The Town of Alexandria has taken legal action in Chancery Court against a Georgia Limited Liability group who allegedly reneged on an agreement to find a new water source for the municipality.
The lawsuit, filed December 30, 2013 against Amnisos Group, LLC, Ross Everett and Kay Nichols Everett, seeks to have the court declare a purported agreement between the defendants and the Town of Alexandria to be null, void, and of no effect.
The town is also asking the court to find the defendants to be liable to the city pursuant to the Tennessee False Claims Act for three times the amount of damages the town has sustained and that they further be held liable to the town for a civil penalty for each false claim made. The town is seeking any other further and general relief to which it may be entitled.
According to the lawsuit, “On or about March 22, 2011, the Town of Alexandria and Ross Everett, purporting to act on behalf of Amnisos Group, LLC, executed a document which purports to be a “Water Supply Contract” between the town and Amnisos. The contract states in part that “The Alexandria Water District seeks and desires to obtain a new water supply to meet the present and future needs of its customers within its serviced area.”
The city currently has a water contract with the Smith County Utility District.
Among other obligations, Amnisos was required to provide the town a “Water Availability Report” which was to include, among other things, a description of the availability of water sufficient to furnish water to all the citizens, residents, and businesses within the Town of Alexandria. The “Water Availability Report” was required to be furnished by Amnisos Group within twelve months following the execution of the agreement.
On February 2, 2012, Ross Everett prepared a letter purporting to bear the name of Amnisos Group LLC but, according to the lawsuit, the correspondence was insufficient to satisfy the requirement of a “Water Availability Report”. The letter stated in part that “Working with hydro-geologists, civil engineers and other water industry professionals, we find there to be ample water available so as to allow a water source to be developed to amply supply the water required to meet the terms and conditions. It is our intent to continue our efforts to have the necessary source, treatment facility, connections, and operations in place by the initial delivery as called for in the ordinance (granting the contract).”
On June 26, 2012, the town determined that, to the extent an enforceable agreement existed, Amnisos Group LLC was in breach of the agreement and voted to give Amnisos the right to cure the breach, and set a deadline of December 31, 2012 for the defendant, Amnisos “to show that you have an adequate amount of water available to provide the Town of Alexandria” A letter was sent to Amnisos dated July 17, 2012, notifying the group accordingly.
According to the lawsuit, none of the defendants provided any further “Water Availability Report” to the town prior to December 31, 2012. As a result, on January 17, 2013, the town wrote to the Amnisos Group notifying them that their failure to comply terminated the agreement.
On January 28, 2012, the Georgia Secretary of State notified Amnisos Group LLC that their limited liability company was facing dissolution and on September 11, 2012, Amnisos was administratively dissolved and has remained so since, according to the lawsuit.
The town claims that the letter dated February 2, 2012 from Ross Everett was false and untrue in which he claimed that Amnisos had been working with hydro-geologists, civil engineers, and other water industry professionals with respect to ample water available within the Town of Alexandria.
The city contends that February 2, 2012 letter was mailed shortly after Amnisos Group was notified the company was facing administrative dissolution and that the letter was little more than an attempt to perpetrate a fraud on the Town of Alexandria.
According to the city’s complaint, neither of the defendants, Amnisos Group LLC nor Ross Everett had drilled any test wells in the town; acquired any real property in DeKalb County; caused any pump test to be conducted in the county; nor requested any site evaluation from the Tennessee Division of Water Supply as of February 2, 2012, March 22, 2012, nor as of December 31, 2012 and that Amnisos failed to produce a “Water Availability Report” as contemplated by the purported agreement.
At a mediation conducted on October 28, 2013, Ross Everett furnished for the first time a letter from the State of Tennessee Department of Environment and Conservation Division of Water Supply relating to water in Alexandria bearing the signature of Johnny Walker, TDEC Division of Water Resources. This letter states that a site visit was made on February 12, 2013, over a year after the original letter from Amnisos Group LLC and after the December 31, 2012 extended deadline had expired. No site visit was made by TDEC prior to December 31, 2012 for or on behalf of Amnisos Group LLC, according to the lawsuit.
Also at the mediation on October 28, 2013, Everett furnished for the first time a document entitled “Tennessee Division of Water Supply New Water Source and Site Evaluation form” dated February 12, 2013. No such evaluation was prepared within one year of the original agreement date nor by the December 31, 2012 extended deadline, the lawsuit continued.
In its request for a declaratory judgment from the court, the Town of Alexandria asks that the purported contract with Amnisos be ruled null, void, and without effect and the Chancellor find that the purported contract was procured by fraud in that the defendants made false and misleading statements to the officials of the Town of Alexandria both with respect to their capacity to develop a water supply to serve the citizens of the town, their intent to make any efforts to do the same, and perpetrated the fraud by false and misleading statements in the February 2, 2012 letter with respect to the efforts supposedly employed.
Amnisos was dissolved on September 11, 2012. Notwithstanding the dissolution, Ross Everett individually appeared on October 28, 2013 at a mediation and attempted to demand money from the Town of Alexandria, according to the town’s complaint. “The defendants, Ross and Kay Everett have failed to follow the corporate formalities with respect to applicable limited liability company law and these persons are individually liable for the conduct of the limited liability company,” the city contends.
