THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, July 7, 1995 TAG: 9507040088
SECTION: VIRGINIA BEACH BEACON PAGE: 06 EDITION: FINAL
TYPE: Letter
LENGTH: Short : 50 lines
May 25, 1995
To: Harvey Chappell Jr.
Christian, Barton, Epps, Brent & Chappell
From: John F. Kay Jr.
Mays & Valentine
Following our meeting, the Virginia Beach Water Task Force met and considered carefully the proposed modification but concluded that it was unable to recommend it to City Council. Though the reduction of the 1998 price from $.73 to $.60 per 1,000 gallons and the reduction of the term from approximately 20 years to 10 years would reduce the total cost from approximately $600 million to $82 million, the effect would be that Virginia Beach would be required to purchase water during the initial years that Gaston is on line when it will not need any additional water to meet its demand. And the agreement would not address Virginia Beach's problem of supplementing the Gaston supply when that supply may become insufficient to meet its demands.
May 30, 1995
To: John F. Kay
From: R. Harvey Chappell Jr.
. . . There are two different pieces to this problem. The first piece is the amount of Norfolk's (uncommitted) surplus water to which Virginia Beach now desires a commitment, the purchase price of the water and the term. . . . (T)he second must deal with the balance of Norfolk's uncommitted surplus, and it is here that Norfolk should be compensated for the reduction of its sales area. . . . (T)he larger the Virginia Beach commitment for the surplus the less impact of the sales-area reduction.
When these two pieces are considered in this light then it becomes quite evident how misleading has been the leakage to the press, whether $495 million or $600 million. For example, if Virginia Beach had committed to 15 mgd on the basis of a 60(CT) water charge plus a 5% inflator to 2030 (and Virginia Beach obviously wants the long-term commitment) this would account for one-half of either amount. As to the other half, Norfolk fully intended to sell this on the same terms which, if successful, would dispose of the balance, possibly with no further expenditure required by Virginia Beach.
KEYWORDS: MEMO by CNB