U.Va. begins transition to paying full-price rates for City water

The University is expected to pay $3.1 million more a year for water services provided by the City of Charlottesville by 2020

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The Observatory Hill water treatment plant at the University is leased by the Rivanna Water and Sewer Authority. 

Andrew Walsh | Cavalier Daily

The University began its transition to paying full city water and sanitary sewer rates this past July, after the Charlottesville City Council approved a plan at a meeting in June that will require the rates to be paid in full by the summer of 2021. 

In an email to The Cavalier Daily, City Utilities Engineering Manager Jason Mcilwee said the University will transition to paying full city water and sewer rates over the next three fiscal years. Beginning this year, the University will see a 25 percent — or $800,000 — increase in the rates, 50 percent — or $1.5 million — the following year and then 25 percent again by fiscal year 2021 to achieve the payment of full city water and sanitary sewer rates. 

In total, the University will pay an additional $3.1 million for both water and sewage services provided by the City of Charlottesville by 2021, based on the University’s past consumption, according to Mcilwee. 

Under the discounted rate for water alone, the University paid the City of Charlottesville roughly $1.6 million per year before the rate increase, based on 60 million cubic feet of water usage, and $3.68 million per year for sanitary sewer services.  

The combined total for both water and sewer services before the increase was $5.28 million — meaning the University will pay a total of $8.38 million for both water and sewer services provided by the City by 2021, assuming consumption and rates remain static. 

The University uses about 60 million cubic feet — or 450 million gallons — of water on average per year. The current rate for City water is $64.66 per thousand cubic feet, but last year the University paid only $27.02 under its discounted rate. 

McIlwee said the rate for sanitary sewage is based on the University’s water usage, adding that the discounted sanitary sewer rate for the University in fiscal year 2018 was $61.34 per 1,000 cubic feet. Accordingly, the total rate for sanitary sewer services provided to the University by the City was roughly $3.68 million.

The University did not respond to questions on whether the rate increase would possibly result in any increase in student tuition or on-Grounds housings costs. 

The discounted rate was brought about in the U.Va.-City 1981 Water and Sewer Agreement, which established that water delivered to the University’s water distribution system instead of directly to a University building would only be paid for with 25 percent of the normal retail rate over the wholesale rate of water. 

However, any water supplied directly to University  buildings through the City’s water distribution system incurred the full retail rate of water, which accounts for costs needed to maintain City’s distribution system infrastructure. The Rivanna Water and Sewer Authority — a government entity that oversees water and sewage waste in the City of Charlottesville and Albemarle county —  oversees this system.

In an email to The Cavalier Daily, University Director of Operations Cheryl Gomez said that while the University does have some of its own infrastructure for water —  which is what allowed the University to receive the discounted rates in the past —  they are still entirely dependant on the city in terms of water supply and purification, besides a few non-central buildings that are provided water by the Albemarle County Service Authority.

“Most of the water used at UVA is provided to the University by the City of Charlottesville,” Gomez wrote. “While UVA owns piping that connects our buildings to the City’s system, it does not have any source of treated water other than that which is provided to it from the City.  As such, UVA is completely dependent on the City for its water supply.”

However, Stacey Hall, a part of the University Health System previously known as the Sears building, is one of the buildings that receives water directly from the City system, and has always incurred the full city water rates since the building’s water supply was not sent through the University’s distribution system.

Lauren Hildebrand, the director of utilities for the City of Charlottesville, said that records from the agreement did not provide details as to why the agreement was made originally. 

“The agreements did not have any background, which is unfortunate because it would have been helpful to understand why the rates were established in the first place,” Hildebrand said.

The agreement also leased the Observatory Hill Water Treatment Plant to the RWSA, and allowed the University to pay only a portion of the sewer water collection retail rate, granted it came first from a University-owned collection system. 

After the City had its water and waste system reviewed by the Municipal and Financial Services Group of Annapolis, Md. this past May, it was recommended the deal be terminated as they found that the University was paying less than what it cost to provide the school with water. 

Hildebrand and the City’s Director of Finance Chris Cullinan cited the City’s and University’s general decrease in water use as one reason the University agreement needed to be adjusted, along with the general increases in water and sewer rates and service charges in the City. With less water use and therefore lower customer water bills, the city has less money coming in to support the water system’s infrastructure.

“While that’s great for the environment, it creates some financial issues for the facility,” Cullinan said at the June 4 City Council meeting. 

At the same meeting, Charlottesville Mayor Nikuyah Walker expressed that she felt the plan did not move quickly enough, although this did not lead to any change in the new agreement. 

“For the most part I’m in agreement with [the plan],” Walker said. “I would have liked U.Va.’s terms to be a little different than a three year, so maybe next year? Be at 100 percent. Just to throw that out there.”

University Spokesperson Anthon de Bruyn said in an email that it was time for an updated rate agreement. 

“The University and the City have been operating since 1981 under an agreement that governs water rates. It was appropriate to revisit that agreement,” de Bruyn said.

The City’s lease for the Observatory Hill Water Treatment Plant is currently being renegotiated. The Observatory Hill plant is the closest to Grounds, and is one of five plants that send water out to the City’s distribution system after receiving the water from local reservoirs, such as the Ragged Mountain Reservoir. Since RWSA did not exist when the City first made the lease for the Plant, RWSA is not mentioned in the lease. 

Hildebrand said that the old lease was coming to an end, so a new one was being drawn up, this time under the name of RWSA. RWSA has already spent $5 million in improvements to the plant in general upkeep, and has plans for another upgrade that could cost around $20 million. An increase to the plant’s water capacity is also being considered allowing for it to create a higher volume of treated water.

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