In contrast, these same users will have to bear the full burden of 100 percent of the cost under the provisions of Public Law 86-515. Thus, local users will be penalized heavily because of a decision on scheduling which they did not make and which was not based on meeting their needs. The unusual character of the situation is exemplified by the fact that local users would find it less expensive if they could ignore the Potomac Interceptor and take advantage of Federal and State grants to construct a parallel sewer or treatment plants. Clearly, such action would not be sensible. Clearly, too, the unforeseen but very real inequity which has been created by Public Law 86-515 justifies special consideration by the Congress. A just and effective means of removing this inequity would be to amend Public Law 86-515 to require repayment of only 50 percent of the Federal funds advanced to construct that portion of the Potomac Interceptor Sewer designed to serve Maryland and Virginia residents. This would put these residents on the same basis as those residing in other areas who receive Federal grants for such facilities. Mr. DOWDY. Thank you. Mr. Orndorff, Director of the Department of Sanitary Engineering for the District of Columbia. Also Mr. Kneipp, you might come around. Mr. KNEIPP. Mr. Chairman, I have nothing to add to the Commissioners report of June 26, 1967, which I ask be included in the record. Mr. DowDY. It will be made a part of the record. (The report follows): GOVERNMENT OF THE DISTRICT OF COLUMBIA, EXECUTIVE OFFICE, Washington, June 26, 1967. Hon. JOHN L. MCMILLAN, DEAR MR. MCMILLAN: The Commissioners of the District of Columbia have for report H.R. 8965 and H.R. 9407, 90th Congress, identical bills "To amend the Act of June 12, 1960, relating to the Potomac interceptor sewer, to increase the amount of Federal contribution to the cost of that sewer." The Commissioners recognize that the construction of the Potomac Interceptor Sewer, as authorized by the Act of June 12, 1960 (Public Law 86-515; 74 Stat. 210), resulted from a number of decisions made by various agencies of the Federal Government to provide sewer service for an airport to be constructed on a site near Chantilly, Virginia (now known as the Dulles International Airport), and for the increased population (both in the then-existing communities and in new communities) and satellite developments which the airport was expected to engender. At the time these Federal decisions were made, the population of the area was minimal and those few local jurisdictions then in the area had no need for the sewer. Financing of the sewer construction was provided by a Federal grant of $3 million, representing the estimated cost of piping the airport sewage to the District of Columbia system for disposal, and a Treasury loan authorization of $25 million, to be amortized over a period of 40 years from rates to be collected from user jurisdictions. The situation, then, is that, aside from paying $3 million for sewer service to what is now the Dulles International Airport-this presumably representing the most economical means available for providing that service-the United States loaned, at regular interest, the funds for the balance of the cost of the sewer. The Commissioners believe that it has now become apparent that the decisions made years ago by the Federal Government primarily for the purpose of providing sewer service to the Dulles International Airport and the communities and other development expected to come into being by reason of the existence of the airport, have resulted in an unfair burden upon the users, both present and future, who are required by the Act of June 12, 1960, supra, to repay to the United States 100% of the loans advanced to the Commissioners by the Secretary of the Treasury for the purpose of constructing the sewer. This comes about, the Commissioners are informed, because the area in which the airport is located has not developed to the extent anticipated. In this connection, the Commissioners are informed that while in 1962, at the time plans were being formulated for the amortization of the cost of the sewer, it was anticipated that the population to be served by the facility would, in Fiscal Year 1967, approximate 81,000, the population actually being served during Fiscal Year 1967 amounted to an estimated 25,000. The Commissioners believe it obvious that the present rate of development of the area indicates there can be full repayment of the Treasury loans only by unduly burdening the users of the Potomac Interceptor Sewer. In the belief that the bills provide more equitable treatment for the users of the Potomac Interceptor Sewer, and will encourage its use by additional communities, the Commissioners recommend the enactment of one of them. The Commissioners have been advised by the Bureau of the Budget that, from the standpoint of the Administration's program, there is no objection to the submission of this report to the Congress. Sincerely yours, WALTER N. TOBRINER, President, Board of Commissioners. STATEMENT OF ROBERT F. KNEIPP, ASSISTANT CORPORATION COUNSEL, ACCOMPANIED BY ROY