Lynchburg staff recommend intent to renew Campbell County Utilities water contract; council referral set for June 24

City staff told the Lynchburg City Council during a June 10 work session that the city must notify Campbell County Utilities and Service Authority (CCUSA) by June 30 whether it intends to renew a wholesale water contract that currently runs through June 30, 2027. Tim Mitchell, presenting the item for staff, said the contract yields about $600,000 a year to the city's water fund and is based on a cost-of-service wholesale pricing methodology tied to an American Water Works Association study.

Mitchell said the contract currently sets a provisional wholesale rate of $2.50 per 100 cubic feet for CCUSA customers, and that Lynchburg city customers pay $3.29 per 100 cubic feet while Campbell County residents pay $4.95. He described a supplemental agreement from 2002 tied to installation of a water line along U.S. 460 east toward Mount Athos that included a minimum, take-or-pay provision to ensure revenue while infrastructure financing was in place.

The supplement, Mitchell said, limits sales: the line was intended primarily to serve BWXT on Mount Athos Road, and the agreement prevents the water from being sold for a new retail or commercial space greater than 50,000 square feet without City Council authorization. The supplement also allows negotiated revenue-sharing for larger developments and permits negotiation of capacity sales to other political subdivisions.

Staff recommended that council authorize sending a letter saying the city intends to renew the contract while reserving the right to negotiate and to bring the matter back as a regular business item for a June 24 decision. Mitchell said any formal negotiations on new contract terms would occur before the end of the current contract in 2027.

During discussion at the work session, a member moved to recommend that the planning/administrative committee (PDC) forward this recommendation to council on June 24; the group voted in favor to recommend it to council. In that exchange, Mitchell said: "This, on June 24, all we're asking for is permission from City Council to send a letter saying that we intend to renew the contract, but we want to reserve the right for negotiations." He also told council that staff sees an opportunity to "renegotiate certain terms, clean up the contract because it is 2 contracts now" (the 2007 contract and the supplemental agreement).

Staff said the matter will be returned to Council for a formal business item (not a public hearing) on June 24 where Council will decide whether to notify CCUSA of intent to renew. No council vote to finalize a contract amendment was taken at the June 10 work session.

Ending

City staff framed the item as a timing matter: because notification must be given by June 30, staff asked for direction to notify CCUSA of intent to renew while preserving the city's ability to negotiate and bring any negotiated terms back to council before 2027. Council referred the recommendation to the June 24 agenda as a regular business item for a formal decision.