Crossville Chronicle, Crossville, TN

Area News

December 26, 2012

Motion to halt merger talks tabled

CROSSVILLE — A motion to end negotiations between the city of Crossville, Tansi Sewer Utility District and South Cumberland Utility Districts, except through Cumberland County Mayor Kenneth Carey Jr., was tabled by the city council Tuesday to be addressed in the coming year.

Councilman Pete Souza presented his argument that the proposed merger of the three utility departments was not a good deal for the taxpayers of the city with three main areas of concern: the business model, the effect on the Crossville residents and that the Tansi sewer problem was not inherent to Crossville's government.

Souza said the permit approved for the district was an "unrestricted permit."

"The people who manage the sewer system can do anything they want," Souza said.

There was also the issue of claims against the sewer utility district, including a lawsuit filed by the Lake Tansi Property Owners Association for repayment of a $1.2 million loan used to construct the wastewater treatment facility and a lawsuit filed by ECE Engineering Services for nonpayment of more than $430,000 in engineering fees. There is also a question of if the utility district could repay funds loaned to the private entity Tansi Waste Management, Inc. The assets of TWMI were transferred to TSUD, but the liability for the loan was not.

"If we assume the company and they in turn sue us, then we're going to write a check for whatever the judge so decrees," Souza said.

Crossville Mayor J.H. Graham said, "There are several things anybody would have to work out before they would be able to get a clear and equitable title to take over those assets."

The city is also currently being sued by some property owners following the water harvesting project. Souza said he'd been told by some residents that, if the merger were approved, they would sue the city for that action.

Souza also noted concerns with the wastewater treatment facility and the capacity of Lake Hiawatha to continue to accept the treated water, citing concerns the lake was filling in. He was also concerned the state may require a different form of treatment than the membrane system used by TSUD in coming years. The operating permit for TSUD has also not yet been reissued by the state, though the system has a letter of continuation from the state.

Souza noted the latest proposal prepared by Mayor J.H. Graham III called for 51 percent of property owners on a street to agree to pay a tap fee and sign on to the sewer line for service. The other homeowners would not be charged an abutment fee or a monthly service fee under the proposal. The minimum monthly service fee is proposed at $50 a month for up to 5,000 gallons of use.

Souza said taking the sewer line around the community in such a manner was not feasible and he was concerned about the rock often found in the Tansi area.

The effect on the city's sewer system was also a concern. Currently, the city's wastewater treatment facility operates at 60 percent of its design capacity, allowing space for new growth in the community. Bringing in the effluent from Tansi would take that capacity, Souza said, and would also require additional pump stations and energy use to pump the sewage from Tansi to the facility on Sparta Hwy.

The city's plant currently operates at 2.4 million gallons a day with a design capacity of 3.5 million gallons a day. The TSUD facility is operating at an average of about 18,000 gallons a day but did have peak use of 36,000 gallons a day in November. Souza said he was speaking of the capacity that would be used once sewer was extended in the Tansi area.

Souza noted the members of the Crossville City Council acted as ex-officio officers of the Crossville Utility District, which provides water and sewer services to the city of Crossville and areas outside the city limits served by water. Previously, only churches and schools outside the city limits have had sewer service extended to them. Others wishing to have sewer service have had to be annexed by the city.

Councilman Jesse Kerley asked, "Are Tansi residents willing to be annexed into the city?"

The audience answered with a resounding no.

Souza was concerned how the residents of Tansi would be represented and their interests protected as none of the residents there could vote on members of the city council. Graham said he would propose the commissioners serving both TSUD and SCUD remain on an advisory board for the departments following a possible merger.

The Tansi community is also divided on the issue, Souza noted. He pointed to a petition with more than 260 names of those opposed to the merger. He invited members of the audience to take the podium and address the issue. While some were opposed to the proposed merger, others suggested continuing to work with the city would be in the best interest of all parties.

Faith Saffier, a resident of Tansi, said, "Why would the city want to step into this mess when things are not settled? The majority of those showing up at meetings don't even want the sewer."

She suggested the sewer system remain as it was originally planned, serving the Tansi amenities, condominiums and residents around the lake with failing septic systems.

"I don't care if the people around the lake want and are willing to finance a sewer, but do not put the bill on my door when I have a septic system," Saffier said.

Frank Thierry, a resident of Tansi, said there was a need for sewer service in some areas of Tansi.

