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Clean water, finally: Chesapeake to buy out private utility in beleaguered Indian River community

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04/13/2018 | 08:12pm CEST

April 13--CHESAPEAKE -- The city is hoping to avert what "would eventually be a Flint, Michigan."

That's what officials said this week about their plan to buy out Aqua Virginia, a private utility that has long plagued a small community here with subpar water quality.

Planning Commissioner Marty Williams made the comparison Wednesday night as the body voted to move forward with the plan to allow the Norfolk Highlands area abutting Indian River Road to join the city's water system.

"We're super excited," said 31-year-old Ronnie Goldbach, who lives in Norfolk Highlands with his wife and two young children. "We feel like it's a win for not only us, but our community."

Residents of the neighborhood in northern Chesapeake have long complained about discolored, rusty, foul-smelling water they say regularly pours from their taps. Many buy bottled water to drink, boil water for cooking and avoid washing clothes with the water.

The Goldbachs' children both suffer from eczema, Ronnie said. When they first moved into their home two and half years ago, the kids would come out of the shower "and their skin was like lizard skin.

"We were angry and upset," he said. "It does affect our family. It does not smell or look safe."

"We don't drink the water": Chesapeake homeowners billed for water they're afraid to use

More than a dozen residents in Northern Chesapeake say their water has been foul-smelling, oddly colored (think yellow and purple), metallic-tasting -- in a word, "gross." At least a hundred more have aired their frustrations on Facebook. It's a common problem for customers of utility company Aqua Virginia, which assures the water is "not a health risk; it's just unsightly." But that's not much consolation for homeowners billed each month for water they're afraid to use.

Aqua Virginia is under the publicly traded Aqua America and serves about 75,000 people statewide and roughly 500 homes in the area. In the past the company has maintained it provides safe drinking water. Last year its new president acknowledged the water quality is subpar.

For the past few years the city negotiated with the utility, seeking better infrastructure. The possibility of buying out its territory repeatedly seemed like a nonstarter -- "the answer was always 'no,'" said David Jurgens, Chesapeake's public utilities director.

"It's just not something we're interested in doing, selling our assets," Shannon Becker, Aqua Virginia's then-president, told the Pilot in 2016.

But officials have appeared to change course.

Jurgens told the Planning Commission Wednesday that the city has letters dating back to the 1960s -- around the time the city was established -- in which officials discussed purchasing the system, not then affiliated with Aqua.

"Every decade since then it's been evaluated but it's never been executed," Jurgens said. "I don't know all the reasons why."

The well water system changed hands over the years. AquaSource replaced the Indian River Water Company in 1999, and it was later bought by Aqua America.

Now city officials have reached an agreement in principle with the utility, meaning they are still working out details such as price. The State Corporation Commission will also need to sign off on the final agreement.

"To say the least, our council is thrilled at this opportunity," said Mayor Rick West. "This has been a goal for years."

The city plans to spend $3.9 million for construction in the area during the transition, including replacing old pipes and installing fire hydrants. The soonest it could all come together is October, Jurgens estimated.

The city will earn new utility revenue from these 500 homes, though residents will not have to pay a hookup fee, he told the commission.

"We can make it pay for itself in time."

Another big concern from residents, even those not privately served by Aqua, has been the poor state of the Indian River Shopping Center, under which lie two of the company's wells. Because of the "inadequacy" of the company's water system, which supplies the shopping center, tenants of a certain size or business type -- like grocers -- are not able to comply with fire suppression standards, according to the shopping center's property manager.

"Poor water quality and fire suppression was holding up the development of our shopping center," Carol Warren with the Friends of Indian River told the commission Wednesday. "We felt like we deserve a good grocery store and to see this blighted area developed to match the surrounding community."

West said the sale is an investment in the community.

"The benefits go beyond the 500 households that will get better water," he said. "You're talking about an opportunity to now market that shopping center and ... bring life back to Indian River."


(c)2018 The Virginian-Pilot (Norfolk, Va.)

Visit The Virginian-Pilot (Norfolk, Va.) at pilotonline.com

Distributed by Tribune Content Agency, LLC.

© Tribune Content Agency, source Regional News

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Financials ($)
Sales 2018 866 M
EBIT 2018 355 M
Net income 2018 251 M
Debt 2018 2 243 M
Yield 2018 2,49%
P/E ratio 2018 24,44
P/E ratio 2019 22,97
EV / Sales 2018 9,60x
EV / Sales 2019 9,28x
Capitalization 6 076 M
Duration : Period :
Aqua America Inc Technical Analysis Chart | WTR | US03836W1036 | 4-Traders
Technical analysis trends AQUA AMERICA INC
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 11
Average target price 36,9 $
Spread / Average Target 7,1%
EPS Revisions
Christopher H. Franklin Chairman, President & Chief Executive Officer
Richard S. Fox Chief Operating Officer & EVP-Regulated Operations
David P. Smeltzer Chief Financial Officer & Executive Vice President
Whitney S. Kellett Chief Information Officer
Richard H. Glanton Lead Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
AQUA AMERICA INC-12.87%6 076
SEVERN TRENT-12.97%6 199