“The defendant, Amnisos Group LLC is nothing but an alter ego of the defendants, Ross and Kay Nichols Everett and these two persons are individually liable for all of the conduct of this limited liability company,” the town concludes.
The Town of Alexandria is being represented in the case by Cookeville attorney Daniel H. Rader IV.

As of Monday, February 10 the DeKalb County Trustee’s Office had collected 56% or $4.2 million of the $7.5 million in 2013 county property taxes to be collected by February 28. That includes property, residential, commercial, personal, and public utility taxes.
Trustee Sean Driver said collections to date are in line with those of previous years which means the remainder of February will be a busy month for the Trustee’s Office as taxpayers rush to beat the deadline.
Friday, February 28 is the last day to pay the 2013 property taxes before penalties start accruing March 1.
The Trustee’s Office is open from 8:00 a.m. until 4:30 p.m. Monday- Friday. “Remember, if the last day comes and you can’t make it to the post office to postmark your payment, we do have a drop box on the outside wall of the county offices section of the county complex,” said Driver.
The Trustee’s Office also offers the State of Tennessee Tax Relief. “If you would like to check on a possible tax relief for 2013, come and see us at 732 South Congress Boulevard, Room 103 or call us at 597-5176,” said Driver. ” The last day to sign up for tax relief is April 7. Also any 2012 unpaid property taxes will be turned over to the Chancery Court on April 1,” he added.
Driver said you have four options for paying 2013 property taxes. “You can come by in person at the Trustee’s Office or you may mail in your payment. We also offer online bill pay at www.tennesseetrustee.com. You go to that website and select DeKalb County and then follow the instructions. Business Information Systems has set this up for Trustees across the state and there is a fee to use your debit or credit card. If you do pay online the fee to use your debit or credit card is 2.75% of your total tax bill. Or you can use an e-check for $2.50 on any total. Online accepts Mastercard, Visa, Discover, and American Express. Business Information Systems collects the fees, not DeKalb County” said Driver.
“We are also accepting partial payments in any amount. Remember, whatever portion of taxes is unpaid for 2013 using the partial payment plan, only the portion left unpaid will accrue at 1.5% penalty and interest per month starting March 1. The office can still receive partial payments on 2012 delinquent taxes up until March 31” said Driver.

NHC Smithville, a 120 bed skilled rehab center, recently announced key measures for year-end 2013 and plans for 2014.
For 2013, NHC completed a record 251 admissions. This number represents a sharp increase from two years ago when there were 137 admissions. NHC was also able to return 61% of patients’ home, a steady increase from 49% just two years ago. “We are honored to provide quality care to DeKalb County and the surrounding communities,” Administrator Clint Hall said. “Having nearly doubled the number of admissions in two years and increasing the number of patients returning home are true measures of being a rehab center of choice in the community. Our team of professionals works tirelessly to help our patients achieve their highest level of function and these numbers bear that out.”
NHC also made significant economic contributions to DeKalb County in the way of employment and tax revenue. NHC employs 125 skilled professionals and paid out over $3.6 million in wages in 2013. NHC contributed nearly $45,000 in city and county taxes and over $250,000 in state taxes in 2013. NHC also provided job training to 80 graduates of the Certified Nurse Assistant course and served as a clinical site rotation for Registered Nurse/Licensed Practical Nurse students at Motlow College and Tennessee College of Applied Technology. “We view our role in the local economy as very important,” Hall continued. “NHC is a responsible employer in our community and contributes to the quality of life in DeKalb County.”
Preparations are already underway for a successful 2014. Significant investment will be made in capital projects at NHC Smithville to improve the experience for our customers. “In addition to capital improvements, we look forward to improving some of our internal systems and streamlining our procedures so that our patients and families experience a seamless transition from hospital to NHC, then back home,” Hall said.
NHC Smithville offers inpatient and outpatient rehabilitative care and accepts Medicare, Medicaid, private insurance, workers compensation, managed care, and private funds. The inpatient healthcare center offers skilled nursing and rehabilitation services to adults of all ages on a short-term and continuing care basis. NHC Smithville’s outpatient clinic offers physical, occupational, and speech therapy services. For more information about NHC Smithville, visit www.nhcsmithville.com or call (615) 597-4284.

What is your greatest fear? Some would say snakes, others would say heights, and still others say flying in a plane. You will be surprised to hear that man’s greatest fear is public speaking. For DeKalb County 4-H members, however, public speaking is a life skill which they have honed into poise, charisma, confidence, and a desire to achieve.
The DeKalb County 4-H Public Speaking Contest was held recently. According to Extension Agent April Martin, “The public speaking contest is one of the 4-H Club’s most important activities. Speaking before an audience is something that we all have to do at some point in our lives. 4-H is one of the first places that young people learn this skill. Public Speaking teaches 4-Hers writing, organizational, and speaking skills as well as equips them with confidence and a sense of accomplishment.”
Participants in the 4th grade included: Brandon Sobotka, Selena Cardin, Ian Chandler (1st place winner), Lindsey Hutchins (3rd place winner), Alexis Skinner, and Katie Colwell (3rd place winner).
Participants in the 5th grade included: Lily Martin (1st place), Skylor Young (2nd Place), and Will Pursell (3rd place).
Katlin Hutchins placed first in the 7th grade division.
Lydia Trail placed first in the 11th grade division.
Lily Martin, Ian Chandler, and Lydia Trail advanced to the Regional competition held at Tennessee Technological University. Lily received participation, Ian received 4th place, and Lydia received participation.
