MAY 31, 1995 SPEC FORMAL SESSIOCity of Virginia Beach
MEYERA E OBERNDORF
MAYOR
MUNICIPAL CENTER
VIRGINIA BEACH, VIRGINIA 23456-9000
(804) 427-4581
FAX (804) 426-5669
May 30, 1995
HONORABLE MEMBERS OF CITY COUNCIL
In accordance with the City Charter, Section 3.06, the City Code, Section 2-21,
and by the authority vested in me as Mayor of the City, I hereby call a SPECIAL
FORMAL SESSION of the VIRGINIA BEACH CITY COUNCIL in the Council
Chamber, City Hall Building, on Wednesday. May 31, 1995, at 1 '00 P.M. re Lake Gaston
Settlement Agreement and related issues.
MEO/bh
Virginia Beach City Council Received Notice
Councilman John A. Baum
Councilman Linwood O. Branch, III
Councilman Robert K~ Dean
Councilman William W tlarrison, Jr.
Councilman Harold Heischober
Councilwoman Barbara M. Henley
Councilman Louis R. Jones
Councilwoman Nancy K Parker
Vice Mayor William D. Sessoms
Counctlwoman Louisa M. Strayhorn
Sincerely,
Meyera E. Oberndorf
Mayor
MINUTES
VIRGINIA BEACH CITY COUNCIL
Virginia Beach, Virginia
May 31, 1995
Mayor Meyera E. Oberndorf called to order the SPECIAL FORMAL SESSION of the VIRGINIA
BEACH CITY COUNCIL re Lake Gaston on Monday, May 31, 1995, at 1:00 P.M.
Council Members Present:
John A. Baum, Linwood O. Branch, III, Robert K. Dean, William W.
Harrison, Jr., , Harold Heischober, Louis R. Jones, Mayor Meyera E.
Oberndo~ Nancy K. Parker, Louisa M Strayhorn and William D.
Sessoms, Jr.
Council Members Absent:
Barbara M. Henley [ENTERED: 1:06 P.M.]
-2-
Item II. ITEM # 39267
The Mayor read the CALL TO SPECIAL FORMAL SESSION:
"HONORABLE MEMBERS OF CITY COUNCIL
In accordance with the City Charter, Section 3.06, the City Code,
Section 2-21, and by the authority vested in me as Mayor of the City, I
hereby call a SPECIAL FORMAL SESSION of the VIRGINIA
BEACH CITY COUNCIL in the Council Chamber, City Hall Building,
on Wednesday, May 31, 1995, at 1:00 P.M re Lake Gaston Settlement
Agreement and related issues.
Sincerely,
s/Meyera E. Oberndorf
Mayor"
May 31, 1995
-3-
Item 1E.
RECESS INTO
EXECUTIVE SESSION
ITEM # 39268
Mayor Meyera E. Oberndorf entertained a motion to permit City Council to conduct its EXECUTIVE
SESSION, pursuant to Section 2.1-344, Code of Virginia, as amended, for the following purpose:
LEGAL MATTERS: Consultation with legal counsel or briefings by staff
members, consultants, or attorneys pertaining to actual or probable
litigation, or other specific legal matters requesting the provision of legal
advice by counsel pursuant to Section 2.1-344(A)(7).
Lake Gaston Settlement Issues
Upon motion by Vice Mayor Sessorns, seconded by Council Lady Strayhorn, City Council voted to proceed
into EXECUTIVE SESSION (1:07 P.M.).
Voting: 11-0
Council Members Voting Aye:
John A. Baum, Linwood O. Branch, III, Robert IC Dean, William W.
Harrison, Jr., Harold Heischober, Barbara M Henley, Louis R. Jones,
Mayor Meyera E. Oberndorf, Nancy lC Parker, Vice Mayor William D.
Sessoms, Jr. and Louisa M Strayhorn
Council Members Voting Nay:
None
Council Members Absent:
None
May 31, 1995
-4-
ITEM # 39269
Mayor Oberndorf RECONVENED the FORMAL SESSION of the VIRGINIA BEACH CITY COUNCIL
in the Council Chamber, City Hall Building, on Wednesday, May 31, 1995, at 3:55 P.M.
