BVU On Its Own?
A plan for Bristol Virginia Utilities to break from the city and become its own authority would give BVU more autonomy and shift substantial debt off the city rolls.
But proponents haven’t made clear whether the changes would benefit existing BVU ratepayers or Bristol city taxpayers, who should gain from any change. In trying to sell this plan, officials have said it would shift $49 million in existing debt off the city’s books and to the new BVU authority. But the method for repaying the debt is unchanged – it will come from utility customers, many of whom are Bristol taxpayers.
Also unchanged is that the publicly elected City Council would appoint a majority of the BVU board. A significant difference is that the BVU authority could borrow money, file lawsuits and impose rate increases higher than 4 percent – the maximum currently allowed without City Council consent.
BVU President and CEO Wes Rosenbalm told the Bristol Herald Courier that this change would allow BVU the ability to borrow money for repairs and infrastructure improvements absent the political issues that sometimes affect council decisions. “This would allow us to run BVU as a business and shields us from the political process coming into decisions,” he said.
We do not support political game playing on any governmental board and BVU officials have a record of solid leadership. But citizens want direct accountability from leaders when it comes to utility costs and the services they receive. Knowing that BVU cannot currently raise rates beyond 4 percent without council approval gives taxpayers and ratepayers a system of checks and balances between the two groups, which have a shared interest in success.
In the past decade, BVU customers have seen four water rate increases and two sewer rate hikes. In the past seven years, BVU OptiNet cable television customers have had two price increases, but telephone and Internet rates have not changed.
Electric charges have been where the biggest fluctuations have occurred – jumps that were influenced by changes in the market and as BVU bought electricity from different providers. Under the proposed separate BVU authority, the Tennessee Valley Authority would maintain control over electric rates and the State Corporation Commission would oversee telephone rates.
Rosenbalm rightly noted that BVU has not abused its power to raise rates and has forgone some increases it could have imposed. But customers need assurance of a reliable system of checks and balances for the future. For now, the council holds the line on any increases exceeding 4 percent. If the separate utility authority is approved by the General Assembly, the State Corporation Commission would approve rate increases. But too many citizens have not been sold in the belief that this would be in their best interest. Isn’t it easier to speak to a representative in Bristol than to an SCC member in Richmond?
So far, the reasons for this change do not seem to resonate with the average taxpayer or utility customer. On Thursday, BVU board member Jim Clifton said citizens should support the change because BVU is expanding services, especially as demand for high-speed broadband is growing. Those steps have brought new companies to the region, specifically Northrop Grumman and CGI-AMS in Russell County, Va. Any possible expansion requires broadband services and BVU has taken the lead in this area.
Clifton maintains the change would allow BVU to move faster on broadband projects and would allow it to base its financing on its own revenue-producing capabilities, not general obligation bonds, as currently is the case. He acknowledged new OptiNet customers often have to wait two weeks or longer for service and he wants to see that lag time improve.
More than anything, Clifton said, having BVU develop into its own utility authority would let the entity bring more jobs to the region. He compared BVU to a child who has grown up and now “it is time for them to go off to college.”
This newspaper recognizes the solid record of achievement by BVU – as a low-cost utility provider and a leader in broadband services to industry and individuals. But any change in its autonomy must benefit taxpayers and ratepayers – in terms of cost and customer service – and those parties must be assured of protections into the future.
When the City Council meets Tuesday – the first of two readings on the agenda – officials must do more to generate public support by explaining why this would benefit the citizens who use their services and will be customers into the future.
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Share This Home > News> Local Divided Council Approves BVU Split from City
By David McGee | Staff Writer / Bristol Herald Courier
Published: October 14, 2009
» 1 Comment | Post a Comment
BRISTOL, Va. – Appearing as divided as its audience, the City Council narrowly approved a plan Tuesday that allows the Bristol Virginia Utilities to split from the city and form its own authority.
The proposal, which requires another council vote and the approval of the Virginia General Assembly, attracted a crowd of about 75 who filled the City Hall council chambers.
After listening to comments from more than 30 people – the majority of whom expressed support for the plan – the council voted 3-2 in favor of the authority’s spinoff. BVU’s board of directors unanimously approved the request last week.
“We were very pleased with the turnout. We had a lot of corporate people who came out and average citizens, and we had some good questions that we tried to answer,“ BVU board Chairman Paul Hurley said. “We’re certainly pleased with the vote to move forward with the process.“
Councilmen Guy Odum and Jim Heaney expressed concerns about some specific aspects of the 21-page act, primarily dealing with the makeup of an authority board and how the change would impact the city in the future.
