Supervisors, supervisors-elect talk economic development

By Susan Gibbs

Greene County is a member of the Central Virginia Partnership for Economic Development, and as such, its economic development is not planned on the basis of what is needed in the county, but on what is theorized will be a good fit for the region.

Greene County's existing economic development plan was created with the county fitting into the region in mind; not with what was best for the local economy

Greene County’s existing economic development plan was created with the county fitting into the region in mind; not with what was best for the local economy

The company doing the theorizing is Younger Associates of Jackson, Tennessee and the region includes the City of Charlottesville and, in addition to Greene, the counties of Albemarle, Culpeper, Fluvanna, Louisa, Nelson and Orange.

The Partnership’s comprehensive target market report for Greene shows the county’s target industry clusters mirroring the two target industries of the region: information technology and telecommunications and business and financial services. In addition to these regional clusters, the target markets report underscores Greene County’s suitability for several other industry sectors, including defense and security and health services.

While these objectives have been written into Greene County’s comprehensive plan, they are not cast in stone and so a business or industry that does not fit the mold to a “T” would likely be considered.

However, just about ever since 2008, when recession struck and the developers who had been flocking to the county to take advantage of northern expansion up Route 29 from Albemarle started taking a second look, complaints about the cost of water and sewer hookup fees have been pouring in.

Most of these complaints assert that Greene’s fees are higher than those in any other locality in that they are higher than those in any other locality in the region and are turning industrial prospects off.

The fees–$20,000 for each new residence to hookup to water-sewer service, and about $200,000 for each new commercial establishment to hookup—were set with the intention of paying the county’s debt on the water treatment plant in Ruckersville that went into operation in 2006.

The hookup fees are based on equivalent development units, or EDUs. Businesses that are expected to use more water and sewer, or are open 24 hours a day, pay higher tap-in fees, and those can vary from twice [the tap fee] for a house to 10 times the amount.

After the plant was completed the county turned it ownership over to Rapidan Service Authority (RSA), while retaining responsibility for its debt service, which was—and still is—based exclusively on hook-up fees and is failing, due in part to the sluggish economy.

Skyline Community Action Program assessments indicate that new employment opportunities in the county have been outpaced by business closings, and that a longer commute to work puts additional strain on household budgets from transportation costs.

And the situation isn’t getting any better.

One area businessman, with industrial clients interested in locating in Greene save for the fees, says the current policy is counter-productive to economic growth because of the initial cost—the requirement that these fees have to be paid before a developer obtains a certificate of occupancy for a project.

Only the large national companies can afford the up front and high priced fees. Regional and local business people find it very difficult to budget these costs into their projects under the current policy.

Moreover, the Rapidan Service Authority (RSA) policy works in a counter-productive way to the best interests of the Greene County government, the businessman says. “This is what happens when the water and sewer authority has its own business agenda and Greene County has the debt service for the sewer plant and very few buyers of EDUs for residential and commercial development.

“The County can’t have the level of commercial growth and increased tax basis unless there is a significant change in policy … county officials have been faced with this situation for years but to date have not had the political will to make a constructive change,” he concludes.

Each member of the Greene County Board of Supervisors who will be seated come January 1 was asked three questions. These questions are:

  • Some believe that if Greene County could end its relationship with RSA at a reasonable cost it would have an opportunity to be master of its own economic future and not be constrained by an agenda not its own. What has prevented the county from ending its relationship with RSA?
  • Apart from spending taxpayer money to hire a high-priced consultant to figure out how to make initial water-sewer costs more accommodating, how would you design a package that will attract clients, rather than driving them away?
  • Assuming that supervisors are able to form a unified body, how soon do you estimate a plan will be put into action?

Chairman of the Board David Cox did not respond to multiple e-mails requesting a response to the questions, but Vice-chairman Jim Frydl, Supervisor Bill Martin, Supervisors-elect Michelle Flynn and Dale Herring did.

Board of Supervisors Vice-chairman Jim Frydl (Midway)

Board of Supervisors Vice-chairman Jim Frydl (Midway)

Frydl’s responds as follows:

“RSA is established as an independent subdivision of Greene County government.  Greene could end that relationship, but this would require a contractual agreement change along with the purchase of all of the assets and infrastructure from RSA and the hiring of staff to operate and manage the system.  The system currently operates at a deficit and all user costs and connection fees would need to increase to cover the infrastructure and operating costs that are part of owning and operating water and sewer system.  It is a national problem.  Small water systems with a limited number of users are struggling to keep up with the costs to operate, maintain, and upgrade the infrastructure while meeting the increased cost burden of new stricter regulations.”

