To:

Phil Martin, Augusta County Service Authority

From: Tom Anderson, Community Energy Solar
Date: February 8, 2019
Re: Comments and questions in response to ACSA Memo on Solar Impacts

We have reviewed your December 31, 2018, Memorandum to the Augusta County Board of Supervisors and
Planning Commission titled “Impacts of Proposed Solar Farm on ACSA Rate Payers” and we have several
questions, observations, and requests for additional information to help us better understand the study
assumptions leading to the potential financial impacts stated therein. We have organized this by memo section
and all are based on your underlying analysis, so we believe the answers and data should be quick at hand.

• Introduction

• The memo references 1,780 acres of the solar project being located in the Urban Service Area.
Based on the Phase I sewer study, the Community Development Staff recommended removing
acreage from the Urban Service Area and reclassifying it as Community Development Area.

• Is the 1,780 acres of Urban Service Area mentioned here based on the previous Urban
Service Area outline, or the newly revised Urban Service Area outline?

• If the 1,780 acres includes those areas now removed, we suggest updating the analysis to
provide the Board an accurate number and related statistics.

• Item 2

• Please provide a map of the 344 acres mentioned in this item, and please highlight what parcels
within this acreage are currently served by existing sewer and therefore do not require new sewer
lines or other improvements to be installed for service.

• Where sewer is not currently available, please provide the cost estimate assumed for extending
service to these un-served areas.

• Would ACSA bear these costs or would the prospective industrial customer?

• The memo states ACSA “analyzed a number of scenarios for possible development of these
properties (including industrial and residential uses)”

• Please provide a summary of the various industrial development scenarios, including

location, type(s), timing, and cost ACSA would incur to provide service to each potential
development.

• Please provide available independent economic development studies that were used to
determine the probability that these scenarios will occur in the next 5 years.

• Also, please provide a copy of the detailed build out business model spreadsheet that was
used to calculate the $3,346,000 in lost revenue.


• Item 3

• Please provide a map of the “1,200 additional acres” referenced in this item

• The item states, “All these properties lie outside the limits of, and would not be impacted by
recommendations from, the study.” This would seem to indicate these areas are outside of the
recent sewer study and therefore are not being considered for new sewer infrastructure.

• Please clarify this statement and provide the ACSA’s analysis that shows the likelihood this
area will be developed and served by ACSA and under what projected timeline.

• Please summarize the location, timing, densities, and cost to ACSA to provide service for the
prospective residential build out. Also please provide the various assumptions for how much sewer
capacity (i.e. service size and gallons per day assumed) each prospective industrial customer would
require.

• Please provide the estimated cost ASCA would incur to serve these locations and the current
estimated time period for the infrastructure build out.

• Please provide a copy of the build out business model spreadsheet that was used to calculate the
$2,200,000 in lost revenue.

• Item 4

• Please provide a map of the 1,780 acres assumed in this item.

• Please provide the total cost of the 2010 ENR upgrade and capacity expansion.

• Based on the limited information available in the ACSA annual financial reports, it appears
ACSA financed the ENR upgrade and capacity expansion with approximately $14M in bonds
and a $3.83M grant.

• Is this the total amount for the project?

• Please list the addition sources of funding for the project, such as other available
internal funds, state grants, etc.

• Please provide the cost that would have been required in 2010 to simply upgrade the previous 2.4
MGD capacity plant to meet the new Chesapeake Bay ENR standard (i.e. absent the increase in
capacity).

• At the time of the 2010 capacity increase, ACSA’s annual report data suggests the Stuarts Draft
WWTP was running around 50% capacity, meaning there was more than 1 MGD of available
capacity at that time. Did ACSA commission an independent economic development study to
determine the probability that industrial development and overall sewer capacity needs were
forecast to occur at a level necessary to justify the additional cost to increase capacity from 2.4
MGD to 4 MGD.


• Also, please detail how many new industrial customers and houses would be required to add 1.6
MGD of wastewater to the Stuarts Draft WWTP.

• Finally, how much would it cost ACSA to complete sewer service to the un-served portions of the
entire 1,780 acres and what would the reasonable build out timeline be given current economic
development trends?

• Item 5

• Please provide a map of this area, including highlighting parcels currently served or could be
immediately served by water (i.e. no extensions/improvements required)

• How many parcels and related acres that are proposed for the solar project have existing water
lines on or immediately adjacent the properties?

• Do these same existing lines also serve other non-solar parcels?

• For those solar project properties lacking a direct water connection, how much would it
cost ACSA ratepayers to provide extend service to the parcels.

• Items 6

• Has ACSA commissioned a recent independent study to determine the probably of occurrence of
the “major industrial, commercial, or residential” development mentioned for any of its major
WWTP regions?

• If yes, please provide.

• Please provide any recent independent economic development studies that show the probably of
occurrence of the “prospective" industrial development specifically in the Stuarts Draft area.

• As part of this response, if information is available, please detail timing for such
development, types of industries most likely based on current trends in the region, sewer
capacity expected to be required for each industry identified, minimum acreage required
for each industry, assessment of available workforce for each industry, and finally ACSA
cost to provide sewer service to representative target parcels.

• By our estimate, even with the solar project, there are hundreds acres within the Stuarts Draft area
that are mapped future potential industrial parcels in the Comprehensive Plan and that would be
able to accommodate new sewer capacity customers. Further, fairly recent ACSA customer
acquisitions indicates this could be more than enough acreage to achieve reasonable treatment
capacities at Stuarts Draft WWTP, or at least keep moving in that direction.

• For example, Shamrock Farms, which required a relatively small parcel and yet produces
significant wastewater, sits on a relatively small lot. Shamrock is far and away ACSA’s
largest customer.