The University of Tennessee Extension offers all its programs to all eligible persons. More information about Extension programs can be found at https://utextension.tennessee.edu/dekalb/Pages/default.aspx.
Captions for Photos
Lily Martin, a 5th grader at Dekalb West School represented DeKalb County at the Sub-Regional 4-H Public Speaking Contest recently (photo by April Martin)
Ian Chandler, a 4th grader at Northside Elementary School, placed 4th in the sub-regional 4-H Public Speaking Contest recently (photo by Beth Chandler).
Participants in the DeKalb County 4-H Public Speaking Contest were front row: (left to right): Brandon Sabotka, Selena Cardin, Alexis Skinner, Lindsey Hutchins, Skylor Young, & Lily Martin (photo by April Martin)
Back row: (left to right): Will Pursell, Ian Chandler, Katlin Hutchins, Lydia Trail, & Katie Colwell (photo by April Martin)

The DeKalb Utility District may have another source of water at a better price than what the City of Smithville is offering.
DUD Manager Jon Foutch said the Warren County Utility District is interested in selling water to the DeKalb Utility District. Foutch addressed the issue with the DUD board members during Thursday’s monthly meeting. “I talked with Mike Green. He actually called me. We had been talking back and forth about an emergency connection. He said right now he might would have to extend a line but he could possibly supply us with at least half of the water we would need at a much lower cost than what the City of Smithville is charging now. If that doesn’t change, it is definitely a possibility we’re going to look at because when all this is said and done we want to have an emergency connection with them (Warren County). Green said for us to keep this in mind because they are in the business of selling water also,” said Foutch.
Even if the DUD makes a deal to connect with Warren County, it will still proceed with plans to build its own water treatment plant.
The DUD board members took no action Thursday.

In recent city crime news, Smithville Police Chief Randy Caplinger reports that 42 year old Richard Brandon Turner is charged with public intoxication. His bond is $1,500. Chief Caplinger said that on Sunday, January 26 police were dispatched to McDonalds Restaurant to check on a man passed out at a table. Upon arrival, an officer made contact with Turner and awoke him. Turner had a strong odor of an alcoholic beverage on his person and he was unsteady on his feet. Turner was arrested for public intoxication.
34 year old Chris Mooneyham is charged with aggravated burglary and public intoxication. His bond is $7,500 and he will be in court on February 13. Chief Caplinger said that on Thursday, January 23 Mooneyham went to a residence and knocked on the door. When the occupant came to the door, Mooneyham tried to force his way into the house. He got partially into the residence when he was detained. Police then arrested Mooneyham and brought him to the jail for booking. He was very unsteady on his feet. His speech was slurred and he was very disoriented.
29 year old Roxanne Landis is cited for theft of property. Chief Caplinger said that on Thursday, January 23, Landis entered the Dollar General Store and took items, which were recovered in her purse. She will be in court on February 13.
44 year old Robert Atnip, Jr. is charged with forgery. His bond is $5,000 bond. Chief Caplinger said that on Friday, January 31, Atnip allegedly took a check book belonging to a family member and forged a check at Walmart in the amount of $2,391.
39 year old Donald Gray is charged with disorderly conduct and resisting arrest. His bond on each charge is $3,000. Chief Caplinger said that on Thursday, January 16 police were dispatched to a residence on College Street in response to an unwanted guest call. Upon arrival, officers made contact with a tenant of the apartment, who said she did not want Gray there. When officers told Gray he was not wanted there he became very irate toward the officers and refused to follow their commands. He was placed under arrest. After being arrested, he refused to let the officers handcuff him. He had to be taken to the ground to be cuffed. He was then brought to jail.
38 year old Tiffany Allen is cited for theft of property. Chief Caplinger said that on Tuesday, January 14 an officer was dispatched to the Dollar General Store in reference to a shoplifter. An officer made contact with Allen. She was found to be in possession of several items from the store concealed in her purse, which had not been paid for. They were recovered. Her court date is February 13.
Meanwhile, Chief Caplinger said Floyd Caulder was arrested on Thursday, January 9 after police were informed by dispatch in Bradley County that Caulder was supposed to be in court there. He had warrants against him for domestic violence and for theft of a vehicle. He was located and taken into custody. Caulder was then sent back to Bradley County. The vehicle was also recovered.
From the Sheriff’s Department, 55 year old Mary Leann Vandergriff of Nashville Highway, Liberty is charged with resisting arrest and for a violation of probation. Her bond on the resisting charge is $1,500 and she is being held without bond for the violation of probation. She will be in court February 13. Sheriff Patrick Ray said that on Friday, February 7 a sheriff’s department deputy and detective served a warrant on Vandergriff for violation of probation. While making the arrest, Vandergriff resisted, pulling away from the officers, and refusing to comply with their commands. The officers had to use force in placing her into custody. Vandergriff was transported to the jail for booking.
44 year old David Dewaine Anderson of Gard Lane, Smithville is charged with driving on a suspended license. He was also issued a citation for violation of the light law. His bond is $1,500 and he will be in court on February 19. Sheriff Ray said that on Tuesday, February 4 a deputy spotted Anderson operating a motor vehicle on Highway 70 with headlight out. The officer conducted a traffic stop. A computer check revealed Anderson’s license were suspended in Florida for failure to pay a citation.

