Crossville Chronicle, Crossville, TN

July 23, 2012

TSUD votes to wait and gather more information before applying for SRF loan

By Clayta Richards
Smoke Signals editor

CROSSVILLE — Commissioner Jim Heath opened the June meeting of Tansi Sewer Utility District (TSUD) by welcoming the newly appointed commissioner, Virgil Ferguson. Ferguson replaces Herb Pallatt, who recently resigned from the TSUD board.

Danny Plumlee, president board of directors of the Lake Tansi Village Property Owners Association, asked to address the TSUD board members regarding the lawsuit the POA filed against the utility district.

At issue is the situation that TSUD currently claims the wastewater treatment plant and sewer system infrastructure as assets, but they claim none of the liability for the bank loan on those assets. The POA has the liability for the assets. A lawsuit was filed Sept. 23, 2011, by the POA, hoping to receive relief through the court system.

Plumlee told them, "The lawsuit has been dragging on, and we're anxious to get it settled." He stated a majority of the POA board members want TSUD to relieve the POA of the $1.3 M loan (plus interest) by accepting the liability for the loan. That action would also unencumber the POAs assets named as collateral on the loan.

Plumlee stated the POA doesn't want the assets, "We just want you to pay the loan."

Ferguson said, "The POA could take the asset back and run it like we're doing."

The two boards made tentative plans to discuss the matter at a special called meeting at 5 p.m. July 12. Public notice would need to be issued.

A lot of discussion came up over applying or waiting to apply for a state revolving fund (SRF) loan. The money is needed to make expansion to the plant, and, hopefully, expand the utility's customer base. At the moment, other than Lake Tansi facilities, there are only 6 residential customers online.

SRF loans have to be repaid, otherwise the state will take over the utility and set rates sufficient to repay the loan. High estimates of loan money needed were sent in initially to see if the state would allow Tansi to apply for the SRF; they were $1.3 M for the collection project and $1.1 M for expansion needs of the treatment project. In actually making application for a loan, the scope of the project would be reduced and the loan would hover closer to $1.5 M.

Audience members brought up the possibility of applying instead for a Community Development Block Grant (CDBG), because that would not require repayment. It would, however, require matching funds. Heath and others think a couple of areas in Tansi could be classified as low income, therefore qualifying it for consideration of the CDBG.

Mary Beth Elrod, of ECE, told the commissioners she needed a resolution to go ahead and apply for the SRF loan or not. Ferguson moved to delay applying for the loan until they understand more about what they can and can't do and have time to talk to an attorney. Heath stated if they didn't go ahead and apply now, it would be 12 months before they could apply again. Kerley and Ferguson carried the vote to wait.

Ken Deadmon, in the audience, told the group they needed to get John Hall, of Tennessee Association of Utility Districts (TAUD) to their meetings because Hall would have many of the answers they need.

Heath responded that Hall has been invited, but not responded. Heath said Hall had dropped them.

The commissioners asked Elrod to find out what the "drop dead" date is for applying for the SRF loan this year. They indicated they would get an attorney's opinion whether they should be applying at this time. If the attorney thinks they should, a special meeting will be set.

A lot of back and forth comments took place during the meeting regarding the rates that Tansi residents might incur if the customer base does not grow, and especially if the state came in and set the rates due to lack of payment of a SRF loan. At a recent informal meeting with Chuck Burgess, of ECE, he suggested rates could be as high as $165 a month. There were several strong objections to such a rate, and declarations against paying it.

Davy Crockett announced to the commissioners that he has a petition with more than 1,000 signatures of Tansi residents against the sewer being installed in the community. Ferguson said he would like to see the petition.

Being new to the board, Ferguson made a statement on the record, "I want to act on behalf of the customers, current and future, of the utility district."

Near the end of the meeting, Kerley also made an "on the record" statement: "Before I was elected and Mr. Ferguson, I heard that the people didn't get much cooperation from the board. I'm here to help."

Gary Dillon was recognized as the new general manager of the Lake Tansi Village POA. Dillon has been employed by Lake Tansi for 30 years.

Jim Heath stated, "We'll try to do everything we can to help you."

Johnny Whitaker, a 31-year employee of Lake Tansi, was promoted to Dillon's previous position of maintenance supervisor.

The district received a billing from ECE (engineering services) for back fees and permits for $3,017.25. Paying that bill was approved.

There was no news regarding state permit approval. That has been pending since November 2011.

Chris Selk reported the wastewater treatment plant is operating as it should, accepting 12,000 to 15,000 gallons per day (gpd) to process, with peak periods being around 21,000 gpd.

Selk was asked if there was rainwater entering the system at Hiawatha East. He said he would check.

Election of officers was on the agenda. Trey Kerley moved to make Jim Heath president, himself vice president, and Virgil Ferguson secretary. Ferguson asked Kerley to consider taking on the presidency. Kerley responded that his schedule did not allow him to do so at this time.

The original motion passed.

The commissioners approved paying the LTPOA minimal monthly commercial fee, of $15.50, on water usage at the plant. This rate is retroactive to February 2012.

Kerley requested the monthly meeting day be changed to 4 p.m. on the third Tuesday of each month. This was approved. The next meeting will be on July 17.