Crossville Chronicle, Crossville, TN

November 24, 2010

Coyne resigns as TSUD manager

By Heather Mullinix
Assistant editor

CROSSVILLE — Claude "Duke" Coyne, general manager of the Tansi Sewer Utility District, has resigned his position with the utility, effective Nov. 30.

Coyne told the Chronicle he was going back into retirement and the decision was made following the uproar over what Coyne said was "misinformation" about the Tansi sewer project, of which he was a target.

"I felt it was the best thing for the district that I get out of the picture," Coyne said. "It will serve the district better in the long run. It was appropriate to get one of the talking points out of the air so the district can move forward."

Coyne also did not attend Thursday's question and answer session and utility board business meeting.

"My being there would have detracted from the purpose of the meeting, which was to provide factual answers to people's questions," Coyne said.

Hundreds of area residents attended the question and answer session held Thursday at Brown Elementary. Numerous questions were submitted to the district's board of directors prior to the meeting and, following those answers, the floor was opened to additional questions.

1. Why aren't all lots being charged the $1,500 availability fee, not just lots with structures on them?

Mike Dalton, board member, explained the utility district did not have the authority to charge vacant lots the availability fee. The county commission could charge vacant lot owners a fee, spreading the cost to all property owners in sections where sewer service was available, but that would take action by the county commission.

2. When will sewer service be available in the outlying areas, and do property owners in those areas have to pay the charges now?

A map was provided that showed the next phase of sewer construction planned, Phase 3, which is scheduled for completion in 2012. It also showed the earliest year service would be available in the future. Fees and charges would not be charged until service was available in that area. The utility would notify property owners that sewer was within the required distance of their home and the owner would have 60 days before charges would begin.

The map will be published in a future edition of the Chronicle and on our website.

3. What is the contingency plan should there be a spill of untreated wastewater?

Herb Pallatt said the treatment facility was designed with enough capacity and storage. Should an incident occur where the plant could not process the waste for a period of time, capacity exists to store waste until treatment could resume.

4. What grinder pump will be used?

The system uses a Barnes EcoTRAN system grinder pump.

5. What are the salaries of district personnel and are they capped?

The general manager of the district is paid $27,000 a year. A part-time office manager is paid $9 an hour. There is a part-time contract technician paid $800 a month.

6. Why weren't residents asked to vote on if they wanted a sewer system?

Pallatt said the utility district was the product of several years of work. It was formed according to the provisions of Tennessee Code Annotated 7-82. Under state law, no vote of residents was required.

7. Why were property owners not given written notice when the idea was proposed?

Dalton said, "The process has been going on for five years."

He held up a folder that included copies of notices and stories that had been published in the Crossville Chronicle and Lake Tansi Smoke Signals and other newspapers, spots that appeared on local radio stations and county documents.

"There were numerous meetings," Dalton said. A public meeting was held in February 2010 where more than 200 people attended and a question and answer session was held.

"That was the opportunity for the public to voice their opinion and, based on that, the mayor had the authority to either deny the petition to create the district or create it. And we all know he created it."

Dalton said it would also be nearly impossible to mail notices to every property owner.

Pallatt said that at the February meeting, former County Mayor Brock Hill asked for a show of hands of those in favor of the sewer district and a show of hands for those opposed.

"There were a handful of opposed and the rest were favorable," Pallatt said.

8. What happened to government grants and other funding to aid in the cost of constructing the sewer system?

Jim Heath said that after the nonprofit Tansi Waste Management Inc. had been formed, contact was made with state and federal officials. At that time, it was possible the district could qualify for a $2 million grant and a $6 million low-interest loan with $1 million in loan forgiveness.

"Based on that information, and with those conditions, it was estimated the monthly fee would be $35," Heath said. "When we were ready to begin work, the economic conditions had changed and those funds were no longer available."

At that time, the district began working to set up a bond issue but repayment of the bond and operating expenses caused the monthly rate to increase to a $50 minimum per month.

The district continues to seek almost $1 million in funding from the Environmental Protection Agency, but that requires a 45 percent match and the funds can only be used for engineering and planning.

Pallatt said, "Those grants and loans are not free money. There are matching funds required."

The state revolving fund loan program requires one-year's principle and interest payments to be deposited in cash before a utility can join the program.

9. How much, in addition to the $1.2 million loan, was provided to the district by the Lake Tansi Property Owners Association.

Heath said the total advanced by the POA to the utility was the $1.2 million loan, which requires repayment plus interest.

"We were not given any other money other than what they paid for the infrastructure for amenities needed to hook up to the sewer," Heath said.

10. How will sewer service impact property values?

Pallatt said there was no guarantee sewer service would improve property values, however new amenities, such as gas service, sewer service and other utilities, usually brought an increase in property values.

"But we aren't building a sewer system for today. It's for the future benefit of the community," he said. "Values aren't likely to decrease even in a depreciating market."

He also noted many homes were built on lots with septic systems designed for two-bedroom homes.

"If you were to examine those homes, they may have a bonus room. Once sewer is in place, you could sell or build, three-bedroom, four-bedroom or whatever homes. Those usually demand a higher price when selling," he said.

11. Why not fix the old septic systems that are leaking?

Pallatt explained merely pumping out septic tanks would not fix the problem of failing septic systems because the drain fields were also not working properly.

