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

DATE: THURSDAY, January 12, 1995                   TAG: 9501130023
SECTION: EDITORIAL                    PAGE: A14   EDITION: METRO 
SOURCE: DIANE D. HYATT
DATELINE:                                 LENGTH: Medium

PUT AVAILABLE RESOURCES TO GOOD USE

A DEC. 8 letter to the editor by John Bostian (``Why the higher water rates?'') raised a very good question concerning recent action by Roanoke County to lend $2.5 million from the water fund to the sewer fund. He asked why this money couldn't be used instead to prevent a planned increase in water rates.

In 1982, county citizens were facing the escalating problem of failing water wells, poor water quality and a projected water shortage for the Roanoke Valley. To address these problems, the county decided to proceed with the Spring Hollow project, which will provide a sufficient water supply for the next 50 years.

In October 1991, the county sold $75 million in bonds to finance the Spring Hollow project, which includes the water reservoir, treatment plant and distribution system. The county was able to realize $6 million of savings due to very favorable construction bids on the reservoir, and by designing the treatment plant in-house under the leadership of our late utility director, Cliff Craig. The county chose to use $3.5 million of these savings to further expand water lines in the northern part of the county. The remaining $2.5 million was loaned to the sewer fund for much-needed sewer repairs.

The $6 million savings was part of the 1991 borrowing and, as such, will be repaid over the next 30 years. To use this money to offset rates for a one- or two-year period would be similar to using a home-equity loan to purchase groceries. This savings is best used to purchase capital construction for the county, construction that has a 30-year useful life.

The $2.5 million is for sewer capital repairs and improvements that are needed immediately. Additional borrowing would have been necessary if funds weren't available in the water fund. Another borrowing would have incurred additional expense and higher interest rates, which would have had to be passed on to sewer customers. This would have been reflected in a higher total utility bill for most county utility customers who receive both water and sewer service.

In addition, this loan will be repaid to the water fund in annual installments over the next 20 years. This will provide an annual revenue source for the water fund, which will offset the need for water-rate increases beyond the year 1995.

This loan of funds from the water fund to the sewer fund was carefully considered and planned to make the best use of available resources, and to minimize the impact on county citizens.

While county water rates may be high compared to surrounding localities, a recent statewide survey shows that our rates are average for the state. We're well aware of the impact of our rate structure, and are attempting to keep it as low as possible while addressing capital-construction needs of the county.

Diane D. Hyatt is director of finance for Roanoke County.

by CNB