THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, November 5, 1995 TAG: 9511030196
SECTION: CHESAPEAKE CLIPPER PAGE: 06 EDITION: FINAL
TYPE: Another View
SOURCE: BY WILLIAM E. WARD AND W. JOE NEWMAN
LENGTH: Medium: 70 lines
Chesapeake has a very important issue on the Nov. 7 ballot which will affect the cost of public utility improvements - the 1995 Utility Bond Referendum. This referendum does not seek approval of utility improvements. It will decide the funding method for utility projects which will be built. Passage of the referendum will save utility customers about $6 million.
The city issues bonds as a way to finance capital improvements. This allows everyone to enjoy the benefit as the debt is paid off. There is a choice of two financial methods to pay for utility projects: general obligation bonds and revenue bonds. General obligation bonds require a referendum of support from the citizens and have a lower interest rate. The full faith of the city is behind the bonds. The cost of utility projects funded by general obligation bonds is estimated to be $72.5 million. Revenue bonds do not require a referendum, but have a higher interest rate and require a reserve debt service. Projects funded by revenue bonds are expected to cost $78 million. General obligation bonds, therefore, will save utility customers about $6 million.
Some citizens have asked why the utility projects are needed and exactly what improvements the bonds will finance. Some of the improvements are mandated, and some are needed to provide for the future. In answer to the ``why,'' the public utility must continue to meet the U.S. Environmental Protection Agency's drinking water standards, which are becoming more and more strict. The largest amount, $61.5 million, is for water treatment plant improvements, which include a desalination facility using a reverse osmosis membrane system, an effective method to remain in compliance with the Safe Drinking Water Act and remove salt during salt water intrusion episodes.
Another answer to the ``why'' is to provide adequate water for future needs of the city. There are two projects of this type: one is $2.9 million for Lake Gaston resources and the other is $5.6 million for Lake Meade improvements.
Finally, to provide adequate fire protection, $2 million will be used for the Deep Creek water storage tank. The remainder, $500,000, is for capital financing issuance expense. These projects are part of the long-range planning for water resources. Each has been approved by the City Council as necessary to remain in compliance with EPA regulations and provide for future needs of the city.
Regardless of the outcome of the 1995 Utility Bond Referendum, these projects must be built. The referendum will decide how much the financing of these projects will cost.
Since the Public Utilities Department is supported by customer fees, not taxes, fiscal health of the department required a rate increase beginning Oct. 1. This increase was based on the general obligation bonds being issued. Utility customers received a notification card with their most recent bill with information about the need to increase rates for services. If the utility bond referendum is defeated, the rates will need to increase again. It is projected that bills would have to increase by $3 on the average bimonthly bill. So, in order to save customers this additional increase, general obligation bonds are the preferred choice.
Drinking water resources are a vital issue in Chesapeake. Throughout the city's history drinking water has remained critical to the prosperity of the city. Citizens will have an opportunity on the Nov. 7 ballot to speak with a strong voice to approve the best way of paying for continuing improvement to the utility system.
We urge citizens to cast their votes based on this factual information. MEMO: Mr. Ward of Waterside Drive is mayor of Chesapeake and Mr. Newman of
Forest Road is a member of the City Council.
by CNB