Wastewater authority settles lawsuit with Petersburg over past-due payments

By Michael Campbell – News Editor

DINWIDDIE – As Petersburg continues to fight its way out of a multi-million dollar debt, a major financial hurdle in the city’s recovery has been settled after the South Central Wastewater Authority agreed to end their lawsuit against the city.

The authority, whose members include Colonial Heights, Petersburg, Chesterfield, Dinwiddie and Prince George, announced last week that they reached the settlement with the city over “past-due wastewater treatment payments that currently exceed $1.9 million.”

According to the authority, “the city has made only one monthly payment for wastewater treatment service provided by South Central Wastewater Authority since the end of May 2016.”

It was revealed earlier this year that Petersburg was facing an $18 million budgetary shortfall from fiscal year 2016 and prior.

The terms of the settlement, according to officials with South Central Wastewater Authority and their legal counsel at McGuire Woods LLP, calls on Petersburg to resume making “timely monthly payments commencing in December 2016,” along with a lump sum payment of around $1.2 million by December 15, which will be applied to the city’s delinquent fees.

Additionally, as part of the settlement, the city will have to “work in good faith to develop a two-year payment schedule to redeem the city’s remaining delinquency.”

Both the Petersburg City Council and the South Central Board must ratify the settlement.

“South Central is particularly dependent upon regular and timely payments by the City of Petersburg, whose share of these costs account for more than half of South Central’s budget for operations and maintenance,” officials with the authority said in their statement.

According to South Central, Virginia Governor Terry McAuliffe and his administration, along with the city, requested the authority settle the lawsuit to “facilitate the city’s closing of a short-term working capital financing and, desiring to promote regional harmony, South Central has responded.”

This settlement presents an opportunity for the city to address critical needs within Petersburg, including making payroll for its employees.

In a presentation focused on the city’s emergency financial and operational restructuring provided by the Robert Bobb Group, the authority’s lawsuit “was a primary obstacle to the city receiving short term financing of $6.5 million,” due to South Central’s lawsuit being the most significant litigation case the city was facing.

Officials with Robert Bobb Group explained that this suit’s dismissal would enable the city to “immediately utilize $1.3 million in capitalized interest accruing from unused Virginia Resource Authority funds,” which will allow Petersburg to make payroll on November 18 and December 2.

With the $6.5 million Revenue Anticipation Note, or RAN, along with making payroll, the city will use $1.3 million to pay South Central Wastewater Authority the agreed upon lump sum payment on Dec. 15. and pay for other critical services, such as emergency communications, critical maintenance and bills, Virginia Retirement Service payments for line of duty pay, Federal and state services that have not been paid for and expenditures that have already been executed for the current fiscal year.

Even though this lawsuit dismissal is a significant first-step in the road to recovery for the city, Robert Bobb Group warned, “This is not a green light to spend!”

In Jan. 2017, the group will conduct a budget to actuals analysis on the current budget to determine if any additional revisions should be made.

Additionally, the city has chosen to defer over $6 million in projects to help pay for “critical projects and services.” Some of those deferred projects include water line and tank upgrades, museum and golf course upgrades and city hall replacement, among others.

One project that was notably deferred was the Hustings Courthouse roof replacement, which, according to local media reports, was condemned earlier this fall by city officials due to concerns about its safety.

Officials with Robert Bobb Group state the $6.5 million RAN will be paid back “in full” by Oct. 2017.

For South Central Wastewater Authority, they hope this settlement means the city is turning the corner financially when it comes to meeting its obligations.

“More importantly, if the City complies with the agreed-upon payment schedule, South Central will be able to continue to provide uninterrupted wastewater treatment service in an environmentally-responsible manner without imposing an additional financial burden on the customers and taxpayers of its other member localities,” officials said in their statement.

Prince George County Administrator Percy Ashcraft was named chairman of the South Central Wastewater Authority and the Appomattox River Water Authority during their meeting last Thursday.

Earlier this year, Central Virginia Waste Management Authority was prepared to take legal actions against Petersburg in regards to its lack of payment for trash and recycling services in the city.

In August, the city submitted a plan to CVWMA officials, which was eventually approved by the authority. At one time, the city was five months behind on its payments, totaling approximately $613,000.

The city agreed to meet its monthly obligation, with an additional $20,000 tacked onto that payment to make up for arrears.

Copyright 2016 by Womack Publications

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