• Given that the Stuarts Draft capacity increase was complete well in advance of Shamrock
Farm site selection process, was Stuarts Draft considered as a potential location for
Shamrock Farms?

• Please explain why Stuarts Draft was not selected by Shamrock Farms.

• Finally, this item highlights the fact that there is significant available capacity across the ACSA
WWTP portfolio.

• As noted above, has ACSA studied what different types and combinations of development
would be necessary to make the most cost efficient use of each WWTP service area?

• If so, did that study include an independent economic development and growth
assessment that provided the likelihood such growth could occur over various
timelines?

• Based on the ACSA’s 2018 CAFR, the 10 largest wastewater customers produce an
average daily total wastewater flow of less than 1,000,000 gallons per day
(estimate based on 6 days per week of wastewater flow; this is skewed a little high
because Shamrock Farms produces nearly twice the amount of wastewater as the
average of the next four customers).

• The data also show there are only a handful of ACSA customers that produce on
the order of 100,000 gallons of wastewater demand each day. This would seem to
indicate that a significant number of the very largest ACSA industry customers
would need to locate in each WWTP area in order to maximize return on
investment at each WWTP.

• As asked above, has ACSA commissioned a recent study to determine the

likelihood and timeline of future growth in these aeas?

• Item 7:

• We believe it is an exaggeration to suggest that using 344 acres of Stuarts Draft land for a solar
project (the county’s own Comprehensive Plan states there is ample land currently zoned for
residential housing for more than the next several decades of growth) would end up requiring a
$20M of investment in Weyers Cave to accommodate near-term Augusta County economic
development. As such, none of this item has any real applicability to the Stuarts Draft solar
project situation and it should not be included in the calculation.

• First, as noted above, the memo makes clear ACSA suffers from a significant current-over-
build situation in most major WWTP areas. This has resulted in ample WWTP capacity
across multiple ACSA areas to custom-solve for any industry that is reasonably likely to
pursue an industrial site in the county.


• The memo shows there is ample capacity for significant future potential industrial growth of
various types at Middle River and Fishersville, such that if Stuarts Draft “filled up” first
Weyers Cave wouldn’t been needed for decades unless a special mega-site industrial
customer came along (i.e. the exact customer Weyers Cave has been slated for, and which
would not be appropriate for Stuarts Draft, Middle River, or Fishersville).

• As described above, Fishersville WWTP alone would appear to be able to handle an

entirely new influx of the top ten current ACSA WWTP customers. 700,000 GPD at
Middle River would accommodate how many more Hershey-level wastewater
producers?

• Therefore, the true probability that all of Stuarts Draft, Middle River and Fishersville WWTP
capacity would fill up so quickly, necessitating $20M in Weyers Cave expansion and
upgrades, is so low that the number cannot be legitimately used in the model.

• Finally, Augusta County has already invested in a “speed-to-market” strategy by funding Mill Place
Commerce Park.

• Shamrock Farms was provided significant incentives to locate at Mill Place, despite
availability of land and WWTP capacity at several other ACSA WWPTs.

• The recent Phase I sewer study clearly showed that the vast majority of the Stuarts Draft
area will require ACSA investment in expansions and improvements before significant
acreage could be accessed by the existing sewer infrastructure, but as noted above our
analysis shows hundreds of acres of available “future potential industrial” land outside the
solar project parcels.

• The result is that only a very few parcels in Stuarts Draft (e.g. across from McKee
on property that remains available even with the solar project; and west Stuarts
Draft along Johnson Dr.) could compete with any number of sites at Mill Place in
Verona or Fishersville.

• Summary Section

• Based on the data in the memo, and as described above, the $25,000,000 "potential loss" is
significantly overstated.

• First, the math results in double counting. The summary concludes that “combining items 2
through 6 the total negative economic impact is …” This assumption appears to add
potential revenue-base estimates, such as those in items 2 and 3, to potential net-capital
asset value impacts used in items 4 and 5.

• Combing two different valuation models results in improper double counting. Each
different model seeks to account for a loss value on the same acreage, just in a
different way. Therefore, while each can stand alone, and be compared, they


cannot be combined. We would suggest the revenue model is appropriate and the
asset valuation model lacks sufficient basis.

• Please reevaluate and clarify.

• Second, we would also argue that in order for the estimates presented in the memo to be
useful to the Board for proper decision-making, the memo should have been accompanied
by a complete summary report of all assumptions (development types, timelines, ASCA
required costs, revenue assumptions; and, importantly, third-party data documenting the
likelihood the scenarios could become reality).

• Finally, and importantly, as implied in several items above, the values presented in each item
- whether revenue based or capital-asset based - do not appear to account for the any
realistic probability of success (i.e. likelihood of occurrence of the forecasted outcome). In
other words, the calculations do not appropriately correct for the reasonable probability
that any of the parcels will actually become developed with industry or houses that will end
up producing the desired wastewater revenues in the timeframe anticipated.

• Is ACSA guarantee to the Board the values presented? If not in total, how much
would ACSA be comfortable guaranteeing?

• Given the significant uncertainty inherent in this study, the memo’s revenue
forecast should acknowledge that there is no guarantee that any, much less all, of
the properties will be developed with sewer customers during the study’s timeline.

• It is our view that the Board deserves to be instructed of the significant

uncertainty in these numbers, that any total revenue projection is
speculative, that there is no independent data to show these scenarios will
actually happen, and that it is just as possible that very little of the
estimated revenues will materialize as projected over the proposed
timeline.

We respectfully submit these observations and questions and we appreciate you and your team taking time to
send us your response.