BY DONNIE JOHNSTON
Culpeper County may be willing to gamble to save the vast majority of the 3.5 million-gallon wastewater allocation it received from the state three years ago.
That allocation, which the county quietly applied for and received in 2004, has since been used as leverage to force the town of Culpeper to join a regional water-sewer authority.
Thus far, the strategy has not worked. And the county, which desperately wants to get into the water-sewer business, is now faced with losing much of its allocation if it does not use it by the end of 2010.
Enter Angler Development, a Warrenton-based company that has a number of large holdings in Culpeper.
Under an offshoot company called Culpeper Utility Partners, Angler proposes to build a 2.5 million-gallon sewage-treatment plant east of the town of Culpeper that officials say will serve the county's needs for the next 50 years.
In addition, Angler says it will install the entire infrastructure needed to make sewer and water available to homes and businesses from Lake Pelham on the U.S. 29 Bypass north to Brandy Station and east to Stevensburg.
Angler says it can do the job for about $90 million and get its original investment back--plus interest at an as-yet-undetermined rate--from future sewer taps. Those taps would cost at least $25,000 each.
County Administrator Frank Bossio isn't sure where Angler will get the initial investment, but said the plan brings minimal risk for the county.
Bossio said that Angler submitted its "unsolicited proposal" only after the county "talked to a lot of developers" late last year.
After these feelers, the regional company, whose backers have a long development history, put their engineers and accountants to work and came up with the plan that now appears on the county's Web site.
QUESTIONS ABOUT ANGLER
Why is Angler interested in taking on such an ambitious task?
First, the company has three major projects--residential and commercial--that could someday be served by the infrastructure.
Second, according to Executive Vice President Steve Vento, the construction slowdown has created a void that Angler could fill with this job.
"We've got a good development team and I'd really like to keep them busy during this downturn," Vento said.
A public-private utility partnership is not unique in Culpeper. Three years ago, the county entered into a similar agreement with Centex Corp., which proffered a 250,000-gallons-per-day sewage-treatment plant during a major rezoning for Clevenger's Village.
Centex paid $20 million for the plant, which is near completion. It was built and is owned by the county, which had hoped to make it a source of revenue through tap fees from developments in the Jeffersonton area.
The completion of that plant was supposed to be timed so that Centex could start building homes at full tilt when it was ready, but the construction slowdown has resulted in a new plant with no new customers.
Under the initial agreement, Centex will make up for any operating-revenue shortfall for two years. But after that, the county could begin losing as much as $500,000 a year if it doesn't have enough customers.
Some officials worry that Angler doesn't have the staying power of a large national corporation such as Centex, and that county taxpayers will wind up holding the bag.
"It is surprising that Angler can somehow pull together a $100 million deal for utilities and can't pull together a deal for its [Copper Ridge] development," said Culpeper Mayor Pranas Rimeikis. "We'd hate to see taxes pay for that [plant]."
Copper Ridge is Angler's major development, near Culpeper National Cemetery, which has gone into bankruptcy.
Part of the Copper Ridge deal was a 12-acre parcel for a new police station that Angler promised to give the town. Now that much-needed facility is on hold while bankruptcy proceedings continue.
Vento defends Angler's bankruptcy action and says it should have no bearing on the county water-sewer proposal.
"We got caught in market conditions," Vento said, adding that a financial restructuring plan should be though the courts within 60 days.
RISK AND REWARDS
Bossio sees the Copper Ridge bankruptcy as good business strategy.
"[Angler] wanted a financial restructuring from the beginning, and it is my understanding that they couldn't get it," Bossio said. "So they went to bankruptcy court and the judge gave them what they wanted in the first place."
Bossio emphasized that the county is not going to go out on a limb with Angler or anyone else.
"They're making an investment," he said. "We transfer the risk from us to them, but they get all the rewards, too."
Angler won't actually get all the rewards, just repayment of its initial investment plus the undetermined amount of interest.
And, the county administrator acknowledged, "There's always risk."
If the Board of Supervisors goes for the idea, Vento said, the county will be fully protected in the venture.
"This project can't even be started until 100 percent of the financing is in place," he said. "And we don't get a nickel back unless the system is 100 percent completed."
Bossio and Vento agreed that any agreement must be signed by August at the latest for the plant to be on line by the time the county's state allocation expires. "We have critical schedules," Vento said.
Meanwhile, county attorneys are busy trying to determine and mitigate all taxpayer risks and also figure out how possible town-county consolidation might figure into the equation.
"The county is not going to take on any liability in this field," Bossio said. "We are going to use every instrument to protect the county."
Donnie Johnston:
Email: djohnston@freelancestar.com