The DeKalb Utility District Board of Commissioners Thursday adopted a resolution seeking a $500,000 Community Development Block Grant for DUD to run water line extensions to areas of the county in need. The County Commission approved the same resolution at the January meeting to make application for the grant on behalf of the DUD.
Keith Blair, DUD attorney, brought the resolution to the board’s attention during the monthly meeting of the DUD. “There is another CDBG project that has been applied for. We have a resolution that I need you to enter a motion on and to approve. It’s basically for the DUD to provide matching funds for the 2014 Community Development Block Grant application. This pertains to the Tramel Branch, Dismal to Alexandria, Oakley Road, Carter Lane, and Old Givens Hollow area. The CDBG funds are in the amount of $500,000 and the district’s (DUD) portion of matching funds would be $96,000. The resolution also references a cooperative agreement which defines the relationship between the parties on this project. It also sets forth that once the project is complete that the district (DUD) will take over the lines. It employs Goodwyn, Mills Cawood & Company as the engineers and Grassroots Planning & Consulting for all administrative services for the project,” said Blair.
The board unanimously approved the resolution.
During the January County Commission meeting Amanda Mainord of Grassroots Planning & Consulting, grant administrator, said the project will serve thirty eight households on Tramel Branch, Oakley Road, Carter Lane, Old Givens Hollow, and the Dismal to Alexandria Road.
“There are six houses left to complete the (existing) water line on Tramel Branch and that’s just a half mile left there. On Old Givens Hollow, there’s nine houses there in a mile and three tenths. The Alexandria to Dismal and the first part of Oakley Road, there’s actually thirteen houses there and that is in 2.6 miles. There is kind of a spot on Oakley Road where I call no man’s land because there is one house in a whole mile so we’re going to leave that. It’s not cost effective to run a water line to serve one person or one household. To start at the other end of Oakley Road and go on to Carter Lane, there are ten houses there and that’s just a mile and eight tenths,” said Mainord.
The county’s grant application will be through the Tennessee Department of Economic and Community Development, which if approved would assist the DeKalb Utility District in extending water lines into these areas of the county not already served.
The DUD would be responsible for paying the grant’s local 20% matching requirement or $96,000 plus any additional funds required to complete the project.
The grant application is due by the end of February.
“We will send in the application in February. We’ll probably be notified in October (if the grant is approved). If we get the money, we’ll get started on this project,” said County Mayor Mike Foster.

Officials of the DeKalb Utility District are turning to the Chancery Court for relief from what they call an unreasonable water rate imposed on the utility by the City of Smithville.
The lawsuit, brought against the city by attorneys Dewey Branstetter, Jr. and Keith Blair for the DUD, was filed Friday in DeKalb County Chancery Court.
The DUD is asking the Chancellor to find that the city’s new water rate to the utility of $5.00 per thousand gallons, which went into effect January 1st, is unreasonable; that the rate be set at $2.25 per thousand gallons, which the DUD believes is the actual cost of providing water services; that the city be enjoined (prohibited) from charging any rate to the DUD in excess of $2.67 per thousand while this litigation is pending; and that the city be enjoined (prohibited) from disconnecting the DUD from its water system while this lawsuit is pending. The DUD also wants the court to order a speedy hearing on this action for a declaratory judgment and to advance it on the court’s calendar.
The Court is being asked by the DUD to enter a temporary injunction while this litigation is pending and a permanent injunction. “The rate of $5.00 per thousand gallons charged by the City to the DUD effective January 1, 2014 has caused and will continue to result in immediate and irreparable injury, loss, and damage to the DUD and its customers. The issuance of the temporary injunction will not cause undue inconvenience or loss to the City of Smithville, but will prevent irreparable injury to the DUD,” according to the lawsuit.
Although the city has never threatened to cut off service, DUD officials are concerned about Section 18-504 of the Smithville City Code which authorizes the Water Department of the City of Smithville to cut off and discontinue water services to the DeKalb Utility District if the water bill is not paid within seven days after the District receives the bill.
DUD further asserts that “if allowed to continue to charge the $5.00 per thousand rate, the City of Smithville stands to make a profit of several hundred thousand dollars, which is contrary to (state) laws applicable to Smithville”. State law provides that “rates and fees of municipal utility systems shall reflect the actual cost of providing the services rendered. No public works shall operate for gain or profit or as a source of revenue to a government entity, but shall operate for the use and benefit of the customers served by such public works”.
In addition to raising the rate to an excessive and unreasonable level, the DUD claims the City of Smithville also violated Section 18-502 of the Smithville City Code, which requires the City of Smithville to give the DeKalb Utility District 30 days’ notice in advance of a rate change. The City of Smithville, however, gave the DeKalb Utility District only 16 days’ actual notice in advance of the rate change.
(CLICK PDF LINK BELOW TO READ ENTIRE TEXT OF LAWSUIT)
Complaint – DUD vs. City of Smithville 2 7 14.pdf (7.08 MB)
The essential text of the lawsuit is as follows:
The DeKalb Utility District brings this action to challenge the December 12, 2013 decision of the Board of Aldermen of the City of Smithville to increase the water rate that it charges DeKalb Utility District by 144%, effective January 1, 2014.
As a result of the rate increase, DUD has had to increase the rates that it charges its approximately 4,987 customers by at least 42%, effective as of the January, 2014 billing cycle.
