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Service authority move upsets Town of Halifax

Halifax Councilmen took the Halifax County Service Authority (HCSA) to task Thursday evening for planning to build a $600,000 building in South Boston when vacant buildings are available in Halifax.

Earlier in the day, Halifax businessman and property owner Frank E. Booker III protested outside the Halifax County administrative offices objecting to the HCSA’s building plans and calling for the resignation of HCSA Director Willie Jones and Chairman Doug Bowman.

Representatives from Halifax Town Council attended the HCSA monthly meeting Thursday seeking answers to why the service authority plans to erect a new building in the Houghton Industrial Park in South Boston.

Halifax Mayor Dick Moore and the three members of the town’s Current Affairs Committee, Chairman Jack Dunavant, Holt Evans and Tom Brown asked the HCSA board if the plans for the new $600,000 building are in fact “a done deal.”

Jones explained the HCSA has signed a lease-purchase agreement with the South Boston IDA that was approved at the last board meeting.

Bowman added the contract has been signed, the contractor has started digging the footers, and the building had to be ordered by Dec. 31 to keep the pricing that had been quoted.

“We looked at this over two or three meetings and the options we had, and this was the option we chose,” Bowman explained.
Moore asked what is the advantage of building a new building instead of renting a vacant building.

“We have a ton of buildings available to be rented in the Halifax area and the South Boston area,” he said. “Yet we hear you want to build a building that would cost around $600,000 to $700,000 preliminary. Is that a turnkey job where you move in, and there’s no other expense involved?”

Jones explained the $600,000 in the contract contains a contingency of approximately $35,000.

“That includes building, land, grading, landscaping and fencing,” he answered. “Internally we are still working to finalize the cost for computer systems and computer software.

“With respect to furniture, it is our intent to use second-hand furniture that is held by the county and school board,” Jones said.

“We’ve already been working with them to see what they have in inventory, and we think that’s more than enough to fully furnish the building with what furniture we need.”

Jones said the HCSA is looking at annually leasing computer systems, and they expect the estimate to be under $20,000.

Phone costs probably would equal what they are currently paying, and insurance will be about $1,000 a year. He said power and heat would be offset by what the HCSA currently pays at the Hamilton Boulevard facility.   

Moore also asked what impact building this new facility would have on water and sewer rates now and in the future.

Jones said in mid-June the HCSA received notice from the county that the fiscal agent fees would be increased from $60,000 per year to $102,000.

He said they also were provided documentation those fees would increase in the future to $144,000 per year.

Chairman Doug Bowman explained the county’s fiscal agent agreement includes handling general ledger, accounts payable, payroll, and a portion of county staff time was being used to handle the authority’s business.

“That’s where we’re headed if we stay with the county,” he added.

Jones said one of the long-term objectives of the HCSA is to have a consolidated location.

“Staff has been checking out locations all the way through,” Jones said. “Last summer when we received word of the increase, shortly thereafter a proposal was submitted to us by the South Boston IDA to examine the cost and possibility of using a site over in the (Houghton) industrial park.”

Jones said what they were looking for would be a location where they could consolidate the maintenance staff and administrative staff in one location. He said they examined several buildings in the area.

“We weren’t just looking at office space,” Jones said. “We were looking at a space where we could store equipment, pipe, trucks, have space for the workers to come and assemble.

“We have a lot of inventory of parts and repair parts that we have to store, and right now they’re stored at the South Boston yard,” he continued. “And we felt it was better to look at the uniform facility.”

He said when they close on the new building, the HCSA will pay about $54,000 a year in a lease-purchase agreement that would belong to the authority in 15 years.

At the end of the 15 years, the building will belong to the authority, and that $54,000 yearly payment will no longer be an expense.

The cheapest price they could come up with looking at other options was approximately $72,000 a year, Jones said.

Replying to a question from Moore, Bowman said relocating is a need and not a want.