Council Members Present:
John ,4. Baum, Linwood O. Branch, III, Robert K. Dean, William W..
Harrison, Jr., Harold Heischober, Barbara M. Henley, Louis R. Jones,
Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor William D.
Sessorns, Jr. and Louisa M. Strayhorn
Council Members Absent:
None
May 31, 1995
-5-
ITEM # 39270
Upon motion by Vice Mayor Sessoms, seconded by Council Lady Parker, City Council CERTIFIED THE
EXECUTIVE SESSION TO BE IN ACCORDANCE WITH THE MOTION TO RECESS.
Only public business matters lawfully exempted from Open Meeting
requirements by Virginia law were discussed in Executive Session to
which this certification resolution applies;
Only such public business matters as were identified in the motion
convening the Executive Session were heard, discussed or considered by
Virginia Beach City Council.
Voting: 11-0
Council Members Voting Aye:
John A. Baum, Linwood O. Branch, III, Robert K. Dean, William gE.
Harrison, Jr., Harold Heischober, Barbara M. Henley, Louis R. Jones,
Mayor Meyera E. Oberndo~ Nancy t¢ Parker, Vice Mayor William D.
Sessoms, Jr. and Louisa M. Strayhorn
Council Members Voting Nay:
None
Council Members Absent:
None
May 31, 1995
CERTIFICATION OF EXECUTIVE SESSION
VIRGINIA BEACH CITY COUNCIL
WHEREAS: The Virginia Beach City Council convened into EXECUTIVE SESSION,
pursuant to the affirmative vote recorded in ITEM # 39268 Page No. 3 and in accordance with
the provisions of The Virginia Freedom of Information Act; and,
WHEREAS: Section 2.1-344. of the Code of Virginia requires a certification by the
governing body that such Executive Session was conducted in conformity with Virginia law.
NOW, THEREFORE, BE IT RESOLVED: That the Virginia Beach City Council
hereby certifies that, to the best of each member's knowledge, (a) only public business matters
lawfully exempted from Open Meeting requirements by Virginia law were discussed in Executive
Session to which this certification resolution applies; and, (b) only such public business matters
as were identified in the motion convening this Executive Session were heard, discussed or
considered by Virginia Beach City Council.
Rtl'th Hodges Smith, CMC/AAE
City Clerk
May 31, 1995
-6-
Item VI.
RESOLUTION RE
LAKE GASTON SETTLEMENT AGREEMENT
ADD -ON
ITEM # 3~271
Upon motion by Councilman Jones, seconded by Council Lady Parker, City Council ADDED to the
Agenda:
Resolution pertaining to certain aspects of the Settlement between the
City of Virginia Beach and The State of North Carolina in the Lake
Gaston Water Supply Project matter.
Voting: 11-0
Council Members Voting Aye:
John A. Baum, Linwood O. Branch, III, Robert K. Dean, William W.
Harrison, Jr., Harold Heischober, Barbara M. Henley, Louis R. Jones,
Mayor Meyera E. Oberndo~ Nancy I~ Parker, Vice Mayor William D.
Sessorns, Jr. and Louisa M. Strayhorn
Council Members Voting Nay:
None
Council Members Absent:
None
May 31, 1995
-7-
Item
RESOLUTION RE
LAKE GASTON SETTLEMENT AGREEMENT
ADD-ON
ITEM # 39272
Upon motion by Councilman Jones, seconded by Councilman Baum, City Council ADOPTED:
Resolution pertaining to certain aspects of the Settlement between the
City of Virginia Beach and The State of North Carolina in the Lake
Gaston Water Supply Project matter.
Voting: 11-0
Council Members Voting Aye:
John A. Baum, Linwood O. Branch, III, Robert 14. Dean, William W..
Harrison, Jr., HaroM Heischober, Barbara M. Henley, Louis R. Jones,
Mayor Meyera E. Oberndo~ Nancy IC Parker, Vice Mayor William D.