DUD seeks a declaration from the court that the new rate charged by the City is unreasonable.
In addition, DUD seeks a decision from the court (a) ordering the City of Smithville to charge a reasonable rate to the DUD; (b) ordering the City to charge a rate to the DUD that reflects the actual cost of providing the services rendered; (c) finding that a rate of $2.25 per thousand gallons for the DUD reflects the actual cost of providing the services rendered; (d) enjoining the City from charging the DUD a rate in excess of $2.67 per thousand gallons during the pendency of this litigation; and (e) enjoining the City from disconnecting the DUD from its water system during the pendency of this litigation.
DUD is a wholesale water customer of the City. At present, approximately 66% of the water produced by the City is purchased by the DUD. In calendar year 2013, the DUD purchased 308,722,000 gallons of water from the City. Under a Water Purchase Contract dated March 15, 2004, the City agreed to furnish the DUD with water at an initial rate of $1.60 per thousand gallons. The 2004 Water Purchase Contract provided for annual rate increases and other rate adjustments. The 2004 Water Purchase Contract terminated on January 1, 2014. In planning for the termination of the 2004 Water Purchase Contract, in May of 2012 the Board of Commissioners of the DUD voted to approve the construction of a water treatment plant with a target completion date of early 2014. When the DUD builds its own water plant, it will have its own water supply; and it will not be dependent upon the City for water.
Unfortunately, the plans for the water treatment plant came to an abrupt halt in July of 2012 when a petition purportedly brought by the “Ratepayers of the DUD” was filed before the Tennessee Utility Management Review Board (UMRB). The petition was the product of efforts by an entity hired by the City, the Calvert Street Group, to stop the construction of the DeKalb water treatment plant, and to do so by any and all means. As enticement for getting other DUD customers to sign the petition, the Calvert Street Group offered petition circulators a prize for collecting the most signatures. The ratepayer petition filed against the DUD proceeded to a contested case hearing before the UMRB on April 4, 2013.
In the UMRB hearing, Hunter Hendrixson, the Secretary-Treasurer for the City of Smithville, testified that the City had paid the Calvert Street Group $5,000 per month, plus expenses and has an agreement to pay the Calvert Street Group a $25,000 bonus if it stops the DUD from building its water treatment plant. As of March of 2013, before the UMRB hearing, the City had paid the Calvert Street Group in excess of $78,000, not including legal fees to the attorneys representing the “ratepayers” in UMRB proceedings. At the conclusion of the April 4, 2013 UMRB hearing, the UMRB denied the petitioners’ request for relief, meaning the City lost. The petitioners filed a petition for Judicial Review, which is currently pending before the Chancery Court of Davidson County, and a decision is expected within the next 30 days. At the time of the termination of the 2004 Water Purchase Contract, the City was charging the District a rate of $2.05 per thousand gallons.
On December 12, 2013 the Board of Aldermen and the Mayor of the City held a special board meeting to decide on a new water rate for the DUD beginning January 1, 2014. In the December 12, 2013 meeting, as reflected in the “Minutes of Special Called Board Meeting” Alderman Danny Washer made a motion to charge the DUD $7.50 per thousand gallons of water. This motion was subsequently withdrawn. Following the withdrawal of Alderman Washer’s motion, Alderman Jason Murphy made a motion to charge the DUD $5.00 per thousand gallons and revisit this rate for the 2014-15 budget beginning in July 2014, The Board of Aldermen voted unanimously to charge this rate beginning January 1, 2014 and to revisit the rate in the next fiscal budget. The Mayor approved the action of the Board of Aldermen. The City notified the DUD of the rate change by letter dated Friday, December 13, 2013 which letter the DUD received when its office opened for business on Monday, December 16, 2013. The first bill reflecting the new rate of $5.00 per thousand gallons is anticipated to be received by the middle of February, 2014 and will be due to be paid shortly thereafter.
In calendar year, 2013, the DUD purchased 308,722,000 gallons of water from the City. Based upon the contractual rate of $2.05 per thousand gallons, the DUD paid approximately $632,880 for the water purchased from the City. By the way of comparison, if the DUD purchases the same amount of water from the City in 2014, at the rate of $5.00 per thousand, the cost will soar from $632,880 to $1,543,610, an increase of $910,000.
In March of 2013, the City contracted with Warren and Associates Engineering PLLC to perform a study to determine the City’s costs to treat and supply one thousand gallons of water (The Warren Study). Information provided in the Study was to be utilized “by the City to determine their actual production costs for supplying water to their citizens and to their wholesale water customers”. The Warren Study concluded that the average cost to the City to treat and supply 1,000 gallons of water is $2.67. In reaching its conclusion on the average cost, the Warren Study considered the last five years of the City’s Audits, which are filed with the Office of the Tennessee Comptroller of the Treasury, and noted that the City’s water and sewer departments currently have no debt. Upon information and belief, the City does not have any anticipated maintenance on its water system because of recent (2011) updates to the raw water intake and water treatment plant. Jerry Warren, a professional engineer and the owner of Warren and Associates Engineering, PLLC, testified regarding the study in the April 4, 2013 UMRB hearing. In his sworn testimony at the UMRB hearing, Warren said that because there would be no transportation costs for providing this water to the District, that the $2.67 rate could be reduced by as much as 42 cents per thousand gallons, for a rate of $2.25 per thousand gallons.
