Crossville Chronicle, Crossville, TN

September 4, 2010

Tansi Sewer sets rates, rules

By Heather Mullinix
Assistant editor

— The Tansi Sewer Utility District has been busy finalizing rules and regulations, rates and fees and moving forward with a revenue bond that will allow for expansion of the sewer treatment facility and installation of sewer lines to serve about 700 homes in the Lake Tansi area.

"I've had several people call and they were ready to hook onto the system yesterday," Claude "Duke" Coyne, general manager of the district, told the Chronicle.

During its regular meeting Aug. 26, the board of directors approved rules and regulations for sewer service and a schedule of fees and rates (see sidebar).

Mike Dalton asked if the district would make sewer connection mandatory for property owners, as was stated in the proposed rules.

Jim Heath said, "It was my understanding there would be an option to actually connect to the service, but that service fees and the availability fee would begin immediately."

Attorney Don Scholes noted the state law that authorizes charging an availability fee and charging monthly service fees even on homes not connected to the system, but that could be served, also allowed the system to compel people to connect to the system.

Dalton moved to approve the rules, but exclude mandatory connection to the system, supported by Heath. The motion passed with Dalton, Heath and Herb Pallatt voting in favor.

The rules address billing of customers, discontinuance of service, access to premises and inspection, prohibited discharges, cancellation of service, interruption of services and customer complaint policy.

Also approved were rates and fees, which include a $1,500 availability fee if the sewer line is within 500 feet of property that contains a structure. Failure to pay the fee could result in legal action, including a lien on the property and fees would accrue.

The monthly charge for residential customers would begin at $50 and be based on water usage. The minimum charge would cover up to 2,500 gallons of water use a month, with a $15 charge per 1,000 gallons over 2,500 gallons a month.

Pallatt said, "These rates and fees do not take into account any funding other than the funding we are going for right now, the municipal bond issue. As other funding opportunities materialize, we have the opportunity to make adjustments accordingly."

The connection fee could be financed through the utility district over 24 months. Coyne said he planned to hold meetings with each area prior to service availability and he hoped to have representatives from area banks available to offer additional financing options to homeowners.

Some in the audience were displeased with the amount of the fees.

Davy Crockett owns 24 rental units in Hiawatha East. He said the fees would cause him to have a negative income on his property six months out of the year.

"It's going to cost me $850 a month for sewer," Crockett said.

Crockett does not live in Cumberland County and said he did not see any notice of meetings establishing the sewer utility. Public notices of meetings were published in the Crossville Chronicle, as required by law, board members noted.

"I'm one of the ones being affected the most out here," Crockett said. "I'm not against a sewer system, but it should not be allowed to destroy lives, finances, everything we've worked for. We're not against it but it shouldn't be allowed to do this kind of damage."

A lady who did not identify herself said the additional fees would make it more difficult to sell her home, and she felt all property owners should be helping to pay the costs of the system.

"I don't want to pay a $60 bill a month for three years and other people in Tansi don't have to pay it," she said. "That's not fair to put that hardship on me. I don't think it's fair. We're all part of Tansi."

The Tansi Sewer Utility District is not a part of the Property Owners Association, and it cannot assess availability fees in areas where the service is not available.

"You better start running it down all the streets," she said.

Pallatt said, "We can't build it all in one day."

Frank Thierry asked, "Have you looked at slowing the project? Do we have to go full bore and implement this? I know some of the systems are failing, and we know where they are failing. Could we not hook them on?"

Dalton said phase III included about 700 homes. If that were cut to 100, those homeowners would pay three to four times then rates being discussed.

Coyne added, "It costs so much to run the treatment plant whether you run one gallon or a thousand gallons. The cost of treatment is extremely high if you cut it back to less customers."

Pallatt said, "We really aren't going full bore. Phase III hasn't changed beyond the original plans."

Phase III includes areas around Lake Tansi, including South Lake, East Lake, Arrowhead, Shoshone, Cherokee Trail and Pueblo. The system is a low-pressure system.

Engineering is under way and phase III is expected to be completed in less than two years.

The district is hoping to secure a revenue bond not to exceed $8.2 million for construction of water lines and expansion of the treatment facility to treat up to 300,000 gallons of water a day as well as pay off a loan held by the POA. In order to secure a bond, the utility must have rates and fees that will cover the payments on the bond.

Coyne explained the district was not eligible for other methods of funding this year, as the district will have to liquidate notes held by the POA who helped provide start-up costs for Tansi Waste Management Inc., the predecessor of the district. The district will be assuming the assets and liabilities of TWMI.

Also, the district has just received a NPDES permit to allow it to serve residential customers. This, along with the environmentally friendly waste treatment system, could make the district eligible for state revolving fund loans, Community Development Block Grants and other funding programs in the future.

"Many forms of funding are predicated on serving the public," Coyne told the Chronicle.

The original permit was modified to allow for residential service and treatment up to 300,000 gallons a day and was granted following a public comment period in August. The permit modification resulted from the wastewater system ownership and operation being transferred from a private company to a public sewer district and was effective Aug. 30.

Dalton said, "We are mandated to be a viable utility and operate at a break even point. Our goal is not to make money. It is to provide a service."

Heath noted many sources of funding that were thought to be available when the project began were no longer available, including estimated $2 million in grants and $2 million in loan forgiveness.

"That's all gone due to the economic state of the nation," Heath said. "At this point, we've got to live in reality. Maybe a few years down the road, we'll have a great economic recovery and those funds will be available again. If we got a $2 million grant, that would change the rate structure and revisit our rates."

The district must be able to cover its financial responsibilities, Coyne said, and show that it can pay principle and interest payments on any bonds as well as operate the system.

Dalton moved to approve the fees, supported by Heath. The motion was unanimously approved.

Work has begun on phase II of the project, Hiawatha West, and should be complete within two to three weeks. The sewer line will cross the second and fourth golf course fairways and include Arrowhead Drive, connecting with the existing sewer line at Cravens Drive.

"It will immediately be available for service to those homeowners," Coyne told the Chronicle.

The board meets the third Thursday of each month at the district office on Utility Drive at 4 p.m.