The City of Falls Church had to suspend the planned auction of its water system this past week, again opening the door to a potential merger with Fairfax County’s water system.
In February, Falls Church began soliciting interest from utility companies wanting to purchase its water system. Fairfax Water responded with a merger proposal rather than an outright purchase of the city’s utility.
The Falls Church water system serves thousands of customers who reside in Fairfax County, as well as city residents.
In its merger proposal, Fairfax Water General Manager Charles Murray indicated a merger would lower rates for Falls Church customers and save the city millions of dollars in needed infrastructure upgrades to its water system.
However, Falls Church officials set a minimum bid of $44 million for the water system, something Fairfax Water is not offering.
The city was planning to auction the water system to the highest bidder, and had interest from several investor-owned utility companies. However, the Army Corps of Engineers Office of General Counsel then reversed an earlier decision, which stated it was acceptable for the city’s water wholesaler, the Washington Aqueduct, to sell water to a nongovernmental entity.
The Corps now says the Aqueduct only can sell to public utilities, although a final written ruling still is pending.
“The City Council and staff are continuing to evaluate options for the future of City water system, with the goal of providing the best possible long-term solution to its taxpayers and customers,” according to an official statement from Falls Church.
Fairfax County Board of Supervisors Chairwoman Sharon Bulova (D-At large) said she is continuing to encourage dialogue between Fairfax Water, which is an independently operated water authority, and Falls Church officials.
She said Fairfax Water is working on an updated letter to city officials that further spells out the financial benefits of a merger.
The letter, to be sent next week, will “spell out more clearly than has been before what the real savings to the city would be and what Fairfax Water would be willing to absorb,” she said.
Fairfax County officials and residents have expressed concern that private ownership would drive up Falls Church water rates, which already are higher than those charged by Fairfax Water.
According to a rate comparison Fairfax Water published May 1, a bill for three months in Fairfax is about $60.19 (assuming usage of 24,000 gallons), compared to $86.55 in Falls Church. In Prince William County, which is served by a subsidiary of the investor-owned American Water, that cost was $149.69 in the first quarter of this year and is proposed to rise, pending approval from the State Corporation Commission.
“An investor-owned utility would have to charge substantially higher rates to recover not only its purchase cost, but also the profit margin and tax obligations that a governmental utility like the city and Fairfax Water do not have,” Bulova wrote in a May 21 letter to Falls Church Vice Mayor David Snyder.
In a May 22 response, Snyder suggested the county could get what it wants by putting a cash bid on the table.
“A very good outcome, in my view, would be for Fairfax Water to make the most competitive proposal and win the bidding process,” Snyder wrote.
Any sale of the city water system has to go before voters, and city officials still are hoping to get the measure on November’s ballot.
In addition, Snyder said, the city council feels pressured to act before July 1, when a new Fairfax County law goes into effect that could restrict the water rates charged to Falls Church water customers who reside in Fairfax County.
Falls Church, the City of Fairfax and the Town of Vienna have sued the county to try to stop that law from going into effect.