Based upon the Warren Study, the new rate that the City is charging the DUD is unreasonable because it is at approximately two times the actual cost of providing the services rendered. Charging an excessive and unreasonable rate is contrary to the public policy governing municipal utility systems as declared in Tennessee Code Annotated 9-21-308 and Tennessee Code Annotated 7-34-115.
Under TCA 9-21-308, state law specifies in pertinent part in section (e) “Notwithstanding any other law to the contrary, as a matter of public policy, public works projects financed under this chapter shall be operated on sound business principles as self-sufficient entities. User charges, rates, and fees shall reflect the actual cost of providing the services rendered. Public works shall not operate for gain or profit or as a source of revenue to a government entity, but shall operate for the use and benefit of the customers served by such public works and for the improvement of the health and safety of the inhabitants of the area served”.
Under TCA 7-34-115, state law provides in pertinent part in section (a) ” Notwithstanding any other law to the contrary, as a matter of public policy, municipal utility systems shall be operated on sound business principles as self-sufficient entities. User charges, rates, and fees shall reflect the actual cost of providing the services rendered. No public works shall operate for gain or profit or as a source of revenue to a governmental entity, but shall operate for the use and benefit of the consumers served by such public works and for the improvement of the health and safety of the inhabitants of the area served”.
The lawsuit states that ” If allowed to continue to charge the $5.00 per thousand rate, the City stands to make a profit of several hundred thousand dollars, which is contrary to the (state) law applicable to Smithville. According to the most recent audit report issued by the City of Smithville, the City Water and Sewer Department had a change in net position of approximately $15,000 in 2013. In addition, for the fiscal year ending on June 30, 2103, the Smithville Water and Sewer Department has cash and cash equivalents on hand of $2,336,722, an increase of $396,122 since July 1, 2012. In 2012, the Smithville Water and Sewer Department had operating income in excess of $100,000. The audit reports for the City are a matter of public record and are posted on the Tennessee Comptroller’s website.
As a consequence, DUD seeks a declaration from the Court that the new rate adopted by the City on December 12 is unreasonable. In addition to raising the rate to an excessive and unreasonable rate, the City of Smithville also violated Section 18-502 of the Smithville City Code, which requires the City to give the DUD 30 days’ notice in advance of a rate change. The City, however, gave the DUD only 16 days actual notice in advance of the rate change.
Section 18-504 of the Smithville City Code authorizes the Water Department of the City to cut off and discontinue water services to the DUD if the water bill is not paid within seven days after the DUD receives the bill.
Pursuant to TCA 29-14-110, a decree ordering further relief is necessary and proper.
Under the circumstances of this case, further relief includes, but is not limited to a decision from this Court (a) ordering the City of Smithville to charge a reasonable rate to the DeKalb Utility District; (b) ordering the City to charge a rate to the DUD that reflects the actual cost of providing the services rendered; (c) finding that a rate of $2.25 per thousand gallons for the DUD reflects the actual cost of providing the services rendered; (d) enjoining the City from charging the DUD a rate in excess of $2.67 per thousand gallons during the pendency of this litigation; and (e) enjoining the City from disconnecting the DUD from its water system during the pendency of this litigation.
DUD requests that the Court order a speedy hearing on this action for a declaratory judgment and advance it on the Court’s calendar.
The DUD requests the Court enter a temporary injunction during the pendency of this action and a permanent injunction, which: Restrains and enjoins the City from charging the DUD a rate of $5.00 per thousand gallons; Restrains and enjoins the City from charging the DUD a rate in excess of $2.67 per thousand gallons during the pendency of this litigation; and Restrains and enjoins the City from disconnecting the DUD from its water system during the pendency of this litigation.
The rate of $5.00 per thousand gallons charged by the City to the DUD effective January 1, 2014 has caused and will continue to result in immediate and irreparable injury, loss, and damage to the DUD and its customers.
The issuance of the temporary injunction will not cause undue inconvenience or loss to the City of Smithville, but will prevent irreparable injury to the DUD.”

Sharing her message of character, integrity and trust, reigning Miss Tennessee Shelby Thompson spoke to groups of students at Smithville Elementary, Northside, and DeKalb West School Friday.
“Today I spoke to about 800 students. I love children and I’m excited that I am able to convince them to think critically about their character and to come up with ways to be a more trustworthy person in their everyday life,” said Thompson in an interview with WJLE.
Thompson’s lifelong dream came true when she was crowned Miss Tennessee on June 22, 2013, at the Carl Perkins Civic Center in Jackson, Tennessee. “There’s a lot involved in becoming Miss Tennessee. You’re tested in so many different ways. I actually went through a ten minute politically based interview. It is grueling. They can ask you anything from your deepest dreams and fears to your biggest mistake to your views on political things and your solutions for any issue going on in our country. It’s a big job and preparing for that job took lots of hours. I also did a couple half marathons and a triathlon to get ready for the swimsuit competition that everyone looks forward to every year . Along with the personal talent, I studied Opera at Vanderbilt for four years. I sing opera as my talent. It’s a fun job. You’re tested in a lot of ways but ultimately you just focus on preparing your heart for this job in serving our state,” she said.