12. When was the last time Lake Tansi was tested for e-coli, fecal matter, etc.?

A 2005 study prepared by the Tennessee Technological University civil engineering department. That study found elevated levels of bacteria that were higher than Lake Mohawk, though the levels were below state water quality levels. The levels were particularly high in shallow areas.

That study recommended current systems be pumped and inspected every three years. The report noted a better alternative was to replace septic systems in the watershed with a sanitary sewer system.

A 2006 letter from the Tennessee Department of Environment and Conservation noted 380 permits for septic systems had been awarded for Lake Tansi the previous year, while another 113 repair permits had been issued. The Lake Tansi area has a lack of suitable soil depth, small lots and ground water interference that make using septic systems difficult.

13. Why is the district requiring payment of the monthly charge for a service a home is not yet using?

The utility district is permitted under state law to charge the monthly service fee to homes that have sewer available, even if they are not hooked up to the system. The sewer district could require homes to connect to the system once it is available, but current rules do not require connection. Homeowners are still responsible for the availability fee and the monthly fee, $50 for the first 2,500 gallons of water used and $15 per 1,000 gallons a month over the minimum charge.

Dalton said, "I think someone with the state decided people don't want to pay for sewer, so they made laws that don't give a choice. They have laws that outline what we're required to do."

14. How did the district set up its rates?

The utility is required to set up a rate structure to ensure all payments of operations and financing will be paid.

15. How were the current rates determined?

Current rates were developed based on operating costs and the cost of repaying an $8 million bond issue. The bonding agency must be assured the district can meet its repayment obligations as well as operate the utility district.

16. Is this final increase?

Monthly rates were originally estimated at $35 a month and have since been set at $50 a month minimum. Heath said the board was continuing to work to find ways to lower the fees and put together a project with a lower base rate. One possible scenario is a reduced scope for the next phase of construction, Phase 3A, which could include about 237 homes. The engineers, board, and bonding agency are continuing to work on that and Heath said he hopes the board will have information to report in the near future.

17. When will homeowners have to pay the availability fee and monthly fees?

Homeowners will be notified when sewer becomes available to their home and will have 60 days notice before fees begin being charged.

18. Why are monthly fees required when the owner does not want the service at this time?

By law, the utility is required to maintain the availability of the sewer service, whether it is used or not. This results in operation costs for the utility cost.

19. What is being done to aid homeowners with the costs?

The monthly fee is due upon billing. The district is working to find ways to help homeowners finance the hook-up costs, $5,950. The district is working with banks who could provide home equity loans to homeowners and the district will provide a two-year repayment plan for hook-up costs.

Heath said if the county would assess vacant lots, it would greatly reduce the costs to all property owners. Such a fee could be added to tax assessments and paid over a 10-year period, he said, though such a move would require approval of the county commission. Availability fees would only be charged to lots and homes where sewer service is available.

20. Who will maintain the grinder pumps?

The utility district would maintain the grinder pumps, though there would be a $50 service charge to the homeowner if misuse of the system caused the damage, as well as cost of repair.

21. Is there a way to not charge customers for the cost of water used to water lawns or cars when that water doesn't enter the sewer system?

The only way to differentiate water use is if a second meter was installed for such purposes.

22. Does Fairfield Glade require every homeowner to connect to its sewer system and what is the connection fee?

Heath said Fairfield Glade did require homeowners to connect to the sewer service when it becomes available and the fee was $8,800 per home.

The floor was then opened to the public for questions. Joe Orr said his sewer bill would be $80 to $95 a month, based on his water use, which is among the highest rates the homeowner could find in Tennessee.

Pallatt said many times sewer systems were subsidized by water rates or general fund operating funds of the operating agency, which many times are municipal governments.

Lori Roberts asked if fees would be reduced after loans and bonds were repaid.

Pallatt said there was no guarantee rates would be reduced but the board could adjust fees in accordance with the cost to operate and maintain the system, so it was possible. The board intends to examine its fees at least every year.

Marlene Knobloch asked what would happen during an extended power outage. Grinder pumps work on electricity and would not operate during an outage.

The grinder pumps do have reserve power and the treatment plant is a top priority for Volunteer Energy Cooperative should there be a power outage. The district also plans to have portable generators to assist during an extended outage.

Teena Strenstrom asked, "What happens if none of us pay you?"

Dalton said the district would not be dissolved. The state could take over operation of the district and require the two residential customers and 100 commercial customers pay the bills of the district. Pallatt said the utility district can't be dissolved, but it could be merged, with mutual consent, with another utility district. The state would insist the operation be financially viable.

Wayne Steele asked if those not scheduled to have service until 2016 or 2017 would pay the same hook-up cost.

Pallatt said inflation could affect the cost of future hook-ups.

Marvin Crockett asked how, if it wasn't possible to notify residents of meetings, the district would bill customers.

Dalton said, "Yes, it could have been done."

It was noted a mailing to 365 homes required the office manager to put in 47 hours of work. The utility district does have a website and is working to get information posted to it as quickly as possible to communicate with the community. The website is

He noted the board was established in March and didn't have input in the creation of the district.

"Why it was not communicated, I don't know," he said. "I assumed it would be difficult. It could have been done, but it wasn't and that's unfortunate."

Janice Crenshaw said many residents don't live in Tansi year-round. She asked if there was a maintenance bill that could be charged those who aren't using the system some parts of the year.

Pallatt said the board was re-examining its rates and looking at alternatives and trying to address part-time residents.