Sessorns, Jr and Louisa M. Strayhorn
Council Members Voting Nay:
None
Council Members Absent:
None
May 31, 1995
A RESOLUTION PERTAINING TO CERTAIN
ASPECTS OF THE SETTLEMENT BETWEEN
THE CITY OF VIRGINIA BEACH AND THE
STATE OF NORTH CAROLINA IN THE LAKE
GASTON WATER SUPPLY PROJECT MATTER
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WHEREAS, the City of Virginia Beach and State of North
Carolina have reached a settlement in the matter of the Lake Gaston
Water Supply Project; and
WHEREAS, a formal document setting forth the provisions of
such settlement was executed on behalf of the City of Virginia
Beach and the State of North Carolina on April 28, 1995; and
WHEREAS, a condition of the settlement is that the City of
Norfolk agree not to sell water outside of southeastern Virginia so
long as the Norfolk water system is being used to treat or
transport water from Lake Gaston; and
WHEREAS, the City of Virginia Beach has attempted in good
faith to obtain the agreement of the City of Norfolk not to sell
water outside of southeastern Virginia, in accordance with the
provisions of the aforesaid settlement, and to that end has made a
bona fide, reasonable offer to purchase a substantial portion of
Norfolk's surplus water, as stated in the attached correspondence
dated May 25, 1995, from John F. Kay, Jr., Esquire, counsel for the
City of Virginia Beach, to R. Harvey Chappell, Jr., Esquire,
counsel for the City of Norfolk; and
WHEREAS, the City of Norfolk has transmitted a counter-
proposal to sell water to Virginia Beach on different terms and
conditions, as set forth in the attached correspondence dated May
30, 1995 from Norfolk's counsel to Virginia Beach's counsel; and
WHEREAS, the Water Task Force, legal counsel and the City
Council have thoroughly reviewed and analyzed the City of Norfolk's
proposal;
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
VIRGINIA BEACH, VIRGINIA:
1. That the City Council hereby finds that the counter-
proposal of the City of Norfolk, as set forth in the aforesaid
correspondence of May 30, 1995, a copy of which is hereto attached,
is not acceptable; and
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2. That the offer of the City of Virginia Beach to purchase
water from the City of Norfolk, as set forth in the aforesaid
correspondence of May 25, 1995, a copy of which is hereto attached,
is hereby restated.
The City Clerk is hereby directed forthwith to forward a
certified copy of this Resolution to the Mayor and City Manager of
the City of Norfolk.
Adopted by the Council of the City of Virginia Beach on the
31st day of May 1995.
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5O
CA-95-5979
/ ordin/noncode/gaston2, res
May 31, 1995
R-2
O*II'CC ?OiAi,.
(804) 697-1260
i~AY8 & VALENTINE
F~. (~) eOT-J 330
Hay 25, 199S
R. Harvey Chappell, Jr., Esquire
Christian, Barton, Epps, Brent
& Chappell
1200 Mutual Building
Richmond, Virginia 23219
Re: ~ke Gaston Settlement
Dear Harvey:
As Jim Oliver has undoubtedly told you, Virginia Beach's
Water Task Force met Wednesday in Washington with ~he mediator and
representatives of North Carolina to discuss and advocate the
deletion of paragraph 3 and the modification of paragraph 7 of the
settlement agreement as you requested. I am sorry to report that
North Carolina continues to insist on those provisions as they now
exist. Its stated reason is that the settlement agreement is an
integrated document and that North Carolina cannot agree to any
modifications. Its lawyers have, however, indicated a willingness
to explain to you why those provisions are important to North
Carolina and to the integrity of the settlement.
Because we were unsuccessful in our meeting wi~h North
Carolina, I have been asked to respond on behalf of the City of
Virginia Beach to the proposal that you indicated you vere
prepared to recommend to address Norfolk's concerns about
paragraph 3 and paragraph 7 of the settlement agreement between
North Carolina and Virginia Beach. We did appreciate the
opportunity to meet with you, Jim Oliver, Louis Guy and MLXe
Mussman on May 21, to discuss your suggested mo~ifications to the
proposal that Jim Oliver made to Jim Spore by letter dated May 12.
