Supes Wrestle With Future of Lake Powell

Wednesday, November 24, 2010

James City County Supervisors were hesitant about moving forward with a plan to purchase and restore Lake Powell, but they did like one idea that would get property owners what they want and leave the county out of it.

About 60 owners with properties adjacent to the former Lake Powell, much of which has drained since the dam failed in 2006, want the county to purchase the lake, repair the dam and maintain the area for recreation. In return, owners are willing to create a Lake Powell Service District that would allow for an increase in real estate property taxes on just homeowners in the district. Representatives for the homeowners came to present the idea to the board at their Tuesday work session, but supervisors generally didn’t seem to warm to it.

What they did like was new County Administrator Robert Middaugh’s idea, which a contractor proposed to him on Monday. That idea is to have a private business (in this case, the contractor Middaugh spoke with, possibly) purchase the lake, repair the dam and create a nutrient mitigation bank, which would pay for the cost of the project and still make some money for the owner while eliminating the county from the picture.

A nutrient bank allows owners of waterways that absorb and process nutrient waste (like a new lake) to “sell” water quality credits to entities or businesses that introduce harmful nutrients to waterways (such as a waste water treatment plant). It’s similar to the idea of proposed carbon cap-and-trade legislation which would regulate carbon air emissions.

Nutrient banks are a very new idea, Middaugh said, but one other pond in the county is considering creating such a bank.

The hitch is that the Army Corps of Engineers, which is tired of wrangling over the area with the current lake owners who have tried unsuccessfully to create a wetlands mitigation bank (an idea similar to a nutrient bank, but with land developers buying credits from preserved wetlands), has set a deadline for the project. It needs to get underway in 2011.

The residents are requesting the county’s help because they can’t get the sale, permitting, bids and financing together by the deadline.

They told supervisors they estimate the cost of repairing the dam at about $1.4 million. The group estimates that raising taxes in the new district by 12 cents per $100 assessed valuation would raise about $700,000 of the cost.

Residents currently have higher taxes because they once had water-view property. Their collective land value was lowered from about $7.6 million to $4.5 million by the Board of Equalization in 2008 due to the empty lake, but they still pay a premium for the view that doesn’t exist, they argue.

Supervisors Jim Icenhour and Mary Jones weren’t sold on the idea because they didn’t like the risks involved, including uncertainty about the overall costs, the maintenance costs, and the reliability of the structure. Jones didn’t like the idea of spending county money on projects that aren’t a priority.

Chairman Jim Kennedy didn’t like the economic unknowns, either, and he was concerned about the idea of taking so much land value and applying it to an amenity because it might set a precedent for others looking for a deal.

He was also concerned about how much staff time would be taken up with the issue at a time when they’re busy with upcoming budget discussions and the ordinance update.

Middaugh agreed it was an atypical move for a county to make. “We don’t generally go and invite risk,” he said.

He did suggest that, if supervisors wanted to go forward with the idea, they take the full cost of the lake purchase and restoration and assess a tax increase that would cover the whole cost. He also suggested that if land in the district were to sell, the special tax assessment be due in full upon the sale.

Supervisor Bruce Goodson said he could go along with the idea with those conditions. “Getting the extra taxes should take care of future risk,” he said, and this “would make a template for future use” in similar situations.

Supervisor John McGlennon, who has been facilitating discussions among lake-adjacent property owners and the current lake owner, agreed the costs would need to be better known but he argued it would be a good idea not only for the property owners near the lake, but also because increasing nearby land values will bring more revenue to the county in the long run.

Supervisors also seemed to agree that they liked the idea of a public-private partnership to tackle the project, which could also mitigate some of the county’s risk.

Staff will compile data on cost, staff time and answers to other questions the board posed and supervisors will discuss the idea again in early January. In the meanwhile, staff will talk to the Army Corps and explain that they are discussing the idea.