THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, May 18, 1995 TAG: 9505180746
SECTION: LOCAL PAGE: B3 EDITION: FINAL
SOURCE: BY KAREN WEINTRAUB, STAFF WRITER
LENGTH: Medium: 90 lines
Virginia Beach negotiators said Wednesday that it would be cheaper for them to suffer through five more years of legal wrangling with North Carolina than to pay Norfolk's price for cooperation on the Lake Gaston settlement.
Although the two Beach City Council members and two city administrators would not reveal that price, one said it was hundreds of millions of dollars more than what the Beach was willing to pay Norfolk for negotiating away its right to sell surplus water to the Peninsula.
Virginia Beach and North Carolina signed an agreement three weeks ago to end their 12 1/2-year war over the proposed Lake Gaston pipeline. The settlement will not become final, however, until both state legislatures and the Congress approve the transfer of water, and Norfolk agrees never to sell its surplus outside South Hampton Roads and Northeastern North Carolina.
Norfolk's reluctance to go along with that restriction is threatening to derail the settlement process. Without Norfolk's support, officials of both cities say, there will be no settlement.
North Carolina will not agree to end its legal battles against the pipeline without the assurance that water from across Virginia's border will not be used to create profits for South Hampton Roads' cities.
Beach officials said they have offered to continue buying 15 million gallons of water a day from Norfolk over the next 40 years, even if Beach residents don't need it.
In negotiations over the last few weeks, Virginia Beach leaders have also offered to compensate Norfolk if that city cannot find buyers for the other 15 million gallons of water a day the Beach now buys.
Virginia Beach now pays about $6 million a year for about 30 million gallons of Norfolk water per day.
But Beach officials said Norfolk returned their overtures with a ``shocking'' counterproposal they cannot afford to meet.
At the crux of the dispute is how much Virginia Beach is willing to pay to settle the Lake Gaston dispute, and how much Norfolk can get for agreeing to limit the geographic market for its most lucrative natural resource.
``The surplus which Norfolk will have when Lake Gaston arrives is an asset which we always intended to market,'' Norfolk Mayor Paul D. Fraim said. ``The fact that our customer base is being limited is what we're trying to seek compensation for, and I believe the Beach believes we are entitled to some compensation.''
Neither Fraim nor Beach officials would detail negotiations but the two sides are ``hundreds of millions of dollars apart,'' Beach City Council member Louis R. Jones, who helped negotiate the settlement, said Wednesday.
``We think that their response to our offer is so out of the realm of reality that it isn't even worth talking about,'' Jones said, adding that the Beach's response to Norfolk's counteroffer will be delivered today.
Jones and other Beach officials argue that Norfolk's water market was not very large to begin with, so the city is not losing much by agreeing to limit the area where it can sell water. The southern half of the Peninsula - including Newport News, Hampton and the southern portions of James City and York counties - has told Norfolk it doesn't want to buy water.
``Newport News has no interest or intention of purchasing surplus water from Norfolk, clearly and simply,'' said Brian L. Ramaley, director of the Newport News Waterworks, the Peninsula's regional water authority. ``We have considered (getting our) water supply from Southside sources and have dismissed that as a viable or feasible alternative. We are now proceeding with development of our own long-term supply project.''
Beach City Manager James K. Spore said Norfolk is also placing an unreasonable value on its water. Norfolk wants as much per gallon in the future as Virginia Beach is paying now, when it has no water source of its own and is in a desperate situation.
The price per gallon should come down as the regional supply of water increases when the pipeline comes on line, Spore said.
Fraim said he believes the price should go up rather than down because the supply of water will never expand as much again.
``We're not building any more systems,'' Fraim said.
Fraim, who said he has long supported the Lake Gaston pipeline, said he expects to be able to reach an agreement with Virginia Beach.
``Everyone needs to take a step back, take a deep breath and keep working,'' Fraim said.
The two sides have less than a week to reach a compromise, Jones said, to allow enough time for the Virginia General Assembly to be called into special session before the 60-day settlement deadline June 27.
If Norfolk doesn't dramatically lower its asking price soon, Jones and Spore said the Beach would be better off backing out of the settlement and facing another round of litigation with North Carolina.
``A four- to five-year delay in the finalization of the Lake Gaston project is what's on the table,'' Jones said.
KEYWORDS: LAKE GASTON WATER SUPPLY PLAN TIDEWATER by CNB