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BY STEPHEN H. COWLES/CONTRIBUTING WRITER
Playback58@gmail.com

You asked: Is the new Courtland sewer treatment plant the cause of the county’s budget problems for next fiscal year?

COURTLAND—“The short answer,” said Southampton County Administrator Michael Johnson, “is that the debt service associated with the Courtland Wastewater Treatment Plant is certainly not the sole cause, or even the primary cause, of our fiscal challenges, but is only one of a multitude of factors that places us in the position we’re in.”

Johnson said the total proposed budget of $57.5 million “is only 0.7 percent more than the current fiscal year 2012 budget.”

To better understand why the county will pay $1.8 million in sewage-related debt service next year, Johnson said, the reasons for the treatment facility’s construction in 2008 need to be explained.

As far back as winter 2006, the Board of Supervisors arranged for a major study to look at the former plant’s condition and projects already under development, to define the area the plant would serve based on a Comprehensive Plan being created at the time, and to “develop future wastewater flow projections based on the future land use map in the updated Comprehensive Plan.”

Further, the research would identify “enhancements needed for future demands” and create a phased capital spending plan for required improvements.

In spring 2007, the Comprehensive Plan stated the county “is anticipated to grow substantially in the coming years. Growth trends show that an additional 4,600 people may call the County home in the next 20 years. This projection requires an additional 1,818 homes to be built.”

“However, the Courtland Wastewater Treatment Plant is expected to soon reach capacity and will require expansion to accommodate future growth,” the plan noted.

Researchers found the following:

n The plant built in 1980 hadn’t had major upgrades in nearly 30 years

n Treatment units were close to the end of their use

n Mechanical and electrical equipment were noticeably deteriorated

No less important, Johnson said, was that the plant then had a capacity of .303 millions of gallons of water per day. The Department of Environmental Quality already had established limits, such as “when a plant reaches 85 percent of capacity (0.258 MGD), a community must submit plans for expansion; when the plant reaches 95 percent of capacity (0.288 MGD), a community must begin construction of new facilities. In 2006, the plant averaged 0.240 MGD or 79 percent of its design capacity. By 2008, the average had crept up to 0.257 MGD, the point at which plans must be prepared and submitted to DEQ.”

In addition, other projects such as Riverdale Elementary School and Southampton Terminals LLC that would be connected to the system pushed the daily use to 0.311 MGD, Johnson said. Other projects proposed in 2008 would ultimately raise the number to 0.675 MGD, though most were put on hold because of the national recession.

In February 2008, a report was made to the DEQ for a replacement facility that would have a 1.25 MGD and could be expanded to 3.75 MGD.

To pay for it, Johnson said, the suggested plan was to increase the real estate tax rate from 72 cents per $100 of assessed value to 79 cents over the course of three fiscal years.

Also that summer, a contract was awarded to build a 1.8 MGD wastewater treatment plant at a cost of $28.9 million.

To finance the project, the board voted that November to obtain a loan from the Virginia Resources Authority. The bond was $32 million with an interest rate of 5.4444 percent and debt service ranging from $1.7 million to $2.4 million annually. For next fiscal year, the amount is about $1.8 million.

“So, clearly the project has had a significant economic impact on the county budget, but it was planned for and should be no surprise to anyone,” said Johnson.

He also stressed a major factor in the fiscal 2013 budget: reduction of revenue.

In short, the county is getting $2 million less next fiscal year from federal and state sources. Garbage disposal is projected to cost more than $1.1 million in fiscal 2013, and federal and state mandates for the Line of Duty Act and Virginia Retirement System are sizeable, Johnson said. The cost of the latter, he said, has risen from 6 percent of payroll to almost 14.5 percent in fiscal 2013.

Johnson cited two other important line items in the proposed budget: Operating Efficiencies and Capitalized Interest. The former, Johnson explained, is money that “must come from the unappropriated reserve (revenues that come in higher or expenses that come in lower) if efficiencies don’t materialize during the year. That’s roughly $1 million less than last year, and it’s been reduced in order to maintain a healthy fund balance.”

“The last of the capitalized interest was utilized in FY 2012, and we’re now on our own to make principal and interest payments. That’s a loss of $823,000 in revenue that’s no longer available.”