Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, March 17, 1992                   TAG: 9203170317
SECTION: VIRGINIA                    PAGE: B3   EDITION: METRO 
SOURCE: JOEL TURNER and MARK LAYMAN STAFF WRITERS
DATELINE:                                 LENGTH: Medium

WATER BILL MAY GO TO COURT COUNCIL AUTHORIZES SUIT AGAINST COUNTY

City Council voted Monday to authorize officials to go to court if necessary to collect payment for the bill that was sent to the county in October. City officials said they have made repeated requests to county officials to pay the bill and have offered them opportunities to discuss their reasons for refusing to pay.

But they said that the county has not provided a reasonable explanation nor paid the bill.

The city sells about 2.5 million gallons of water to the county daily, which the county then resells to its residents.

The dispute involves the issue of whether the county should have to help pay for improvements to the city's water system, such as those made at the Falling Creek water filtration plant in the past year.

City officials contend that the cost for upgrading and expanding filtration plants, replacing water transmission lines and other large improvement projects should be included in the calculations for determining the rate. They said the latest bill was computed the same way as earlier bills.

At the beginning of each fiscal year, city officials calculate the estimated cost for producing and treating the water that is to be sold to the county. Then they impose a 25 percent surcharge, under the terms of a 1979 contract.

At the end of each fiscal year, auditors determine the actual cost for supplying the water for the previous 12 months, including the 25 percent surcharge. If the actual costs are higher than the estimate, the city sends a year-end settlement bill to the county.

It is this bill that is in dispute. City officials said the bill is "based upon and authorized by the specific language in the contract and is consistent with prior billings which have been paid without protest by the county since 1979."

After learning that the city may go to court, County Administrator Elmer Hodge said the county takes its bills seriously and pays them on time. But in this case, he said, "the city has billed us for $320,000 that we feel should not be paid for by the citizens of Roanoke County, because they don't benefit from [the improvements]."

That $320,000 is in addition to the $300,000 a year in profit the city makes on water sales to the county through the 25 percent surcharge, he said.

"We feel it's totally unfair," Hodge said.

The Board of Supervisors discussed this in executive session six weeks ago and agreed unanimously not to pay the charges, he said.

Hodge said he had no inkling that council would decide Monday to take the county to court.

But, he said, "We had always known that litigation was one of the alternatives, as is arbitration and negotiation. I hope there's always room for negotiation and settlement before litigation."