Utility rate increases are creating steam, especially for residents in the Tuckahoe Creek Service District.
On September 1, the board of supervisors will conduct a public hearing to discuss raising connection fees in the TCSD from $7,000 to $10,000 and increasing usage rates by 12 percent. The other utility districts, James River and General County, are scheduled for a five-percent rate increase.
Rebecca Dickson, county administrator, said that Goochland’s water and sewer rates are not generating enough revenue at current levels to pay the $64 million debt service to the Virginia Resource Authority. Dickson also said that Goochland owes money to the city of Richmond and Henrico County for water and sewer upgrades–part of Goochland’s agreement with the localities.
“At the rate we’re going, we will have only paid back about half of what we owe by the end of the agreement [with Richmond],” Dickson said at the August 4 meeting.
Scott Gaeser, chairman of the TCSD advisory committee, said that the rate increases could help in the short-term, but that the county needs a big picture solution.
“We’d have to double the [utility] rate increases every year to keep up with the debt service payment,” Gaeser said.
According to a report provided by Lane Ramsey, former county administrator, the county’s debt service payment increases each year and the county will be operating in the red by 2016.
In addition to the rate increases, Ramsey recommended a $3 million loan from the general fund to the utility fund to help pay back the debt. However, even with the loan the utility fund would still have a negative fund balance by 2019.
Gaeser said that the only solution would be for the county to absorb the TCSD and consolidate the various utilities systems.
“The revenue [from TCSD] benefits the whole county,” Gaeser said. “We have to be proactive and encourage development if we want to get past this.”
Supervisors Ned Creasey and Rudy Butler agreed with Gaeser, noting that the structure of the three utilities systems is complex and confusing because of billing procedures, interconnected systems and past mismanagement, and the most efficient solution would be to consolidate the systems.
Gaeser was also concerned that real estate assessments were too high, and that values needed to be reduced to 2005 levels to more accurately reflect the market.
“Most [Goochland] properties are over-assessed 20 to 40 percent,” Gaeser said.
According to the county assessor’s office, TCSD home values have increased an average of 30 percent a year for four years–double the increase of other county properties. Since 2005, TCSD properties have increased in value by 118 percent.
Gaeser said that he believes the county is over-assessing the properties to create a higher tax base to pay the VRA-issued bonds.
“That’s simply not true,” said Glenn Branham, county assessor. “The assessments are based on sales within the neighborhood. If you look at the sales, the assessments are defended.”
Branham said that the difference in assessed value between the county and the TCSD is due to new construction.
“We’ve had a couple hundred homes built since 2005,” Branham said of the subdivision Kinloch, which is part of the TCSD.
Kinloch had nine properties for sale ranging in price from $625,000 to $2 million as of press time, and Branham noted that construction projects within the TCSD tend to be more expensive than properties outside the district.
Branham reported to the TCSD advisory committee that he had never received instructions from any county official to artificially inflate real estate values
Ramsey’s report projected a 10-percent decrease in the tax base due to the economic recession, and that values will increase after three yearsof no growth.
Gaeser insisted that the values would still be too high, and the county had not devised a plan that would be viable for the long-term.
“We’re looking into all available options,” Dickson said regarding solutions to the lack of revenue and loan repayments. “We will get it under control. It just takes time.”
The September 1 public hearing will be held at 7 p.m. at the administration building.
Originally published in The Central Virginian