Opponents of a proposed DeKalb Utility District Water Treatment Plant are taking their case to the Tennessee State Comptroller and the Utility Management Review Board.
During a meeting Monday at the County Complex, Darden Copeland of Calvert Street Group told DUD water plant opponents that a petition, signed by more than 1,000 persons will be submitted to state officials this week, more than the 520 signatures needed to force a review of the DUD’s plan. Calvert Street Group is a Nashville public relations company, hired by the City of Smithville in April to better educate the public, from the city’s perspective, on the impact of a plan by the DeKalb Utility District to build its own water treatment plant.
(PLAY VIDEO OF DARDEN COPELAND AT MONDAY’S MEETING)
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Opponents hope that if state officials conduct a review, they will find no need for the project and block the sale of bonds to help fund it. “There’s a rule in Tennessee Code. Tennessee Code 7-82-101. It’s known as the Utility District Law of 1937. It says the taxpayers can petition the Utility Management Review Board for a review of the DUD’s plan to finance their water treatment plant,” said Copeland. ” Essentially what this says is, if ten percent of DUD customers sign a petition we can bypass the DUD and go straight to the Tennessee State Comptroller. The mission of the Tennessee Comptroller and the Utility Management Review Board is to look for duplicity, for taxpayer waste to protect ratepayers, and rate increases that are out of line with what their plans and their debt management policy calls for. If we have enough petition signatures collected we can turn that in to the comptroller to force a review. That review will look at rates, rate increases, plan of services, service area, and a lot of the (existing service) problems that have been brought up (by DUD customers). A lot of those problems hopefully will be addressed and looked at by the Tennessee Comptroller. They’ve (DUD) got a plan for a new water treatment plant but they don’t necessarily increase the services rendered and rates are going to go up,” he said.
The City of Smithville, according to Copeland, has also retained the services of Nashville attorney and former Metro Nashville Mayor Bill Purcell to help “walk the petition through the process” and get answers from the state. “Their (DUD) customer base is right around 5,200 so ten percent of that would be 520 signatures that we would need. As of today (Monday) we have over 1,000 signatures that we plan to turn in this week, directly in Nashville to the Tennessee Comptroller’s office. We have also retained additional counsel, former Nashville Mayor Bill Purcell. He has a law practice in Nashville and understands utility work. He can help us get answers and walk this petition through the process and manage our best interest. He has been retained by the City of Smithville,” said Copeland.
Copeland said DUD has already increased rates by 8-1/2% and more increases are coming within the next two years. “For July, DUD rates are going up 8-½ %, and rates will go up next year and the year after that as well,” said Copeland. “USDA Rural Development, in their review of the application said that the DUD would need 31% more in revenue before this plan would work,” he said. “The DUD has $4 ½ million dollars in loans outstanding already. They’ve got five million dollars in loans from USDA Rural Development and right now they have put out to bond another $4.25-$4.5 million dollars in additional loans to fund their water treatment plant and to refinance some of their existing debt. So that’s a total of about $14 to $14-1/2 million dollars in loans to refinance some old debt but also to build this new water treatment plant. The debt service alone is going to be astronomical for those existing 5,200 customers,” said Copeland.
“They (DUD) currently have some of the highest rates in the state already,” said Copeland. “Now if you add another fourteen million dollars in loans to pay back, that’s going to be on the backs of DUD customers and those rates are going to have to go up. What the number is, remains to be seen. But that’s going to be a tough pill for folks to swallow who live out in the county, who pay high water bills as it is,” said Copeland.
If the DUD goes through with it’s plans, the City of Smithville stands to eventually lose it’s largest water customer and over a half million dollars in sales each year.
J.R. Wauford, the city’s utility engineer since 1962, who spoke during an April city council meeting, said a DUD water plant is unnecessary since the city’s newly renovated water treatment plant has more than the capacity to meet current and future needs of the City of Smithville and the DeKalb Utility District. “You(Smithville) have a four million gallon a day water treatment plant. You’re producing about 1.8 million gallons per day. About 700,000 to 800,000 gallons is going to the DeKalb Utility District. Your contract with DUD now gives them the right to buy two million gallons a day which is well within your capability of doing so. They’re (DUD) proposing to build a three million gallon a day treatment plant at Holmes Creek,” said Wauford.