I will first address the mo~ification to Jim Oliver's
May 12 proposal that Virginia Beach agree to purchase, or be
responsible to pay Norfolk for, 30 mgd beginning In 1998 at: a
price of $.73 per 1,000 gallons, escalated at the rate of S% per
year, until the year 2030. We had misunderstood that Norfolk's
R. Harvey Chappell, Jr., Esquire
Hay 25, 1995
Page Two
May 12, proposal contemplated backdating the five percent (St)
escalator to fiscal 1994 so that the initial water charge in 1998
would be $.73 and not $.60. This would have resulted in a total
paynent of approximately $600 million instead 0£ $495 Billion as
we had originally understood. The modification which you propoeed
at our meeting on May 22, as we understand it, would reduce
1998 price from $.73 to $.60 and would reduce the term of the
agreement from 32 years (through 2030) to l0 years (through 2007)
but would still include a 5% escalator. The total cost ~hat
Virginia Beach would be responsible for over that period would be
a minimum of approximately $41 million and a maximum of
approximately $82 million, depending on Norfolk's ability to sell
15 mgd of the 30 mgd to other customers.
Following our meeting, the Virginia Beach Water Task
Force met and considered carefully the proposed modification but
concluded that it was unable to recommend it to City Cou/lcil.
Though the reduction of the 1998 price from $.73 to $.60 per 1,000
gallons and the reduction of the term from approximately 30 years
to 10 years would reduce the total cost from approximately $600
million to $82 million, the effect would be that Virginia Beach
would be required to purchase water during the initial years that
Gaston is on line when it will not need any additional water to
meet its demands. And, the agreement would not address Virginia
Beach's problem of supplementing the Gaston supply when that
supply may become insufficient to meet its demands. The proposal
was then discussed at a special meeting of City Council and,
though no vote was taken, the task force was instructed to
continue to attempt to reach some agreement satisfactory to both
cities if North Carolina refused to make the requested
modifications.
In an effort to address the objectives Norfolk has
explained (1) to maintain $.60 per 1,000 gallons as the
'benchmark' price and (2) to bridge any gap that may exist between
the time that Gaston water becomes available and the time Norfolk
is able to market what will be then be a surplus and, at the same
time, to assure Virginia Beach its objective of having additional
water when the Gaston supply is not sufficient to meet demand, the
Virginia Beach Water Task Force is willing to recommend to City
Council that the City agree to buy 12 mgd of treated water
beginning at the termination of the water sales contract at $.60
per 1,000 gallons until the year 2030. Moreover, as discussed
generally on May 21, Norfolk would need to agree that, upon
receiving five (5) years notice from Virginia Beach to do so, it
will provide water system capacities to convey and deliver to
R. Harvey Chappell, Jr., Esquire
May 25, 1995
Page Three
Virginia Beach the 12 ~qd of treated water, in addition to the
Gaston water, under the same terms and conditions of the Virginia
Beach/Norfolk Water Services Contract. The Virginia Beach
contract capacities established in the Water Service Contract for
average day, maximu~ month, and maximu~ day would be increased
accordingly. The Water Service Contract should also be amended to
provide that Norfolk would convey, treat and deliver either the
Lake Gaston water or the Norfolk raw water, at Virginia Beach's
election, before the capacity to convey and deliver the additional
12 mgd of treated water is called for or provided. Additionally,
Norfolk would agree that the 12 mgd of treated water to be sold to
Virginia Beach would not be reduced unless such reductions apply
in the same percentage and in the same way to water being supplied
by Norfolk to its residents or other customers.
We believe that this is a reasonable compromise between
the positions of the two cities. Though no escalator is provided,
Virginia Beach would be purchasing 12 mgd of Norfolk's water for a
period of 12 years or more before it will actually be needed at
Norfolk's "benchmark" price. And, given the time Norfolk has had
and will have to market its anticipated surplus and its confidence
that it will be able to do so to other areas of the region, this
does not appear to us to be an unreasonable risk for Norfolk to
assume. As in all compromises, each city would be getting and
giving. (We do not concede that $.60 was a #benchmarkm
established by the water sales contract; under the contract the
$.60 charge for fiscal 1994 was reduced incrementally to $.48 for
fiscal 1997, "for an average of $.54 . . . over the initial four
(4) year term.")
