F’ville Council unanimous: Appraise water system for sale
Fayette Commission to consider splitting appraisal costs
The Fayetteville City Council on May 17 unanimously agreed to spend up to $15,000 for an appraisal of the city’s water system for a potential sale to Fayette County.
Bond attorneys reviewing the matter said merging the two systems instead would not be permissible. City staff said the even without the sale it is only a matter of time before the currently lower city rates top those charged by the county.
City Manager Joe Morton recently said the idea for potentially merging services or selling a city service such as the water system is financially-driven and came out of discussions at the City Council retreat in March. He said discussions with Fayette County are also underway about the potential for consolidating fire services and the building inspection department.
The Fayette County Commission has operated the Fayette County Water System for decades, fully funding it through water fee collections. The county system currently is the sole water provider to both Peachtree City and Tyrone. It also operates the Brooks water system under contract.
The county system also owns and maintains the only reservoirs in the county: Lakes Peachtree, Kedron, Horton and the soon-to-be up and running McIntosh.
Fayetteville draws its water directly from Whitewater Creek and several deep wells and treats it in a plant capable of producing 3.9 million gallons a day.
The city also operates its own 5 MGD sewer treatment plant and associated system, but that is not involved in the current negotiations.
City Assistant Director of Finance and Administration Ellen Walls on May 17 explained that city staff had first explored merging the city and county water systems.
The possibility of merging the systems will not be available, Walls said, noting that, “During these discussions, it was necessary that the city consult with bond counsel to determine any legal obligations with merging the two systems. Bond counsel reviewed the 2003 and 2010 Water and Sewer Revenue Bond Issue Resolutions and advised that a merger or long-term lease purchase would not be permissible. In order to meet the bond resolution obligations it has been determined that the sale of the city’s water system to the county would be the only option to join the two systems.”
The council voted unanimously to approve up to $15,000 for an appraisal of the water system with the condition that Fayette County jointly agree on the choice of consulting engineer and share the cost of the appraisal. Mayor Greg Clifton had not arrived at the meeting by the time the vote was taken.
Questions about the water system were raised prior to the vote. The answers to those questions shed a somewhat different light on what might otherwise look like the city is abandoning its water system.
Councilmen Walt White and Ed Johnson said they were concerned about an increase in rates since the county rate is higher that what the city charges.
“We’re already looking at a rate increase based on the Consumer Price Index,” Walls said, noting the potential for a phased-in rate approach, especially with seniors. “If we keep the water system it will mean a rate increase that would be more than what the county charges.”
Fayetteville’s minimum rate is $14.50 compared to the $18.48 charged by the county. But given the increases coming in the next two or more years the city’s price would eventually exceed that of the county, Walls said.
The down side, said Walls, is that the city has a senior rate but the county does not.
Beyond that is the reality that Fayetteville cannot provide water to all its residents. Walls said that is due to a 1984 contractual agreement between the city and county that runs for 50 years and sets specific boundaries on the city’s water service area.
City Manager Joe Morton added that in the current economy the city, “Can buy (water) cheaper from the county than we can produce it, given the volume we produce.”
If the sale were to go through the county might purchase one or more of the city wells but would likely not purchase the water plant, Morton said.
Pertaining to the city’s fire department and a possible merger with the county, Morton last week said the city is currently looking at the operational side of the issue that includes staffing, equipment, fire stations and organizational structure.
“We’ve met with the chief and the three shifts of firefighters. We got some good feedback and we’re looking at the issues,” Morton said.
The discussions come at a time when local revenues continue to fall due to a slumping tax digest. Also in the mix is a grant that will construct a new county fire headquarters and emergency center. If eventually approved, the merger could potentially have the city fire station on South Glynn Street operated as a county facility, Morton said.
Morton said discussions between the city and county are also underway about the merger of the building inspection function.
Fayette to assess F’ville water system?
Up until now, the idea of Fayette County’s Water Department absorbing the Fayetteville Water Department via a merger has been a conceptual matter.
But Thursday night, the county commission will consider entering an agreement with Fayetteville to share costs of a $15,000 assessment of the net worth of the city’s water system assets.
If the county ultimately decides to purchase the city water system, the county would likely have to issue revenue bonds to cover the purchase price, according to a memo to the commission from County Administrator Jack Krakeel.
The commission is expected to discuss the matter during its regular meeting, which starts at 7 p.m. at the county’s Stonewall administrative complex in downtown Fayetteville.
The talks initially sprang from the City Council’s annual retreat in March as a cost-savings measure, along with a potential merger of the city and county fire and building departments.
However, the water system is different because the city has outstanding water/sewer bonds which will require the city water system to be technically sold to Fayette County to allow Fayetteville to pay off its bonds.
The cost of the assessment will be split between the county and the city.
— Additional reporting by John Munford