As Miss Tennessee, Kirkland’s Inc. sponsors Shelby as she serves as Governor Haslam’s Official Spokesperson for Character Education and travels 70,000 miles speaking to 40,000 schoolchildren about the Character Education Trait: Trustworthiness. Throughout her year of travels across the state, Shelby also serves as a National Spokesperson for Big Brothers Big Sisters, Official Friends of Children’s Hospital Board Intern, Volunteer Tennessee’s Honorary Board Chair, as well as the Goodwill Ambassador for Children’s Miracle Network for the state of Tennessee, home to five CMN hospitals.
Shelby is a graduate of the University of Tennessee at Knoxville with a B.S. in Public Relations, a minor in Business and has been accepted into Lipscomb University’s MBA program with a Nonprofit Management concentration. She was a member of Omicron Delta Kappa Honor Society, was selected as one of fifteen college seniors to participate in the Senior Leadership Capstone Course, and received the UTK’s School of Public Relations Scholarship. Shelby also received Tennessee’s Lottery HOPE Scholarship, as well as the University of Tennessee’s Center for International Education Scholarship. While a student at the University of Tennessee at Knoxville, she was selected by her professors to attend the LeaderShape Institute in 2011, was employed as an Ambassador Scholar, served as Philanthropy Chair for Alpha Delta Pi Sorority where she coordinated weekly service projects for 175 members and was named Alpha Kappa Chapter’s Junior of the Year. The National Alpha Delta Pi Sorority honored Shelby as the National Collegiate Volunteer of the Year in 2011 for her work involving Ronald McDonald House Charities where she raised over $8,000 through the fundraiser she created.
Shelby has been awarded over $26,000 in college scholarships from her participation in the Miss America program. She won the Miss Tennessee Quality of Life Award 2013 and was presented the Duke of Edinburgh Bronze Medal Award by HRH Prince Edward at Governor Haslam’s residence in May 2013. Shelby was a Swimsuit Preliminary Winner in 2010 and won Talent Preliminary awards in 2012 and 2013 when she competed for the Miss Tennessee crown. With the scholarships she won participating in the Miss America Organization, Shelby was afforded the opportunity to study International Public Relations and Crisis Communication in Italy at Universita di Urbino during the summer of 2011.
As a Nationally Endorsed Spokesperson for Big Brothers Big Sisters, Shelby will represent the organization during her travels across the state and will be filming a national Public Service Announcement that will run on Comcast and joins Academy Award Winner, Jamie Foxx, former Miss America, Laura Kaeppeler, Grammy Award winner, Eve, and Super Bowl Champion, Darrin Smith, as national spokespeople. Shelby is an Honorary Member of BBBS Ambassador Circle, has appeared in a statewide Public Service Announcement as Miss Tennessee in support of BBBS, and is on a billboard campaign with her Little Sister, Justice Fields, for BBBS. Over this past year, she has worked as the Fund Development Intern and has spearheaded the Tennessee chapter’s capital campaign by organizing Bowl for Kids’ Sake in five different cities that have raised $125,000, while also raising nearly $15,000 during the past ten months through online virtual fundraisers and speaking engagements. Shelby has also served as a Programs Intern for BBBS and volunteered as a Big Sister to Justice for three years, until her Little Sister graduated from the program. Shelby received the University of Tennessee Chancellor’s Honor for Extraordinary Community Service for her volunteerism with BBBS.
In addition to her work promoting Big Brothers Big Sisters, Shelby has been heavily involved with Tennessee’s five CMN hospitals and volunteered for IHOP’s CMN National Pancake Day for the past several years. Shelby created a Krafts 4 Kids Program, which she has taken to all five Tennessee CMN Hospitals, where she makes “love bug crafts” with patients who are able to participate. She has volunteered for CMN Queen for a Day events in Nashville and Memphis, hosted a Pancake Breakfast for CMN Hospitals in Knoxville, and hosted both The Children’s Christmas Artwork Winner’s Party and “Miss Tennessee Day” at Vanderbilt Children’s Hospital. Shelby escorted youth volunteers at CMN’s Sundae with Friends and Fashion Show and worked as a phone bank volunteer for the Nashville and Knoxville CMN telethons. She volunteered at the CMN Phone-a-thon for East Tennessee Children’s Hospital, and participated in the Jersey Mike’s Day of Giving in Nashville where 27 stores provided a portion of the proceeds to CMN. Shelby has founded the GenerosiTEA fundraiser at Vanderbilt Children’s Hospital where mothers can bring their daughters to have refreshments and photos with Miss Tennessee while learning about Shelby’s volunteer experiences at VCH.
When Shelby is not working on behalf of Big Brothers Big Sisters, CMN Hospitals and the Miss Tennessee Organization, she enjoys classical vocal performance and has had the opportunity to sing at Dollywood and Carnegie Hall. She has studied classical voice through Vanderbilt’s Blair School of Music, Nashville Opera and Opera Memphis. Shelby is an avid triathlete and runner, having completed both the Nashville Country Music and Chicago Half marathons and UT’s Triathlon.
Thompson said she hopes to have a career in sales and marketing or working in her family’s business after her reign as Miss Tennessee and once she completes her education.

It appears the DeKalb Utility District is taking the City of Smithville to court in a move to bring down the new $5.00 per thousand gallon water rate the municipality began charging the utility January 1st.
During its regular monthly meeting Thursday in Smithville, the DUD Board of Commissioners voted 5-0 to authorize DUD attorneys to take whatever legal action is necessary to force the city to adjust its rate. The board also voted to authorize the DUD management team to bring down the rate DUD charges its customers, after the city rate to the utility is adjusted.

