City, County present shared services study

Published 12:04 pm Friday, March 4, 2016

The Shared Utility Services Study was presented to Franklin City Council, Southampton County Board of Supervisors and to the public on Wednesday night. The presentation was a summary of the preliminary engineering report done by Timmons Group.

The project management team, made up of representatives from Franklin and Southampton, created a presentation that highlighted the analysis done by the engineering group. Franklin City Manager Randy Martin and Southampton County Administrator Mike Johnson presented this to the public.

The summary began with the background of the study.

Timmons Group was hired by the City of Franklin and Southampton County to evaluate each locality’s respective utility systems and organizational structure in the context of three scenarios and make a recommendation on which scenario they feel is most advantageous.

The scenarios considered were:

1. Non-Shared Services (Status Quo) – each locality remains autonomous

2. Shared and Contracted Services – one locality becomes the customer of the other

3. Regionalized Scenario (i.e. a Regional Utility Authority) – merged utility systems with management and oversight assigned to a Board composed of appointed representatives from each locality

The ultimate goal for Franklin and Southampton is to create a win-win scenario for both localities regarding the costs, economic development and environmental stewardship. The goal for the costs is to reduce the subsidy from the general fund in support of the utility system for the County and to minimize future cost increases to utility rate payers for the City.

The Status Quo scenario involved the city continuing to operate its Waste Water Treatment Plant until they were “triggered” to act because of change in Water Quality Standards, the water flow met or exceeded 95 percent of the design capacity for three consecutive months, flood damage required major modifications or the capacity needed for economic development became necessary, as the City already has limited opportunity. It was stated that once one of these triggers happen, the City would have to build a new 3 MGD plant out of the floodplain – which would be a three-to-five year process.

If the City of Franklin was to go with the Status Quo Scenario, the eventual construction of the new 3MGD WWTP would cost $62 million in the year 2020 or $70.1 million in the year 2025, depending on when the construction took place. Monthly water and sewer rates would double from $63 to $126 – an increase of $756 annually per household.

If Southampton County was to go with the Status Quo Scenario, they would continue to subsidize public utilities by $2.9 million annually. The pros for the Status Quo Scenario are that each community maintains control of its respective assets and rates and that no major capital outlay is required until a “trigger” forces action by the City. The cons are that it is the most expensive option to move forward once triggered, the county would continue to subsidize debt and operations with tax revenue and the option is not a win-win for either locality.

The Contracted Services scenario has the City of Franklin operating as a customer of Southampton County. The capital cost for Franklin with this scenario ranges from $28.2 million to $62.2 million. The impact on operations and maintenance was deemed negligible because the potential saving from efficiencies of waste water treatment consolidation is offset by increased pumping costs.

The pros for the Contracted Services scenario are that each community maintains control of its respective assets and that it is quicker than the status quo, but not the best long term solution to address one or more “triggers.” The cons are that there is limited flexibility for long-term planning and execution, the City has no formal representation in decision making, each community maintains responsibility for its assets and operations, it is a limited win for both localities and the relationship between the two localities remains subject to the political process.

Johnson said that the relationship between the City of Franklin and Southampton County right now is better than it has been in 30 years, but he doesn’t know what the future looks like, as the political process for both localities could change things.

The Regional Authority scenario involves Franklin and Southampton becoming one public service authority. The capital costs for authority customers ranges from $20 million to $53.9 million dollars.

The impact on operations and maintenance for this scenario is deemed negligible as the potential saving from efficiencies of waste water treatment consolidation is offset by the increased pumping costs. However, it was stated that a public service authority can own, operate and maintain public utility systems; acquire, purchase or lease property; issue debt utilizing bonds; and fix, charge and collect fees. The pros to the Regional Authority scenario are that both localities have equal representation, the decisions are based solely on business factors, it provides the greatest flexibility in planning and executing technicals solutions to meet “triggers,” it provides the lowest cost long term alternatives for both localities, it provides a great competitive advantage for regional economic development, it provides great opportunity to obtain grant fund for capital improvements based on regional collaboration and it provides the best win-win scenario for both localities. The cons are that there is loss of control by the governing bodies, it is more difficult to establish and once the assets are conveyed, it is very hard to reverse them.

Once all of these scenarios were presented at the meeting, the management team’s recommendations were said.

First they recommend that Franklin and Southampton have a Formal Asset Valuation completed by an independent third party that hasn’t worked for either locality.

Second they recommend that both localities set up a Public Service Authority (PSA) in accordance with the Virginia Walter and Waste Authorities Act with an even number of representatives from the City and County.

Then they recommend that the localities develop a financial framework for an equitable consolidation of utility systems and assets. All parties involved are asking that the public give their feedback on the study, the scenarios and the recommendations.

Franklin City Mayor Raystine Johnson-Ashburn and Southampton County Board of Supervisors Chairman Dallas Jones both stood up at the end and said that nothing is set in stone right now, as this is a preliminary stage showing options to the localities. They want the public to review the study and let them know what they think of it.

The public will have access to detailed study within the next few days. It will be posted on the city’s and county’s websites, as well as in public places such as the libraries. Martin and Johnson will also be repeating this presentation to civic groups.