Hurley said BVU will make “every effort” to address those questions and concerns before the council takes its final vote on the plan Oct. 27.
If approved this winter in Richmond, the change would take effect July 1, 2010.
The council currently fills six of seven seats on the BVU board of directors, including four city residents and two council members. The proposed authority board would include one council member, three city residents appointed by the council and three more residents selected by the authority board. An eighth member from the Washington County, Va., Board of Supervisors, would round out the new board.
Odum asked BVU General Counsel Walt Bressler about apparently conflicting language setting the board size, but another passage empowering an authority board to go back to the General Assembly to change “anything.“
Bressler said changing the size of the board wasn’t the intent of the wording and provisions establishing board makeup could be included as part of a contract with the city.
“That could only be changed if both parties – the City Council and the BVU Authority Board – agree to it,“ Bressler said.
Bressler said council members should receive a copy of the contract later this week.
“As to concerns about selling the assets, they’re not salable,“ Bressler said. “That is infrastructure to provide services.“
BVU also couldn’t just spin off its OptiNet telecommunications division, as some audience members suggested, Bressler said, because it currently isn’t profitable enough.
BVU provides electricity, water, sewer and telecommunications services. It is currently a division of city government, with its operations overseen by the board of directors, with council oversight on some issues.
The change would empower a new BVU Authority to borrow money, file lawsuits, enter into contracts, leases and arrangements and increase rates beyond the 4 percent ceiling, without City Council approval.
A new authority board would control all rates except electricity, which will continue to be set by the Tennessee Valley Authority, and telephone charges, which must be approved by the Virginia State Corporation Commission.
Supporters of the plan ranged from the Bristol Chamber of Commerce and the top executives of Bristol Compressors and Snack Alliance to a number of city residents with no apparent links to BVU, a pastor, and the head of nonprofit Bristol Faith in Action.
Cousins and business associates Archie Hubbard and Frank Goodpasture III spoke on opposite sides of the issue.
“In the constellation of city assets, the Bristol Virginia Utility Board is the brightest star,“ Goodpasture said.
Hubbard, a former BVU board chairman, said he supports the move based on BVU’s “track record” of sound decision-making.
Former Mayor R.L. Light questioned how BVU’s potential expansion into other areas would minimize the role of the ratepayers who helped to build it.
“I fear this ever-expanding, regional utility will rob its present owners of first consideration in all services,“ Light said.
Some opponents urged the council to slow down, gather additional input and take more time to study the process before acting.
“We have a bad habit in this city of rushing into things,“ Heaney said during his remarks. “I’ve only had a few weeks of information and I don’t think that is a lot of time.“
Mayor Jim Rector later said the authority “was not a rush deal,“ and that BVU has been speaking with council members since the spring about this proposal.
“Some, but not all of us,“ Heaney countered.
The final reading of is scheduled at the council’s Oct. 27 meeting, which will include another opportunity for public comment.
dmcgee@bristolnews.com| (276) 645-2532
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Voice your opinion by posting a comment. Flag Comment Posted by wizzard on October 14, 2009 at 5:03 pm
It looks to me that three city council members ( Rector, Bowman, and Sprouse ) are going to rush to get this BVU deal passed, and Mayor Jim Rector knows he has the three votes to get it done. We knew that Jim Rector and Fred Bowman would vote yes, since they both already serve on the BVU board. All Jim Rector and Fred Bowman had to do was get their “yes man” Ernie Sprouse to vote with them, as he always does. Mr. Sprouse, you should be ashamed of yourself to be used the way you have been, ever since your appointment to the city council. I and many others have lost so much respect for you since your appointment to city council, due to you not being your own man and not strong enough to vote your own way. Be a man, and stand up and vote for what you feel is right for the city as a whole, not how Jim Rector or Fred Bowman wants you to vote. Can you dare to be your own man? Do you not understand how many people in this city speak of you not being able to stand on your own two feet? I’m embarrassed for you.