Comparing renting to owning, Bowman said the HCSA is a long-term business, and it would not make any sense to relocate to a building it could not own.

“We needed something we could ultimately own because this is not a short-term business,” he said.

Jones added they checked on several buildings, and they could not get prices to purchase them.

Bowman said they need two to three acres to have a yard sufficient to store inventory, house the trucks and keep all the maintenance and operating crew in one place for operating efficiency.

Jones said the authority is paying the county $102,000 a year now, and that is projected to go to $144,000.

He said when everything is done, the final cost for the authority will be in the neighborhood of $144,000 a year, but in 15 years $54,000 of that amount drops off, and the authority owns the building.

He also said that would include adding one personnel position to do what is shared by several county workers now.

Councilman Dunavant questioned the HCSA board on what would be the best deal for the customers.

He asked if the authority sought bids for the building, to which Jones replied the building is being handled through a lease-purchase agreement with the South Boston IDA, which did solicit bids for construction of the building and financing.

“The reason to move was forced on us,” said Bowman, “although it did meet our stated objective that we would be an independent entity someday. Three years just happened to be the time.”

Bowman also said the costs would be approximately $10,000 more per year under the new system, which represents very little in a $4 million annual budget and will not affect the rates.

“The impact on rates was a wash, and we would have a much better facility and much more operating efficiency,” Bowman said.

Dunavant suggested moving to a storefront building that could be rented for about $1,200 a month. Moore asked if town officials could see a study on rent versus building.

Jones replied no formal study had been completed, but he would share the analysis of the cost the authority would have if it were to go to a storefront.

Moore questioned improved productivity by putting everything under one roof. He said consolidating everything under one roof is not what they have to have, rather it is a want.

“In my mind I cannot see where it will save much money,” Moore said.

“We came here with an open mind,” said Moore. “We don’t care where it’s located, we just want to save our citizens and businesses as much money as we can, and operating good water and sewer through an authority is one way to do that.

“It is our responsibility to represent them and bring it before this authority. It would be good for the public and good for the working relationships in our county if you did keep the public informed.”

HCSA board member Thomas Walton assured the Halifax representatives the HCSA board wants to do what is most beneficial for its customers in the long term.

“It’s safe to say there will be no change in the decision to proceed with the project,” said Bowman. “We’ve gone too far.

“We made the commitment, we did the ‘due diligence,’ and we felt good about it,” Bowman continued. “The timing is right, the financing is right, it’s a good time to bid for construction, but the need to move, we didn’t have the option. We could have rented somewhere, but we never would have owned.”

HCSA board member Coleman Speece said discussion of this issue has been going on for several months in open meetings.

“This is not a late development, we’ve been wrestling over this for several months, and there’s nothing secret about what we’ve been doing,” said Speece. “We’ve been going down this road for quite a while, and I think it’s unfortunate we didn’t have these discussions several months ago,” he said.

“We don’t think it will be a negative impact on any of our customers,” Bowman concluded.

In other business, Jones updated the HCSA board on monthly financial data and the Rural Development loan process.

Gary McCollum, program manager for Draper Aden Associates, updated the board on the Banister Shores waterline project.

He said the pre-bid meeting was held earlier that day (Thursday), and it was well attended by interested contractors.

Bid opening will be held Feb. 2, and everything must be complete by the end of September, but Jones said the project should be complete by the end of July. Jones also said the project has been split into three contracts to make it as efficient as possible.

The meter replacement project is about 90 percent complete, McCollum said. After all meters are installed they will have to come back and double check and set up all the data, but everything is moving quickly, Jones said.

A progress meeting on the Maple Avenue wastewater plant is scheduled for this week, Jones said. They are about 60 percent through the design.

The goal is to have the project ready to bid by late March, and bids will be opened sometime towards the end of April, then everything has to be approved by Rural Development, Jones said.

“We anticipate closing sometime in early summer,” he added.

Prior to adjourning, the HCSA board went into closed session to discuss personnel issues.