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Virginia Politics
Posted at 06:39 PM ET, 06/14/2012

Falls Church, Fairfax County call truce in water war to discuss merger

Fairfax County and Falls Church officials who have been battling over water service have decided they would rather talk than fight for the next few months.

On the eve of a Friday hearing in federal court in Alexandria, all sides agreed to stand down for 90 days, allowing Falls Church, Fairfax County and county-controlled Fairfax Water to investigate a possible merger of their water systems.

Representatives from the City of Fairfax and the town of Vienna have also agreed to put their litigation on hold, although those municipalities have not expressed interest in a merger, and Fairfax Water has not pursued such a possibility, according to interviews and documents filed Thursday in U.S. District Court in Alexandria.

All three municipalities have asked for a court to strike down a Fairfax County ordinance, which takes full effect July 1, that gives the county broad new powers over how water is delivered to county residents and at what cost. But a consent order staying the proceeding was entered Thursday by U.S. District Court Judge Liam O’Grady.

For years, Falls Church relied heavily on water system revenues from more than 34,000 customers, 90 percent of whom reside beyond city limits. Critics, including many of those customers, said the city unfairly kept its property taxes low with water rates that were also higher than those set by Fairfax Water.

A recent letter from Fairfax Water’s executive suite to Falls Church’s mayor may have helped nudge the parties toward merger talks, although Falls Church has also found its other options dwindling. The city was forced to scrap a planned auction of its water utility after the U.S. Army Corps of Engineers, which supplies the city with Potomac River water, said federal law allows it to serve only other governmental utilities, not those owned by private investors.

Philip W. Allin, chairman of Fairfax Water, outlined the financial benefits of a merger in a June 7 letter to Falls Church Mayor Nader Baroukh. Allin’s letter says a merger could save as much as $100 a year on water bills for customers inside the city. The annual average rate increases would also be about 5.5 percent a year, compared to Falls Church’s 8 percent, and save the city more than $70 million in potential capital costs, the letter says.

It also warned that selling the city’s 80-some-year-old water system to an investor-owned utility would likely boost water rates at least 11 percent. The letter was silent, however, on whether Fairfax Water would offer compensation to assume control of the city’s water utility — a key sticking point so far for city officials.

Falls Church discussed putting its water system up for sale after Fairfax County last year enacted an ordinance that assumes oversight of water rates for all county residents, including those who receive their water from municipal utilities in Falls Church, the City of Fairfax and the towns of Herndon and Vienna. The amended county ordinance also set aside exclusive zones of service for Fairfax Water, an independent authority whose board is appointed by the Board of Supervisors.

The Fairfax County Board of Supervisors acted on behalf of county residents who complained that they were paying substantially higher rates for drinking water from Falls Church than neighbors who were hooked up to Fairfax Water. Many were still stewing over Falls Church’s decades-long practice of directing millions of dollars in surplus water revenue to city coffers — a practice that came to an end after a Fairfax County judge ruled that the arrangement amounted to a tax without representation.

The city has already spent approximately $1 million in legal fees, and the latest court fight had hardly begun. In addition to pursuing merger talks, Falls Church officials said they are also considering creating an independent water authority that would be immune to the county’s ordinance.

By  |  06:39 PM ET, 06/14/2012

Tags:  Truce called in Fairfax County water war

 
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