DUD officials say they do not want to have to depend on Smithville for its water supply. “Our major concern is DUD customers,” said DUD Board Chairman Roger Turney at the May 24 meeting. ” We buy our water from Smithville. Every year that water rate goes up because the rate from Smithville goes up every year. Our contract (with Smithville) runs out in sixteen months. We looked to the future. We had our auditors and several different other people look at the possibility of continuing to buy water from Smithville or produce our own water. In the long run all the projections come back that our water rates will go down or not go up as much because we will have the capacity to control our own expense and not have to depend on Smithville,” said Turney.
USDA Rural Development funds have already been approved to construct a new DUD Raw Water Intake, Raw Water Transmission Line, Water Treatment Plant and distribution system improvements. The proposed plant would be constructed near Holmes Creek Road in the Yolanda Hills area and would have a capacity of three million gallons per day. The intake would be on Center Hill Lake, the Transmission Line along Holmes Creek Road and distribution lines would be along Allen’s Chapel, Game Ridge, Turner, South Tittsworth, and Big Rock Roads, and Wheeler Lane.
The DUD is to receive a $5,000,000 loan and a grant of $1,250,000 to fund construction of the water plant. The terms of the loan are forty years at 2.75% interest. The remaining $4,250,000 needed to build the $10.5 million facility would be funded through a bond issue. During a DUD board meeting in May, Chairman Turney said that the DUD is also refinancing other loans to save money. “In this loan and grant we have applied for, we’re refinancing some of the loans we already have at a savings of over $400,000 on the money that we have right now because of the historically low interest rates. The time is right. Everything that we’ve looked at says this is the time to do it,” he said.
On May 24, the DUD board, facing a small room full of DUD customers and others in opposition, voted 4-1 to adopt a bond resolution for the authorization and issuance of not to exceed $9-million 250-thousand dollars in aggregate principal amount of waterworks revenue refunding and improvement bonds. Board member Hugh Washer voted against it.
During the meeting, Turney explained what passage of that bond resolution meant. “In essence what it does is, it gives the bond council the right to go into negotiations to set up and to see just what qualifications we’ll have. What our bond rating will be and what the bonds will cost. No obligation will go forward. If something happens, we can back out of that and change it, but this gives them the permission to go on and find out exactly to the penny what our bonds will cost, what the interest rate will be, what the interest rate will be for those who buy them, and what the final cost will be,” said Turney.
(PLAY VIDEO OF DUD BOARD CHAIRMAN ROGER TURNEY DURING MAY 3RD DUD BOARD MEETING)
Turney said that DUD water rates, while increasing seven percent each year over the next three years, will actually stabilize, if not decrease in time with this new plant. “We had to project to the state what our rate increases would be in order to pay for this grant, loan, and this water treatment plant. Our board passed a seven percent rate increase for this year, seven percent next year, and seven percent the third year with the stipulation that the third year that seven percent increase may not be that much. Let’s talk about what that really means. Our minimum bill right now is $17.50. At the end of that three years, the minium bill will go up four dollars and twenty cents. That’s the price of 1.2 gallons of gas today. That’s not going to break anybody. I don’t want anybody’s water rate to go up but that’s a small price to pay. We figure that our average customer uses about 6,000 gallons. Their water bill now is around $44.00. At the end of the three year period, their water bill will go up $10.50,” he said.
Turney also believes that having two water plants in the county would be better than one, especially in the event of some catastrophic episode. “What if something happens, and it did happen sometime ago. A flood came and Smithville was short of water for a while. Thank goodness it wasn’t a disaster. It could have been. What happens if that plant goes down. Where do you get your water? There’s no other place. With two treatment plants, we can benefit Smithville and they can benefit us and I firmly believe that in the long run not only will DUD customers be happy that we did this, but the City of Smithville will be happy we did it. We can help each other,” said Turney.
In addition to the grant/loans which have already been approved for the proposed water treatment plant, DUD Manager Jon Foutch told WJLE Monday the DUD is currently awaiting word on another grant application, in the amount of $500,000 for the project. Foutch added that with interest rates having fallen to a new all time low as late as last week, there is no better time to proceed with this plan than now.
Foutch told WJLE Monday that the DUD’s reasons for wanting to build its own water plant have been well explained and publicized. The message is still the same and there are currently no new developments. He added that unlike the City of Smithville which is paying a public relations firm $5,000 per month in this matter, the DUD prefers to spend its money on water related services, rather than having to engage in a PR dispute. Foutch also questions whether the city can legally employ a public relations firm to advocate a position such as this, at taxpayer expense.
The DeKalb Utility District serves parts of a four county area, DeKalb, Cannon, Smith, and Wilson.