Crossville Chronicle, Crossville, TN

Area News

November 12, 2012

Carey: Sewer merger proposal a starting point

CROSSVILLE — Cumberland County Mayor Kenneth Carey Jr. told a group of Tansi area residents that while there are many issues to work out in a proposed merger of the Tansi Sewer Utility District, South Cumberland Utility District and city of Crossville, the proposal by Crossville Mayor J.H. Graham III offers a starting point to find a solution for continuing issues and concerns surrounding the sewer district.

"First, I did not create this utility district. I have been as far as the Tennessee Attorney General to see if I had the power to un-create it, and I've been told no at every stop," Carey said. "I'm trying to help you all find a solution that will fit because there are folks that want sewer and there's some that don't want it."

The meeting was an informational meeting organized by state Rep. Cameron Sexton with Joyce Welborn of the Tennessee Comptroller's Office, working with the Utility Management Review Board.

The proposal calls for consolidating TSUD and South Cumberland Utility District with the city of Crossville's municipal system. Graham recommends a decrease in water rates of 7 to 10 percent.

There are a number of conditions that would have to be met, including the city taking ownership of a sewer line along Dunbar Rd. that serves Brown Elementary and is currently owned by the Cumberland County School System. The Tennessee Department of Environment and Conservation would also have to approve transfer of the operating permit for the sewer treatment plant while commissioners for both utility districts and the Crossville City Council would have to approve the merger. After that, the petition would go before the Utility Management Review Board for comment and Carey would hold a public hearing on the petition.

The proposal calls for a $1,250 tap fee for single-family residential connections plus the cost of a grinder pump and installation. Fees would be a minimum of $30 per month up to 3,000 gallons. Before sewer service would be extended, however, 51 percent of the property owners would have to agree to pay a tap fee.

"This is just a proposal," Carey reiterated. "Nothing is written in stone that this is going to happen. That's not the case. This is a proposal, a starting point."

Carey said he had received both positive and negative comments regarding the proposal.

A member of the audience said, "The city is offering you an out. We need to get a solution to the problem. We need to get out of debt. The city is offering a solution. If you had a toilet you couldn't flush for five days because of the rain, you'd think differently."

Others commented the cost was too high as proposed, with the current proposal calling for the minimum charge to be assessed to all lots with sewer availability. The problem is that many people have multiple lots, often because of the need for additional field lines when their homes were built, and would face multiple minimum charges under the proposal.

Carey said, "It's not a good idea for you to have to pay twice when you could never use it but for that one home."

Welborn discussed various points of operation and revenue for a utility service under public and private ownership.

As a municipal provider, the city would be able to apply for Community Development Block Grant funds and also would have the ability to borrow from the State Revolving Loan Fund and seek loans and grants from USDA Rural Development. Some have mentioned seeking grants and other funding through TSUD or the POA to help bring the cost of the sewer system for customers and residents down, but TSUD does not have the funds to provide the required 12 months debt service on loans from the State Revolving Fund Loan, Welborn said. Only city and county governments can apply for CDBG funds, and Rural Development offers low-interest loans with grants.

"If it's under private ownership, you can't get anything," Welborn said.

Welborn and Sexton discussed Public Chapter 215, which Sexton and state Sen. Charlotte Burks worked to pass in 2011, which gives the Utility Management Review Board authority to have financially distressed utility districts enter good faith negotiations on mergers or consolidation and, should one back out of an agreed consolidation, the authority to enforce the consolidation. However, that law does not apply in the case of TSUD because it does not meet the definition of financially distressed, which is having negative total net assets, in default on an indebtedness or having a negative change in net assets for two consecutive years. There were questions of if the district would become financially distressed if it assumed responsibility for a $1.2 million loan the POA made to Tansi Waste Management Inc. to construct the treatment facility. Welborn said state law prohibits a public utility from assuming a private debt, so the district could not take on that loan.

Under current law, a public utility cannot revert to a private system, Welborn explained. However, she noted a judge could decide differently in the pending lawsuit and return the sewer system to the POA or to TWMI. If TWMI controlled the system, rates would be set by the Tennessee Regulatory Authority. Under POA ownership, the members of the POA would govern rates. If consolidated with the city, the city council would set rates. Those rates can be different than the rates charged other sewer customers of the city of Crossville.

Carey said, "I think we need to work toward some kind of system where the sewer can service those who want it, but not cost those that don't."

Worries were raised that the consolidation with the city would be the first step towards the city annexing the Lake Tansi area; however, the area is outside the city's Urban Growth Boundary. Changing that boundary requires public hearings and approval by the city and county governments. Also, property annexed must be adjacent to property already in the city limits.

Sexton said he would pursue legislation in the coming session regarding the process for forming utility districts to provide greater protection for communities; however, that would not affect TSUD as it is already formed.

Sexton also agreed to seek an opinion from the Tennessee Attorney General from regarding the legality of the POA giving away property without a vote of the membership, thereby making the original transfer of the sewer system void.

Sexton also invited people to email their questions regarding environmental concerns with the sewer system and operating permit to email him at rep.cameron.sexton@capitol.tn.gov, and he will attempt to get those answered.

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