While it may seem somewhat disturbing to watch Cape Charles Town Manager John Hozey diligently tie his own rope by fostering the sale of the town’s water and wastewater utilities, he is actually just following precedent established by at least four previous town managers. The strange case of the town’s water narrative, its water wars with Bay Creek, and the even stranger thing, the dark and looming Annexation Agreement, is a hill that town managers have an affinity for dying on…and the town council always seems ready and anxious to give them enough rope to do so. Let’s look back.
On June 24, 1991, the Town of Cape Charles awarded bids to improve the town water system. The total cost of the project was $3,166,000, and was undertaken to provide metered water, as well as wastewater connections to what is now Bay Creek. $126,000 in local funds was used for the connections.
While the Town expanded the capacity, neither Brown and Root nor BayMark paid a dime for the work. At the time, Bay Creek and Marina Village had approximately 200 metered accounts and consumed approximately 20,000 gpd of metered water. Cape Charles believed that this water is from capacity created by Town’s expansion of the water treatment plant, and in their opinion, this water was “lent” to BayMark. Further, in 2005, then town manager Tim Krawczel in a letter to Richard Foster, owner of BayMark, told Mr. Foster that when BayMark expands the water treatment plant, all the capacity that was originally created should be returned to the Town. They held the belief that the Annexation Agreement firmly put Mr. Foster and BayMark on the hook for the cost of expanding the plants since the expansion is due to the development of Bay Creek and Marina Villages. From the letter:
Issue # 1: The Town and BayMark must agree on the responsibility for upgrading the water and sewer treatment plants to serve the Bay Creek and Marina Village developments, both in terms of water and treatment of wastewater treatment. The Annexation Agreements assign Brown & Root and its successors the responsibility for expanding the capacity of the water and sewer plants to serve the needs of its developments. When BayMark Construction, as the successor of Brown & Root, fulfills its responsibilities, the Town will reserve the capacity created by BayMark investments….As we know, the Town’s water treatment and wastewater treatment plants must be expanded to accommodate the development of Bay Creek and Marina Village. In the months ahead, we must agree fundamentally on our roles and responsibilities so that our attorneys and engineers can guide us through complex design, permitting and construction activities.
Over the years three, and if you count Bob Panek (who served as interim Town Manager), four Town Managers have tried to get Bay Creek to pay up for what the Town sees as its obligations to expand the wastewater plant. They point to this portion of the Annexation Agreement:
.. .(d) Brown & Root and the Town agree that any reservation of treatment
capacity in or from the Town’s water or wastewater systems, as provided in the
Prior Agreement, for the use of Accawmacke Plantation, shall be derived from the
capacity created by investments in the Town’s water and/or wastewater systems,
made by Brown and Root…
Expressing frustration, Town Manager Timothy Krawczel wrote: if Bay Creek and Marina Village were not adding new utility accounts and new service demands to the system, the Town would not
need to expand the capacity of either the water treatment plant or the wastewater treatment plant. All expansions in plant capacities made by Bay Mark Construction (except that which replenishes the capacity “lent” by the Town to Baymark to date) will be reserved for use of Bay Creek and Marina Village. The Town will use the capacity of the water and wastewater treatment plants that existed prior to the development of Bay Creek and Marina Village for existing and new utility accounts within the historic town.
In 2008, after receiving an invoice from the town for design work intended for the new wastewater plant, Bay Creek went on the offensive, offering a different interpretation of the Annexation Agreement. In what now appears to be a brilliant move, Foster notes that the Agreement states that Bay Creek is only on the hook if the plant needs to be expanded to meet the demand of the new planned unit development. That, in his opinion, had not occurred, and to the contrary, Cape Charles was replacing the plant because of the DEQ regulatory requirements (the old one was failing), not because of capacity issues.
This thumbing of the nose angered the town. Then town manager Joe Vacarro sent a letter in which he stated: Given this state of affairs, we appear to be headed towards litigation and perhaps downsizing the proposed Wastewater Treatment Plant due to funding challenges…
In late 2008, during Executive Session, Mr. Foster told the Cape Charles Town Council: I’ve been here seven years and only built 300 units. A (smaller) 250k might last another 13 years.
In an email to the town council, Bob Panek responded that the new plant would reach capacity in 2013.
Note: We are midway through 2022 and the plant seems to be playing the banjo and just rolling along. So much for the town’s paid expertise.
In the same email, Mr. Panek tells the council that the Annexation Agreement provides no firm trigger of when Bay Creek should pay once the planet “reaches design capacity”. He goes on to argue that Bay Creek should be paying upfront for when the plant will surely, in the future, reach design capacity.
At this stage, Bay Creek has only placed the town in check, but checkmate is just a few moves away–only Cape Charles doesn’t realize it.
Early in 2009, the town increases utility hookup charges from $10,047 to $20,000 effective July 1, 2009. It was a bold move Cotton, but not sure it paid off.
