City to propose surcharge model for new customers to finance Route 33 West utility extension

BUCKHANNON – City officials this week plan to propose a surcharge model to finance installation of sanitary sewer service along U.S. Route 33 from corporate limits to the Buckhannon Mountain area.

By adding a monthly surcharge for those who want service in the expansion area, the city could finance the project without raising rates for current utility customers. An Upshur County Commission meeting is slated for Thursday, at which the commission is expected to make a decision regarding installation of utilities in the area.

At an Oct. 4 commission meeting, the decision was tabled until Oct. 31 after a motion to reassign the service area from the City of Buckhannon to Tennerton Public Service District failed.

According to previous stories, the City of Buckhannon and the Tennerton Public Service District have each presented plans for extending utility service along Route 33 West. The Tennerton PSD secured the engineering firm, The Thrasher Group, to design the line extension on its behalf.

The City of Buckhannon has pointed out that the territory is its to develop based on having received a Certificate of Convenience and Necessity that the state Public Service Commission granted in 1996.

At Buckhannon City Council’s meeting Oct. 17, Mayor David McCauley said the surcharge model would have to be approved by the West Virginia Public Service Commission. However, if it’s approved, that mechanism would enable the City of Buckhannon to begin construction on sanitary sewer service in March 2020 for commercial customers.

The surcharge would only apply to new customers who opt for service in the expansion area. If you already have city water or sewer service, your bill would remain unchanged.

The mayor said commercial customers on both the north and south side of Route 33 West are seeking sanitary sewer service – and some developers on the south side of Route 33 want water utility service.

McCauley reported the city’s Sanitary Board had, earlier that day, approved a surcharge model that would allow the city to undertake the extension “almost immediately.”

“We believe that by this point next year, the sewer work on the north side of U.S. Route 33 would be completed,” he said. “We plan on being very aggressive and zealous in pursuing that project. We’re going to do it in a more affordable and efficient way than was being proposed by the Tennerton Public Service District.”

“Essentially, it’s our position that this is largely a moot point, that we are going to develop this project, it’s in our territory,” the mayor added. “We have a plan ready to go.”

To finance the project, McCauley said a surcharge would be added on top of the regular utility bill for customers served by the project. Essentially, the city would front the costs, and those want water or sewer service would then gradually contribute over a multi-year period.

“Another way to skin the cat, and we did this 25 years ago, out on the Brushy Fork Road, is in addition to your regular monthly utility bill, you would have to pay a surcharge – an extra amount – that we would finance … (possibly) over a 20-year period,” he said. “We don’t need the permission of the county commission or of the folks who are in this territory to effect this surcharge. We would need to get the approval of the West Virginia Public Service Commission, which has generally smiled on the way the City of Buckhannon conducts business.”

“We think that’s the best way to proceed and that’s what we’re going to advance on Oct. 31 and that’s what we’ll continue to have advance until we have a successful project,” McCauley added.

The surcharge was proposed after commercial property owners rejected two original financing options, McCauley said.

At the Oct. 4 commission meeting, city officials presented commercial sanitary sewer customers with two options to finance the approximately $300,000 project – either chip in a total of $200,000 with the Sanitary Board contributing the remaining $100,000 or agree to annexation and the city’s general fund would pay for the work.

Property owners said they didn’t want to be annexed by the city and while some commercial customers were willing to contribute to finance the $300,000 project, others said they weren’t, McCauley said.

“The other model that I offered up … was, if you come into our corporate limits and participate like all the other businesses and residents do in Buckhannon, I would advocate to the city council that the general fund undertake these utility improvements, and we’d do a bond issuance or some other mechanism to come up with that million and million-and-a-half dollars to deliver water and sewer to that area,” McCauley said.

He said the city is unable to pay for the extension out of the general fund unless the area is annexed; that’s because the city is comprised of five separate enterprise funds, and statutorily, the Sanitary Board is a distinct entity from the general fund even though it operates as an “arm of the city.”

“They are in fact, arms of the city but they are separate statutory corporations, so they can do things outside of the corporate limits that the general fund cannot do,” McCauley said.

Councilman Robbie Skinner said even if the project was awarded to Tennerton PSD, customers’ rates would likely go up so the public service district could afford to pay for the extension.

“I think it also needs to be noted that if we were not the players in this particular project, all of the residents and businesses that are paying customers through Tennerton PSD … their bills would go up each month, even though they had nothing to do with this project,” Skinner said.

City attorney Tom O’Neill said Monday the city is opposed to Tennerton PSD taking over the area, in part, because the public service district has “continuing substantial indebtedness” to the Sanitary Board.

City finance and administrative director Amberle Jenkins said Monday Tennerton PSD currently owes the city $118,000, an amount that includes its current bill of $27,000.

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