan regarding water rate increases. “It’s necessary as rates have not been increased over the past several years.”

In protest, citizens pointed to flaws in MSFG’s report and also claimed that the rate increases result in financial gains for the city and significantly affect the many county residents living outside of city limits while benefiting those who live in the city.

On June 14, 2011 the Fairfax County Water Authority sent a letter to Mayor Nader Baroukh claiming that the MSFG study was flawed and would place Falls Church on “a trajectory to charge water rates that are more than 60 percent higher than the rates Fairfax Water charges to its own customers in Fairfax County. The primary reason for that cost disparity is that Fairfax Water has significantly larger economies of scale that enable it to supply water at the lowest unit cost in the region.”

“I think it is completely implausible that a city system that was so profitable for so many years and was so profitable so recently, all of a sudden needs these dramatic rate increases to break even,” said Dennis Hennigan.

Applause erupted from one member in the crowd after an elderly gentleman living in the Fairfax County portion of Falls Church staunchly opposed the rate increases and called for the council to provide more transparency and awareness of the rate increases to it’s constituents.

A total of seven Falls Church citizens presented their disgruntled analysis of the rate increases and the apparently flawed MSFG study.

“For many years Falls Church has illegally overcharged its’ customers, including the 92 percent of its’ customers who reside in Fairfax County,” said Dennis Hennigan, who based his statements on a January 2010 ruling by Fairfax County Judge Terrence Ney that the city cannot charge water rates in excess of expenses. “The judge held that as to those residents in Fairfax County, this was in effect taxation without representation. We don’t have the power to hold you folks accountable for these exorbitant rates.”

Ney’s decision was upheld by the Virginia Supreme Court.

Since December, several customers, mostly in Fairfax County, have complained that their water bills from the City of Falls Church were overcharged. Customers allege that they were overcharged between fiscal years 2007 through 2009. Alexandria-based lawyer John Charles Bennison filed a lawsuit on behalf of 21 water utility customers who alleged they were overcharged for services. According to the water utility’s website, the company supplies water to 35,000 commercial and residential customers within the City of Falls Church and Fairfax County. In May, bills but to let things play out in court.

Despite the protests though, the council moved to approve the rate increases on the first reading and have scheduled a second reading and public hearing for July 11th. If the ordinance is approved, the rate increases would go into effect beginning August 1st.

After hearing the disapproval of citizens, Vice Mayor Dave Snyder responded candidly prior to closing the discussion of the rate increases amongst the council.

“It’s always been the priority of this council to assure that the water that we provide to our customers is as safe and reliable as humanly possible,” said Snyder. “I will not be swayed by arguments directed to keeping our rates artificially low so that the quality of our system suffers.”

Here is a Q&A from Falls Church officials about the rate increase:

Q:      Why is a water rate increase necessary?

A:      Since the City’s last rate increase in 2005, there have been increases in operating and capital costs, including the cost of purchasing water, electricity, chemicals, and asphalt.  In addition, the City has invested approximately $34 million to improve and expand critical utility infrastructure, including U.S. Environmental Protection Agency (EPA)-mandated improvements to the disposal of water treatment residuals at the Washington Aqueduct, distribution system water main replacements, pump station improvements, automated meter reading equipment, and storage tank maintenance. The City’s rate consultant, Municipal & Financial Services Group, concluded that the City’s current rate structure does not provide sufficient revenue for operation of the water utility. 

Q:      How much will rates go up?

A:      For the average household, the quarterly (three-month) water bill would increase between $2 and $7, depending on consumption.  (The proposal would increase water service rates by 8 percent.)  The current water commodity charge is $3.03 per 1,000 gallons.  The proposed rate would increase the commodity charge to $3.27 per 1,000 gallons in FY12. 

Q:      Are the rates the same for City and County residents?

A:      The proposed rate will be the same for all City of Falls Church water utility customers who live in the City and for those who live in Fairfax County.  The City has charged a uniform rate to all its customers since 1974.

Q:      Are Falls Church water rates higher than other water rates in the area?

A:      The City water rates remain below average for the National Capital Region and are lower than 2/3 of the water rates throughout the Commonwealth of Virginia. When the new rates take effect, the quarterly water bill for Falls Church City water customers will be below the average quarterly bill charged by water utilities in the region.  (see attached water rate comparison)

This past year, a Fairfax Circuit Court ruled that the City practice of transferring a return on its water utility assets to its general fund was no longer permitted.   The City has fully complied with this court order.  The rates proposed for adoption by the City Council are required solely for the operating and capital expenses of the City water utility.