I have a legal question about Mr. Sprouse’s vote on city council for the last couple of years anyway. Are his votes even legal to begin with? Is he still being on city council even legal? I ask this due to him being appointed to city council not even into a full year of the four year term of the past city council member that he replaced. I understand his appointment to city council was legal, but for a time period of almost a full term? However, since his appointment was made less than a year of a four year term of the person he replaced, should there by law not have had to been a special election to let the voters make this replacement? He got appointed to an almost full four year term on city council, and has never been elected to the office he now holds. If there should have been a special election called due to the very short time the past council member served, why wasn’t a special election called? Are all the votes he has made since being appointed to city council even valid? Is it even legal for him to be on our city council now, without him ever being elected to the office?
Why has Jim Rector been on the BVU board for 24 or more years? Why is city council so careful who is appointed to the BVU board? They protect this BVU board with other past city council members too, and it sure doesn’t look right. Why was Mayor Jim Rector afraid to let Councilman Guy Odum or Councilman Jim Heaney on the BVU board? Is there something to hide from them?
Will Jim Rector or Fred Bowman get something out of this BVU deal later on, if this goes though? Are they setting things up for when they are no longer on city council after the election this coming May? I have to wonder about this. Is this one reason why in the new BVU deal that the BVU board itself will have the power to appoint a number of members to it’s own board? Looks to me that someone is worried that after a new city council is elected this coming May, they know they will need another way to protect who serves on their board. They know that no matter who the new city council appoints to the BVU board, that they can themselves stack the odds and power in their favor. Could this be part of the reason why there is such a rush to get this BVU deal passed? Think about this!
Can this deal be taken to court by anyone in order to stop it, say by a taxpayer that lives in the city of Bristol, Virginia? I hope it does end up in court, maybe some questions will be forced to be answered in court. Why would some on city council want to give up a financial asset that the city owns? How will this play with the bond ratings of Bristol, Virginia?
If this deal passes, will the city of Bristol, Virginia still not owe the 88 some odd million dollars that we are now in debt? This is not counting the 49 million dollar BVU debt now. How and in what way will this BVU deal help the people and taxpayers of Bristol, Virginia? Better question is, who will it help?
In the last several elections for city council, has it not been stated that the 49 million dollars debt by BVU, is BVU debt only and not part of the 88 million dollar city debt? Now, they are trying to make it look like it is a city debt, lumping it all in together. Which one is it now, you can’t have it both ways? BVU seems to have had no problems in paying their debt. BVU doesn’t seem to have to keep borrowing more and more money with high interest each time, to make their debt payments, unlike how the city of Bristol, Virginia operates.
The three members on city council that vote yes on this BVU deal know they will have to face the voters this coming May, IF they even dare to run for re-election. I have to ask, who are they looking out for? Are they looking out for your interest? Are they setting things up for themselves after their city council terms are up?
“We have a bad habit in this city of rushing into things,“ Heaney said during his remarks. “I’ve only had a few weeks of information and I don’t think that is a lot of time.“ Mayor Jim Rector later said the authority “was not a rush deal,“ and that BVU has been speaking with council members since the spring about this proposal. “Some, but not all of us,“ Heaney countered.
Shouldn’t this exchange of comments between Mayor Jim Rector and Councilman Jim Heaney tell us something? Have Guy Odum and Jim Heaney been left out of the loop by Jim Rector and others? It sure appears that way to me, and not for the first time either. Is Jim Rector afraid that Guy Odum and Jim Heaney might find out something, like maybe the truth? Jim Heaney is right, city council does have a bad habit of rushing into things. Why is there such a rush on this BVU deal, what’s the real reason? If it’s not a “ rush deal “ Mayor Jim Rector, what is it then?
Wasn’t it Jim Rector that was on our city council years ago that voted to bring in and hire our past ex-city manager, remember back when we had a surplus of several million dollars in the bank ? Wasn’t it the one and same Jim Rector that many years later again on city council, that voted to give our past ex-city manager such a great retirement package deal, after the city was millions of dollars in debt? Mr. Jim Rector, can you can share with Mr. Odum and Mr. Heaney where all the surplus money that we once had, went? It looks to me that Odum and Heaney are the only two on city council right now that care, and are trying to get our city debt under control. I can see Jim Rector not sharing information with them, they are not part of the good ole boy system that has been around this city for way too many years. Come next May’s city election, Guy Odum and Jim Heaney will get the help they need to finally start turning this city and it’s debt around. We are tired of your good ole boy system Jim Rector, and you may have to learn it the hard way come the next election evening results. People are tired, and I think we will see all three of the open seats that will be up, all filled with new people. Odum and Heaney just need one more free thinking person to vote in order to start changing things in this city, and I opine they will have all three new votes. Mayor Jim Rector, could this be one reason for such a rush to make this BVU deal?