"There is effluent that lays on top of the ground, and when it rains, you smell it," he said. Members of the audience applauded his statement.

He urged the city to continue to work with the Tansi community toward a possible solution.

"So that we know what the ifs are and the actual information so that we can intelligently make a decision," Thierry said.

Mike Dalton, a resident of Tansi, member of the POA board and former commissioner for TSUD, said, "There's a lot of information that needs to be gathered, fact finding to see if this is a good idea or not, and I would ask that the council allow you to do that."

Souza said, "This is a private corporation that is not a governmental agency. For the people of Crossville to bail them out I believe is wrong. But I don't want to close the door, either."

Souza moved that the city not solicit any further negotiations for a merger by any elected official, and that the city manager was not to pay any funds for negotiations toward a utility merger without approval of the city council. The city would stand open to offers brought by the county mayor to a city worksession or meeting.

"We're spinning our wheels," Souza said. "The people of Tansi have been torn up for a long time by people running around, trying to make deals. The POA doesn't represent all the people, and the people are divided. Instead of going out there and negotiating with this group or that group, let the county mayor pick up the responsibility and bring it before the city council if they have a plan."

Kerley supported the motion for further discussion. Souza said he had not discussed the motion with County Mayor Kenneth Carey Jr.

Following Souza's presentation, Graham addressed the recent proposal to merge the utility districts with the city, adding, "I must say I have some of the same concerns."

He added, "I'm a long way from recommending my own proposal,"

He noted the proposal was in its "infant form," and provided a starting point for discussions. The suggestion of requiring 51 percent of property owners to agree to pay a tap fee and hook onto the system could go to a higher number before sewer service would be extended. That determination and the proposed costs were determined by the number of homes to be served in a 14-mile area surrounding the lake and the golf course and dependent on possible low-interest financing and grants from USDA Rural Development. He estimated a possible construction cost of $6.3 million for the 14-mile sewer extension.

Saffier said there would be no control on making fees higher if necessary.

"There is no control on anyone saying they can't make fees any higher," Saffier said. "It's just not going to work."

Councilman Danny Wyatt said, "Our first priority is the city taxpayers. But I will not support anything that will tell you you have to hook on and pay a fee. I assume if there is a deal, there could be a clause stating no one would ever be required to hook on to the system?"

City Attorney Kenneth Chadwell said such protections would be enforceable if they were a part of the merger negotiation and documents.

As for extending sewer service outside the city limits, previously only allowed for schools and churches, Chadwell said a merger would take over the sewer utility district's service area, which would require the city to serve those customers. It would not require annexation.

Fees do change from time to time, Graham said, and those discussions are part of the city council's yearly budget work sessions and hearings.

Kerley questioned the small reduction in water rates for customers of South Cumberland Utility District, which serves an area much larger than the Tansi community. He pointed to the Catoosa Utility District that reduced rates by about 45 percent when it became a department of the city.

"How do we tell people in Linary, Big Lick and Midway they're just saving 10 percent?" Kerley asked. "They'll feel like they're supporting the Tansi sewer."

Graham has proposed a 7 to 10 percent reduction in water rates for all SCUD customers in the spring. That would affect more than 4,000 customers and represent about a $144,000 decrease in income for the water district. That's about how much excess income SCUD generates at this time, Graham said. In addition, he believes the city would lose about $100,000 a year on the sewer operation.

Graham said he had developed the proposal in an attempt to "be a good neighbor" to the Tansi community.

"I believe that the city is the economic engine for our community," Graham said, noting 80 percent of sales tax in Cumberland County is collected in the city though 80 percent of those shopping in the community are not residents of the city.

"I think its a priority to provide infrastructure and the atmosphere for the strong and smart growth," Graham said. He said he'd spent several months working on the proposal for the city to provide more services, "economically and efficiently, for our neighbors."

Councilman George Marlow said, "The easy thing for Mayor Graham could have done is say this is not his problem. He worked hard on this. We're not here to tell Tansi what to do. We need to move forward and see what can be worked out. And, it's not a good deal unless it's a good deal for Tansi, a good deal for the water customers and a good deal for the city taxpayers."

Following discussion, Souza and Kerley agreed to table the motion for discussion sometime in the new year.

Souza said he does have an alternative proposal for the Tansi sewer system that did not involve the Crossville government or residents involved. He said he will have that prepared shortly and it will be reported in an upcoming issue of the Crossville Chronicle.

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