As was recognized and discussed at our May 21 meeting,
time is a very big problem for Virginia Beach and therefore it
respectfully requests that Norfolk indicate whether it is willing
to accept this proposed compromise by June 1, 1995. I also have
been instructed by the Water Task Force to advise you that this
proposal represents the most it is willing to recouend to City
Council; because of the time problems, it was decided that it was
in the best interests of both cities for the task force to present
its best proposal to you now. It is made subject to the
interstate compact being enacted without the imposition on
Virginia Beach of any requirement to provide compensation to any
other municipality, Jurisdiction, or entity as a condition to such
compact becoming effective, and to the settlement agreement
becoming effective. Of course, it is also subject to approval by
the City Council.
R. Harvey Chappell, Jr., £squir~
May 25, 1995
Paqe Four
Ne are hopeful that Norfolk will find this proposal to
constitute a fair compromise.
Sincerely,
cc: M~. Sa~es K. Spore
Leslie L. L£1le¥, Esqu£re
John,,F. Kay, Jr.
,
69 't3)9
SEN'[ BY:MAYS &
.-~0-8~ ;lO:~Ui : IL%YS & VALE. I~-,
604 426 5687 ;# 2/ 4
CH]IlSTIAN. BARTON. [~PP,~. ~Rts:.N']' ~ CHAPPE:LL
Nay 30, 1995
(804) 697-4137
,]ohn F. Kay, ~r., Esquire
Mays& VaLentine
F, o. BO:( 112~
lilchmond, v£rcjinia 2320,1-1122
lie: ~ ~[on Sattle~m3t
rear Jacks
I appreciate -.he promptness of your response of May 25,
1995, and ]2 now rec:Lprocste (it has been ~n interesting Memorial
Cay Week.nd!) with Norfolk's further proposal to try to resolve our
d i f f er en(:,~s.
As s:tated in our negotiating session on ~lay 22nd, there
are two dLfferent pieces to this problem. The first piece is the
amount of Norfolk's surplus water to which Virginia Beach now
desires a co~lltaent, the purchase price of the water and the term.
1his firs': piece was an:icipated during the Water Services and
~ater Sales contract neqotiations of several years ago and should
put NorfoLk ir~ approxi~ately the same position it would have been
had ther,! beert Gaston water without the problems attending the
=ediat£on sett.lement contract. As you know, Norfolk stands ready,
willing and able to perform fully its two existing water contracts
with Virq£nia Beach and much prefers not to have to deal with the
mediation sett.lement contract problems. The ~econd must deal with
the balance of' Norfolk's uncommitted surplus, and it is here that
Norfolk should be compensated for the reduction of its sales area.
~he two plecea~ obviously are related inasmuch as the larger the
Virginia Beach commitment for the surplus the less i~pact of the
sales are.l redtuotion. When these two pieces are considered in this
light th,ss it becomes quite evident how misleading has been the
leakage i;o th~: press, whether $49~ millioa or $600 million. For
example, if VJ.rginia Beach had com~titted to 15 mgd on the basis of
a 60~ wac,ar charge plus a 5% inflator to 203~ (and virginia Beach
obviously wants the long-term commitment) this would account for
BY:lAYS
R%YS & VALJ~ J~-
804 426 ~7;# 4/ 4
CHlUS£IAN. Iz}~,R'Z'.Ot~. ]~AaPg. U.-tBh'T ~ CltAPPBLL
H~y 30,
Pugs 3
5. The 12 mgd being surplus we':er, this nust be subject
to ceduot~on as in the c ise of any other Ju~pLus water as now
pcovlded Ln the Habe~ SaLes Coat,act. Ho:folk c~t~zens and ~e
H&~ ca~ot ~ put on re tuctton ~nso~ as the sal~ o~ eurplus
va~e~ Is c:on~n~.