Therefore, Frydl explains, “Cost is a huge deterrent.  Also, in addition to cost there is environmental and regulatory liability that would fall on the County and its citizens … The reality is that someone must pay for the service.  In Greene traditionally the connection costs have been higher and the monthly rates lower.  Since the economic slowdown, there have been many fewer connections and those missing funds have been paid from the County general fund.  Some communities choose slightly lower connection costs but charge significant infrastructure fees each month to the users to make up the difference.  If we chose to lower connection fees then the lost dollars must be come from either increased user fees or from increased taxes.”

Frydl also says that if supervisors are able to form a unified body a plan could be put into action immediately.

“The hard part is deciding as a community what the priorities are and how we would like to pay for those priorities.  The system is losing money.  Any changes in operation, infrastructure, fee collection or service, will come at a cost.  The question is who will bear that cost–the monthly user, the new user, or the County taxpayers?”

Martin did not answer the questions directly.

Supervisor Bill Martin (Stanardsville)

Supervisor Bill Martin (Stanardsville)

Instead, he says, “What local government can do is provide an enabling environment for economic growth.  Greene County has done a reasonable job of that in recent years—the water and sewer project being a prime example—despite the fact that economic growth projections to pay for the project have not panned out.

“We are left with a heavy debt burden that the entire county is paying for.  Though even those residents not directly benefiting from the water and sewer infrastructure are paying with their real estate property taxes, even these folks benefit from the increased commercial activity that the infrastructure has attracted.

“I believe all options should be on the table when looking at the water and sewer equation for Greene’s future,” Martin continues.  “A few key variables to look at: 1) our relationship with RSA, 2) the charges we levy for actual volume of water used, 3) a survey of competing counties’ water and sewer rate structures, and 4) the cost the county levies for an Equivalent Development Unit (EDU).

“Absent this expertise locally, I believe technical assistance is required to help the county with these issues.  The Board of Supervisors should engage this assistance rapidly and act on its key recommendations as soon as possible,” Martin concludes.

Flynn says: “My first commitment as a new supervisor in January is to learn more about everything.  I am certainly aware of the complications created by the lack of expected EDUs to pay for the water treatment plant and the havoc that has created for our local budget.

Supervisor-elect Michelle Flynn (Ruckersville)

Supervisor-elect Michelle Flynn (Ruckersville)

“I don’t think I know enough to answer specific questions but will share this:  I do not think Greene County can afford to be in the business of running water and sewer services,” she continues.  “Is there a better deal that needs to be pursued with RSA?  I don’t know, perhaps.  I do know that being ‘master’ of our own future would come at a significant cost.  Regarding initial water/sewer costs and making them more attractive, I think it will be important to examine what is being done in other localities and to talk to developers in order to determine the magnitude of the problem.

“I could not offer a timeframe until I better understand the magnitude and scope of the issue and possible solutions,” Flynn concludes.

Herring is calling for a review of the current pricing structure: “Currently, the price of $20,000 is higher than most surrounding counties. To put it simply, the cost of a new home is $20,000.00 more than the cost of the land plus the physical structure. Obviously, reducing the cost of the EDUs would have a financial impact on the county. The question that needs to be answered is whether or not the impact of reducing the cost of EDUs can be offset by the increased growth,” he says.

Supervisor-elect Dale Herring (At Large)

Supervisor-elect Dale Herring (At Large)

“The policy would also have to be approved by both the County and RSA in order to insure uniform pricing throughout the county,” Herring continues. “The timing of the purchase is also an issue that should be considered. Several builders have speculated how many lots can be developed on certain property purchasing the required EDUs. In certain instances, developers over estimated the number of homes that could be constructed either due to property constraints or the recent decline in residential growth. It would be much more agreeable to have the EDUs purchased after the completion of the construction, but before the water and sewer services have been turned on. This prevents the builder from over estimating and insures the county receives the needed financing to cover the cost of the individual hookups.”

As for the county ending its relationship with RSA, Herring says: “Not knowing the full history behind the original agreement, I cannot provide a more in depth response. The finances needed to maintain currently offered services are the primary motivator for not ending the current relationship with RSA.”

Finally, Greene County Administrator John Barkley agrees that payment for water and sewer service has to come from somewhere.

“There’s no argument that Greene County will need to expand its water and sewer infrastructure into the future to meet demand forecasts,” Barkley says.  “Growth pressure is inevitable, and the clock is ticking.  Our success depends on the extent to which we can manage growth, expand the county’s revenue stream, and achieve a better balance to the county’s tax base. That’s the issue here.

“The Board has now taken the initiative to begin to address the structural imbalance that has left county tax payers paying the bill for the county’s water and sewer debt service obligations.  The only way to achieve this is to work toward establishing a true enterprise fund, where user fees paid by the customer cover the cost of providing the service.  A quick look at our region’s EDU rates tells the story.  Current rates are compatible with the area market and have not seen an increase since 2008,” Barkley concludes.

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