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Home My WebLink AboutMAY 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 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 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 38 39 40 41 42 43 44 45 46 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. 47 48 49 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 ¥0~ · 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