closure to theme neGotia=£or.s, and ! look fo~agd ~o heag~nq from
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l~HC3r: lp
$
$incer~l¥,
,It ar · y ppe 11, 3r.
cc: Hayoc Pacl D. Fraim
Mr..lames B. Olive~'
Phil.Lp R. Trapan!, Rsqu~re
69'~t3!9
SI~'I' BY:~YS & V.~-"~iTI~
; 30-86 ;IO:34AM :
.'(%YS &VAI 1~ .P-,
804 426 ~87;# 3/4
J~hn F. Kay, Jr., Esqu£r.J
Nsy 30, 3995
P~ge 2
one-half of either amount. As to the oth.~r half, Norfolk fully
intended to sell this on the same terms which, If succees£ul, would
dispose of the balance, '~ssibly with no further expenditure
required by Virginia Bea.;h.
Now, directly .-ee~onding to you.: May 2Sth letter,
ass--~ming ~hat the problea~ cf Paragraph 7 (Regional Water
&uthority] can be resolved, the Norfolk t,~am 18 prepar~ to
race. end the following :o the Norfolk ci':y co~cil:
1. Virginia B~ach will putchas.t 12 mgd of Norfolk
surplus water commencing in 1998 (the dat.a assumed for the first
delivery of Gaston waterj until the year .)030 with a water charge
of 60¢ per thousand galL;ns, plus either ,~ St inflator as
or~q~na[l~ prc~sed or, [E Virqinia eeach prefers, an ~nrlator t~
to the ce~, Atteched ~s ateble s~plied me b~ nl~ck & Veat~
vh~=h shc),a, the CPZ over the past sevente. Jn years. ~s c~it~nt
would ~ ~ya~le eonthLy.
2. Virginia Beach will ;.ay to ~orfolk as a guaranty for
the marketing of the ren~ining 18 mgd of ~ts surplus water a water
charge of 600 per thousand gallons, ;lus the in,la,:or mentioned
above, commencing i~ 1995 for a pericd of five year;. Thus,
Norfolk vii1 undertake t3 market i~ accor.~ance with good practices
its surplus water and wL~l under~ake to c311ect wa~er charge
revenue equal to that ~p~cifte~ above, bu= to the extent that this
water charge ~evenue can%et be so ¢'ollect~.d, then virginia Beach
will ~aarantee to Norfol< each year (paya3le monthly) such water
charge r~venue for five fears.
3. Under Para]raph I above virginia Beach may reduce its
Wa~er Se]?;ices Contrac~ ~.ommitment to delLvsr Gaston Water to
Norfolk l~] 1.2 mgd until eurther ex$~nston is in place. Under
Paragrapl~ 2, Virginia Beach could reduce the Gaston pumping
commitmeu~t by an add~tio.~al 15 mqd for a per~od of ten years to the
exten~ that all or part Df this su~131us [s not ~old by Norfolk.
4. Norfolk agcees to expand its transmission and
treatment facilities to serve the ca~acit~ of Virginia Beach's
combined supply from Gaston and NorfoLk surplus, with the
established peaking faotlrs, after suitable notice. However,
without ~aore dLefinitive information, the notice required should be
approxiRat:ely ten years to co, plate all phases of this expansion.
Virginia Beach will be e~pected to specify the sequence of water
use betw~mn Ce.eton and N~rfolk sources, recognizing the Water
Services Contract: capacity limitations.
80469'~t
SENT BY:NAYS
; 5-30-ii ; 11:12
·
· ·
~004
TABLE !
Contumer Pdce Index
1978
1970
,. 19,~0
1981
1083
19t~
1~0
Ci'l AAfl~ual /Vtflual
' I
!"' I : 0.00%
74." 11.4~% I 11.49% i 1!.4~
~ 83.' 12.~% 11.~% , ~.~%
gO.,i 8.12% 10.~ ~.0~
~ OS:, 5.~% I g21% 42.24~
~s ~ ~.~% , 847% ~16%
: ~4 , 3.78% , 707%
,,~.5 ' 4.80% ' 7 27~
111.5 1.83% : 867% j 6642%
,~O., 4.22% ' 0,1%
i 127., J 5.88% · 006% .75%
135.' 0.18% ~ 0.~% 1~.~
140.') · 3 ~ 5.88% 110 30%
1~2 , 144~J 2.~% ~ 6.~%
~ 1~3 I 149 ;I 3.~% 8.48%
-8-
Item VIII.