The town claimed that the charges were increased to fund the cost of providing future water and wastewater system capacity, but it seemed to be more of an attempted squeeze play against Bay Creek.
In an email responding to Paul Galloway’s question about future connection costs, then town manager Heather Arcos told him that future costs could not be determined, and that, “I don’t know what the cost of the connection will be by the time you develop those lots. The letter sent to all owners of unimproved lots and or buildings without connections is to make everyone aware of the increase of the residential connection charge and the time frame along with the capacity of the plant. As of right now, I don’t see the town approving any more subdivisions without an approved plan to expand plant capacity“.
In January of 2009, then Mayor Dora Sullivan fires off another letter to Foster. In this futile gesture, Sullivan threatens that if Bay Creek doesn’t pay up, the town will have no choice but to downsize its plans and build a much smaller plant, which town expert Bob Panek confirms will reach capacity in just a couple of years, at which point an expensive ‘upgrade’ will have to take place.
Bay Creek calls their bluff and essentially tells Cape Charles to go pack sand. Checkmate.
However, the folly continues as Bay Creek CEO Oral Lambert pens a response to comments made by a citizen during Town Council’s Regular Meeting public comments section:
From: Oral Lambert
Sent: Wednesday, January 21, 2009 2:06 PM
Subject: Comments in 1/20/09 Publication
Please share this message with your readers.
To Readers of “All Around Our Town”
The edition of “All Around Our Town” that was distributed earlier yesterday, 1/20/09, publishes a copy of the remarks delivered by Ms. Karen Jolly Davis during a recent Town Council meeting. In those remarks the statement is made:
“Since July of 2006, the town has spent $7,169 in attorney’s fees, attempting to get Bay Creek to pay its share of the costs for a new, state mandated water and sewer system. By July 2008, Bay Creek owed the town $42,000 for their portion of the system’s design costs. That debt is still unpaid.”
We have purposefully not engaged in the public discussions regarding the recent actions before Town Council, however, the writer of the statements about Bay Creek is misinformed and may not have read the Annexation Agreement. We can not allow these allegations to go unnoticed. Bay Creek has a reputation for paying its debts and in fact has paid hundreds of thousands of dollars to the Town of Cape Charles during the course of our business with them as well as having spent hundreds of thousands of dollars toward construction of the water system. The $42,000 “debt” the writer refers to has not been paid because it is not owed by Bay Creek. The Town Council is fully aware of our position on this as we have met with the Council in executive session to discuss the Annexation Agreement and to explain our position…we haven’t paid it because we don’t owe it. We have not until now made a public statement on this out of respect to our continuing discussions and negotiations with the Town. The Waste Water treatment facility project that is the subject of the state mandate is a replacement project…the existing treatment plant is wearing out. It is outdated and it must be replaced…replaced even if Bay Creek was not here. This is a cost that all of us who live here in Cape Charles must share in. The cost of replacing the plant will be paid for by all users and of course Bay Creek will pay as a user of the system like everyone else.
Bay Creek does have an obligation to pay to expand the plant when it becomes necessary. The Annexation Agreement requires Bay Creek to participate in the cost of expanding the plant once the permitted capacity of the plant is reached. The Town’s consultant has made that point clear by his statements during public meetings. At a recent public briefing he stated and then repeated for emphasis his understanding that Bay Creek’s participation in expanding the plant is tied to “permitted capacity”. In other words, when the plant reaches its current permitted capacity Bay Creek must then pay to increase its size sufficient to cover the additional needed capacity that is generated by the Bay Creek development…new capacity over and above the existing permitted capacity. That has not happened and is not likely to happen for a number of years into the future. Bay Creek plans to fully meet its obligations under the terms of the Annexation Agreement when that time comes.
As an aside, we are also in disagreement with the current thinking that a 500,000 gallon a day treatment plant should be built before it is needed. This is a major, major cost to the taxpayers and utility users in this small town and we believe all options should be considered before incurring that debt…a debt that every utility user will be strapped with for many years to come. We are willing to pay our part but we have repeatedly taken the position that the utility expenditures must be based on a sound and affordable business plan to address what is needed and not so much what might be nice to have.
The writer goes on to suggest that Mr. Bennett may favor density because it benefits Bay Creek. I do not know how Mr. Bennett will vote when the time comes, but I believe I know him well enough to say that when the time comes for him to vote his decision will be based on what he believes is in the best interest of the community…just as I am sure was the basis of Ms. Davis’ decisions when she voted to approve land use decisions that increased densities as a member of the Planning Commission.
If I may say, on a personal note, for the good of our community and the potential it holds for our future I encourage all who have gotten emotionally caught up in what has turned into a “bitter” debate to slow down and rethink what we are all about. We strengthen one another by sharing differing opinions. There is always room for disagreement, healthy debate and even dissent, but I see evidence of too much ugliness and too little faith in one another. It is not serving our community well and I believe it is disrupting long and deep relationships.
