James City Service Authority adopts rate-stabilization language and updates investment policy

The James City Service Authority Board of Directors on Monday approved updates to its financial and investment policies that add a defined rate stabilization reserve and revise other reserve targets, the authority's staff said.

The authority's staff told the board the financial policy revisions create a rate stabilization reserve with a defined minimum target balance intended to manage unexpected revenue shortfalls or unanticipated expenses and to reduce the need for large rate increases. The update also adds minimum target-balance language for the repair-and-replacement reserve and the alternative water-supply reserve, and it revises how the authority assesses reliance on facility-charge (tap fee) revenue to maintain debt-service coverage.

"The updates before you are for the financial policy and the investment policy of the James City Service Authority. These policies were last updated in March of 2021," a staff member said. "Tonight's item is for the financial policy to create a rate stabilization reserve with a defined minimum target balance to manage unexpected revenue shortfalls or unanticipated expenses while minimizing need for large rate increases." The staff member also said the revisions were developed with the County Attorney's office, Davenport & Company (the authority's financial advisor), and Stantec (the 2025 rate-study consultant).

On the investment policy, staff said the proposed revisions align the authority's investment and operational rules with the Code of Virginia, add flexibility intended to preserve principal and liquidity while maximizing return, and update references to credit-rating agencies. Staff said PFM Asset Management advised on the investment-policy changes.

The board approved the policy changes by roll call vote. The board also approved the consent calendar, which included a $251,780 contract award for a replacement well at Wexford Hills (W-28 well number 1) and adoption of the minutes from a prior meeting.

In the manager's report staff said the authority has observed a noticeable increase in water production over recent months. A staff presentation said Newport News performed maintenance on a facility connected to James City County via an interconnect, which resulted in Newport News drawing water from the interconnect from roughly October to mid-February. Staff also cited very dry weather in October ("it only rained one day in October") and increased irrigation as factors in higher demand.

Staff reported that a water-line replacement project on College Creek (Bridle/Bridal) was recently completed and that the contractor had coordinated work around a Hampton Roads Sanitation District (HRSD) project. The board did not take additional action on the manager's report.

The board adjourned the Service Authority meeting and scheduled the next regular meeting as noted on the record.