L. ORNDORFF, DIRECTOR, DEPARTMENT OF SANITARY ENGINEERING, FOR THE D.C. COMMISSIONERS Mr. KNEIPP. As you will note, Mr. Chairman, the Commissioners favor the enactment of one of the bills before you. Mr. DOWDY. You may proceed. Mr. KNEIPP. Mr. Chairman, with respect to the proposed amendment of the bill offered by the Washington Suburban Sanitary Commission, neither Mr. Orndorff nor I have had an opportunity to discuss that proposal with the Commissioners. I would like to ask, if I may, that the District be given an opportunity to give that proposal some consideration and then within a few days furnish the committee with a statement of the views of the Commissioners respecting it. Mr. Dowdy. I was going to ask that you do that. I read the amendment and it takes a little time to get the purport of the amendment. I do want to know what it would do. My interrogation indicated there was a question in my mind about it. Anyway, we would like to have you get the Commissioners' views on that at an early date. Mr. KNEIPP. I think that perhaps by the end of this week, Mr. Chairman. (See p. 46.) Mr. DowDY. That is good. Mr. KNEIPP. If I may, I would like to defer to Mr. Orndorff for some further explanation of the bills. Mr. DowDY. Mr. Orndorff, your full statement and exhibits will be included in the record. You may proceed. (The full statement and enclosures follow:) STATEMENT OF ROY L. ORNDORFF, DIRECTOR OF SANITARY ENGINEERING, GOVERNMENT OF THE DISTRICT OF COLUMBIA COMMENTS ON EFFECT OF PROPOSAL ON RATES FOR SERVICE The Department of Sanitary Engineering has studied the effect upon rates for service of the proposed remission by the Federal Government of one-half the total loan which was authorized for construction of the Potomac Interceptor ($12.5 million of the total $25 million). Present Fiscal Plan On the basis of the original legislation authorizing the Potomac Interceptor (P.L. 86-515), a fiscal plan was devised in 1962, extending over the 40-year period of the loan. That plan provides for payment of all costs of operation, maintenance, rental of capacity in present sewage treatment facilities, amortization of loan for D.C. trunk sewer capacity (P.L. 86-711) and for amortization of the $25 million treasury loan. This latter amortization did not follow a level debt service schedule since the Congress had recognized the need for easing the burden on the using jurisdictions in the early years, and had provided for deferral of interest and principal payments whenever the income is inadequate to cover these and other expenses of the Interceptor. Therefore, the debt service charges were planned to be relatively low in the early years and to increase substantially in later years when tributary population will have increased and the using jurisdictions will be better able to pay. Under that plan, the total charge per million gallons of sewage was established at $138.00 through 1970 and then increasing gradually to approximately $268 in the 1990's. Within this overall charge, the increment for debt service on the interceptor loan would increase from $20 per mg. initially to $210 per mg. in the later years of the life of the loan. Effect of Proposed Change With the latitude allowed in the authorizing legislation (P.L. 86-515) it is possible, as indicated above, to consider a number of variations in rate schedules so long as all requirements of the Act are met and the loan is amortized within the 40-year period. For the information of the Committee, we have analysed two possible schedules meeting those criteria. The first of these is illustrated on attached Chart A. The top line of this chart is the present schedule which is described above and which is designed to service the $25 million loan in its entirety. The second line shows a possible schedule of total charges to provide repayment of one-half the loan or $12.5 million. Under this schedule the rate rises after 1970 but at a noticeably lower rate of increase than the top line. It reaches a plateau of approximately $187 in 1995 which extends through the year 2005. The increment for debt service of the Interceptor loan again would start at $20.00 per mg but would reach a maximum of only $130 per mg. Chart B illustrates another plan under which early-year charges, both total and debt service component, would be somewhat higher than under "A" and would decline slightly in later decades when the maximum total rate would be about $172 per mg., with the Interceptor debt service increment amounting to $114. Chart C gives a graphic comparison of alternates "A" and "B" along with the present schedule. It would appear that, if the proposed legislation is enacted, alternate “A” would be the prefereable plan inasmuch as it fulfills the requirements of P.L. 86-515 with the least burdensome effect upon the user jurisdictions. Receipts to Date As possibly an item of further usefulness to the Committee, I am presenting a tabulation, labeled Table A, which lists the receipts which the various user jurisdictions have paid or will pay through Fiscal Year 1967. Chart D shows a comparison of these actual receipts with those originally estimated for the same period. |