C. Oral Lambert, Jr.
Chief Executive Officer
Bay Creek Resort & Club
Fast forward to now, the plant does not appear to be reaching capacity, and even if the plant needs to be expanded, can it be proven that it needs to happen because of Bay Creek’s development? Foster and Bay Creek argued, successfully, that there are other forces that are driving the plant towards capacity. It could be argued that new stores, hotels, and eateries, as well as the massive influx of tourists, are just as culpable. Historically, Bay Creek has been as slippery as an Alabama catfish, and this will probably never change. Who could blame them? The Town of Cape Charles has shown itself to be unequipped to do much more than divest itself of premium assets while diligently working to make a once small and quirky little village as unlivable as possible.
Loraine Huchler says
In a town council meeting, the town manager said that the town would be able to keep the funds escrowed for the expansion of the plant. There’s no information about whether Preserve Communities (formerly Baymark, Bay Creek) has been escrowing funds to support the expansion. The town has not even forecast the date that each of the plants (water and wastewater) will reach capacity (based on projections of future new water and sewer connections). The 10-year NewGen forecast from the council work session on Thursday, May 26 shows two sources of revenue from developers (2024 & 2028). It’s the middle of 2022 – how could that 2024 projection of a housing developer be real? And what’s the reason for the developer to pay revenues? This can’t just be permit fees….
Finally, the town council meets on Thursday, June 9 to discuss the budget. However, that budget assumes that the town does not sell the water and wastewater plant. Where’s the budget for the scenario if the town sells the plant? The citizens deserve to know the impact of selling these plants on the budget.
P.S. Late breaking news. Virginia American Water, the proposed purchaser of these plants, requested a rate increase of 28% for 2022. The State Corporation Committee (SCC) tentatively approved a 24% increase in water and waterwater rates for 2022. If Cape Charles sells their plants to VAW, the rates WILL increase during the first three years at a lower rate, but after 3 years, the rates will be “consolidated” – and yes, Cape Charles’ rates could increase by double digits – VAW has now set a new record of 24%! There is NO CREDIBLE DATA to support the town manager’s assertion that rates will increase at a greater rate if Cape Charles keeps the plant! In fact, if you understood the concept of rate consolidation, you would know that Cape Charles, with a relatively new plant and a small district (~1500 rate payers) will be subsidizing all of the other districts, especially high-density suburban districts like Alexandria (who has been unsuccessful in their legal challenge to this rate increase).
Don’t sell the water
Paul Plante says
Frankly, I am surprised that no one has appeared to have filed a Freedom of Information request with Cape Charles for any and all “public records” as that term is defined by § 2.2-3701 of the Virginia Freedom of Information Act, which makes it clear that the term “public records” means all writings and recordings that consist of letters, words or numbers, or their equivalent, set down by handwriting, typewriting, printing, photostatting, photography, magnetic impulse, optical or magneto-optical form, mechanical or electronic recording or other form of data compilation, however stored, and regardless of physical form or characteristics, prepared or owned by, or in the possession of a public body or its officers, employees or agents in the transaction of public business,” related to the sale of the water works from a year before the date the potential sale was first made public to the present time, so as to be able to determine just exactly what is really going on here.
§ 2.2-3700(B) of the Virginia Freedom of Information Act states that by enacting this chapter, the General Assembly ensures the people of the Commonwealth ready access to public records in the custody of a public body or its officers and employees, and free entry to meetings of public bodies wherein the business of the people is being conducted.
The affairs of government are not intended to be conducted in an atmosphere of secrecy since at all times the public is to be the beneficiary of any action taken at any level of government.
Unless a public body or its officers or employees specifically elect to exercise an exemption provided by this chapter or any other statute, every meeting shall be open to the public and all public records shall be available for inspection and copying upon request.
All public records and meetings shall be presumed open, unless an exemption is properly invoked.
The provisions of this chapter shall be liberally construed to promote an increased awareness by all persons of governmental activities and afford every opportunity to citizens to witness the operations of government.
Any exemption from public access to records or meetings shall be narrowly construed and no record shall be withheld or meeting closed to the public unless specifically made exempt pursuant to this chapter or other specific provision of law.
This chapter shall not be construed to discourage the free discussion by government officials or employees of public matters with the citizens of the Commonwealth.
All public bodies and their officers and employees shall make reasonable efforts to reach an agreement with a requester concerning the production of the records requested.
Any ordinance adopted by a local governing body that conflicts with the provisions of this chapter shall be void.
Paul Plante says
I should add that the FOIL request should say “an opportunity to view” so you are not paid to pay an exorbitant copying charge for records you don’t want or need.
And consider that the most important records are those that should be there, but aren’t.