I hope the BHC will look much closer into this BVU deal and the city of Bristol, Virginia, before it’s too late for us.
If this BVU deal isn’t tied up in court to stop it, there is always another way the citizens of Bristol, Virginia can go about in order to do something about it. It’s a way that our city council or BVU board can not have a say in, and a very good chance they haven’t even thought of. What happens to BVU if most of the people in Bristol, Virginia drop their services with them? I know we have no choice on our water and electric services with BVU, but we sure can drop their phone, cable, and Internet hookup services. We do have a choice on that, and I for one will be dropping them. What happens to BVU then, if we all did this? Think about it!
First, I’m a bit surprised more people aren’t logging in on this.
BVU and the City Council wants the citizens (taxpayers) to focus on the existing debt owed by the City ($49 million). They are not wanting it’s citizens to see the revenue (taxes) that the City will loose if they approve the BVU proposal to split from the Cities control. City council members hasn’t mentioned how they intend to replace the lost tax dollars by such a move. We don’t need more restraunts or motels/hotels, there are too many now that burdens the city with minimum wage paying jobs and no benefits.
The residents of Bristol and other effected areas needs to ask the Council Members some hard questions pretaining to lost tax dollars and attracting future industry to the area. When you give away half of your net worth then you loose much of your clout when setting across the table from executives and CEO’s of large bussinesses.
This proposal needs severe, indepth, long term consideration by all parties that it will affect. We need to back up and look at the other side of the coin.
Excerpt from BVU website:
BVU left the traditional utility “comfort zone” to deploy competitive services for the following reasons:
• to provide unsurpassed local customer service & technical support
• to meet a need in rural areas that was not being addressed by incumbent
data providers
• to improve the quality of life and the quality of service for ratepayers by reducing the costs for these services
• to meet customer demand for competition
• to enhance economic development opportunities regionally
Quoted from the article:
“This would allow us to run BVU as a business and shields us from the political process coming into decisions,” BVU President and CEO Wes Rosenbalm said after the meeting.
BVU is currently a division of the city, which means publicly elected City Council members have some oversight – particularly when it comes to the purse strings. BVU can’t borrow money or raise rates beyond a certain point.
Under the proposed change, the council would still appoint a majority of the BVU board members, but a BVU authority could borrow money, file lawsuits and impose rate increases greater than the 4 percent currently allowed without City Council approval.
Opinion:
So the purpose is to establish a new service authority that circumvents the restrictions put in place to insure better service and lower costs to the rate payers of our area.
We the rate payers and citizens elected the city council…who in turn employ and have oversite of those at BVU…have shouldered the initial startup costs and took the risk of additional debt…have supported and benefited directly from the success of the business venture…are now being asked to step aside so that Wes & Co can operate unrestricted and raise BVU’s SG&A expenses and our service costs to levels more in line with other providers???
HAHAHAHAHA..You’ve got to be kidding!!
WE DON’T REALLY HAVE TO ASK WHY DO THEY REALLY WANT THE RESTRICTIONS REMOVED??? The answer is in Rosenbalm’s statement…
Shouldn’t the BVU operational and consulting business successes be passed on to US the risk takers in terms of state of the art services. I could imagine city wide wireless services and holding programing costs to a minimum as the BVU entity success subsidizes these increases via profit sharing. Why would we turn this over when it’s just now beginning to provide a return? Why else would they be willing to take on all the debt and give back some return over a period of ten years? Is ten years as long as we expect use electricity??
Wouldn’t it be more efficient to simply broaden the mandate of the entity while keeping it under the City Council responsibilty?
If this were to actually happen, then we need to make sure ONLY under these terms:
City Council appointees are to be ELECTED by referendum
TERM LIMITS
Home territory rate increases be approved by referendum.
Provide a reversion clause that requires the arrangement to be reapproved every 5 or 10 yrs.
An open ended term of profit sharing arrangement in lieu of fixed payments (which tend to become worth less over time due to inflation).
I see a Private take over comming ! Think proces are high now wait till it is privatized.
I am not sure if I would want our cable, phone, internet service’s turn over to an Authority type system. Right now we have check and balances. There could be abuse’s of the system if given over and Council appointments people. We have already seen where family members have been given jobs without going through proper procedures. I say leave the system as is and use any profits to go toward debt and improvements. I just don’t trust our present council. To many good ole boys in the majority.
Thank You.
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