ITEM # 39273
STATEMENT OF MAYOR OBERNDORF
"The Virginia Beach City Council is most disappointed to learn that Norfolk City Council
has declined our offer of 60 cents per thousand gallons for 12-Million gallons of water a day over 32
years., a total of $84,000,000. Indeed to reserve that amount of water is in Virginia Beach's best interests.
Norfolk's response to this offer, both monetarily and in terms of imposed conditions, is not.
While our offer remains on the table, let me explain why we cannot accept Norfolk's latest
proposal back to us.
There is no rational economic reason why Virginia Beach should pay Norfolk 60 cents
per thousand gallons for water above and beyond the 12-Million gallons a day we anticipate needing by
the year 2010. If Norfolk can sell its remaining surplus of 18-Million gallons a day to another buyer in
southeast Virginia, that is and will always be its right.
Secondly, Norfolk has no justification in charging Virginia Beach either a 5%
compounded inflator for that water or attaching a cost of living adjustment to it. In our water services
contract negotiated with Norfolk in 1993, Virginia Beach agreed to pay Norfolk's cost of treating and
conveying Lake Gaston water which includes a fair and reasonable return on investment. To provide
Norfolk with even more profit is unwarranted. Indeed why should Virginia Beach pay a cost of living
adjustment when the surplus water we are paying for sits in a reservoir? Where are the additional costs
incurred by Norfolk to justify such fees?
In addition, the terms of Norfolk's proposal do not even guarantee Virginia Beach's right
to this water under a sever drought. Despite paying Norfolk's artificially inflated price, Virginia Beach
residents would be subject to service curtailment should the supply have to be drastically reduced
although Norfolk citizens and the Navy would not.
Let me reiterate that Virginia Beach did all ff could to protect Norfolk's interests during
mediation talks with North Carolina and kept Norfolk informed at appropriate times. For Norfolk to now
attempt to extract money from Virginia Beach because of a perceived restriction on its ability to market
its water is unfortunate. The Agreement with North Carolina gives Norfolk the right to sell its water to
parties most likely to need it, those being Virignia Beach, Chesapeake, Suffolk, Isle of Wight County and
Northeastern North Carolina. Peninsula communities do not want Norfolk's water, and Norfolk knows this.
The only buyer Norfolk has for its surplus water right now is Virignia Beach, and our generous offer has
been found wanting. We are baffled and disappointed by Norfolk's position.
We still believe it is in the best interest of the Commonwealth of Virginia and the State
of North Carolina to approve the settlement agreement and the interstate compact which puts limits on
withdrawals from Lake Gaston. The agreement and compact also impose necessary environmental controls
and assure years of peace between our two states. We encourage the General Assembly, with or without
the support of Norfolk, to support Governor Allen in calling a special session of the General Assembly
next month to act on the interstate compact. It is the right thing to do for Virginia and North Carolina,
not just Virginia Beach and Chesapeake.
Norfolk has known since we began our quest for the Lake Gaston pipeline in 1982 that
the day would come when we would not be a permanent customer for its surplus water. Despite this, we
will continue working with all parties to see that Norfolk's concerns regarding the viability of its
municipal water system are addressed. We will not, however, pay an unreasonable price to alleviate those
concerns. Our citizens understand this fact, and I hope those in Norfolk and throughout the State of
Virginia do as well."
May 31, 1995
-9-
Item IX
ADJOURNMENT
ITEM # 39274
Mayor Oberndorf DECLARED the City Council SPECIAL SESSION ADJOURNED at 4:05 P.M.
Hooks, CMC
Chief Deputy City Clerk
Ruth Hodges Smith, CMC/AAE
City Clerk
Meyera E. Oberndorf
Mayor
City of Virginia Beach
Virginia
May 31, 1995