“We feel that $5.00 per thousand is not reasonable,” said DUD Board Chairman Roger Turney. “During the court hearing, the City of Smithville hired a company to do a rate study. They came back with a figure of $2.67 per thousand gallons which they estimated was their costs to produce water. During that hearing it was said that’s not really a true figure because at least 40 cents of that would be for transportation but there is no transportation costs when it comes to us. It goes through the meter and we pay to distribute it. So their real cost is a whole lot less than $5.00 per thousand and that even $2.00 to $2.25 is probably an exaggerated cost. We sent them (city) contracts and have agreed to pay that. We said we’ll be glad to pay that amount but every time we have contacted them through correspondence, they would not talk to us unless we agreed to buy a minimum amount of water and that minimum amount is the same amount that we bought last year which means, in essence, as long as you buy all your water from us, we’ll cut the rates back down. We feel that $5.00 is an unreasonable rate,” said Turney.
(VIEW VIDEO OF ENTIRE DUD MEETING BELOW)

Though plans are still in the making to build its own water treatment plant once all the legal hurdles have been cleared, DUD may still have to purchase water from the City of Smithville for another eighteen months after construction begins until the plant is ready to open.
Turney said the city’s new $5.00 per thousand gallon rate would add hundreds of thousands of dollars in costs to the utility if it were left in place. “In 2013, we purchased about 308,722,000 gallons from Smithville at the rate of $2.05 per thousand gallons. If we had been paying $5.00 per thousand for the water at that time, that would have increased our bill for that year $910,729 extra to the City of Smithville and they (city) would have had no extra expense,” he said.
Under state law, water districts cannot operate at a loss, therefore the additional costs have to be passed on to the ratepayers. “As a district by state law, we cannot operate at a loss. We had to look at our costs and the new costs from the City of Smithville and see what we had to do to compensate for that. Their rate increase amounted to a 144% rate increase. We looked at what that’s going to do to our bill from Smithville. We looked at the figures and decided to go up 42% on our customers. We realized that was an inconvenient thing to do but we really had no choice. We have to cover our costs,” said Turney.
The DUD Board Chairman was quick to add that the 42% increase was only because of the city’s recent rate hike to the DUD, and not because of the proposed water treatment plant. “That had nothing whatsoever to do with the water treatment plant. That 42% increase was strictly to cover the increase from the City of Smithville from $2.05 to $5.00 per thousand gallons,” he said.
Turney also explained that while the DUD has to pay for all the water it gets from Smithville, the utility does not receive income from the entire supply it purchases due to water loss for various reasons. “Every single gallon that we buy from the City of Smithville, I don’t care if it is to fight fires, if it’s a leak, or to flush a line, we pay them $5.00 for every thousand gallons regardless of where it goes. They have no loss when it comes through our master meter. It’s strictly our bill to pay. That’s one of the things we have to look at as we consider what our rates are to our customers because that water has to be paid for to the City of Smithville,” he said.
“I’m going to ask my board today to give our legal group the authority to proceed with any legal action necessary to see if we can’t get some justification on that rate. We think that rate should be much, much lower than $5.00. I’m going to call on my board to give our legal counsel the authority to take whatever legal action it takes in order to get the City of Smithville to reconsider their cost increase to us,” Turney said.
“At the same time, I’d like to ask the board to give our management team here the authority to lower our rates at the same time city rates are adjusted, so we don’t have to wait for another meeting,” said Turney.
The DUD board approved both requests.
Only four people attended Thursday’s DUD board meeting, other than the board members, attorney, engineer, employees, and local media. While the meeting was not opened up for public comment, Chairman Turney updated the audience on the events which have occurred over the last couple of years, hoping to address public concerns or questions about the water plant project.
Turney said the DUD’s decision to build its own water treatment plant was based on findings that it would save the utility money and reduce rates to customers over a period of time. ” We had several different people, auditors and accountants look at what our costs would be to produce water and to buy water from Smithville. Every single scenario was looked at. Every possibility. Even the possibility if Smithville never raised another penny and kept it at $2.05 for the next thirty years. Every scenario we looked at it was going to be profitable for us to build our own treatment plant. We would, in the long run, save our customers money if we built our own treatment plant. So we as a board decided that would be our undertaking. That we would make efforts to try to build a water treatment plant. Interest rates are at an all time low. Grants are now available to us, and building costs are down because of the recession. So we felt the time was right for us to proceed on with a treatment plant and we made every effort to start with that,” he said.
Another factor in the DUD’s decision to build a water plant was that it might not have this opportunity again. “In fact, about ten years ago we looked at the possibility of building a water treatment plant,” said Turney. “The Corps of Engineers said we as a district, DUD could purchase from them up to four million gallons of water from Center Hill Lake. As things happened at that time, the plans didn’t work out. We actually had contracts bid. The contracts came back so expensive that we could not afford to build a treatment plant at that time. That’s when we entered into a contract with Smithville. Since that time, the Corps came back to us about two years ago and asked us if we were still interested in water. That got us thinking. We said possibly. At that time, the amount of water that they would allocate to us had decreased from four million gallons to two million gallons due to the fact that many other places including Cookeville would love to have every drop of water from Center Hill Lake, the way Cookeville is growing. At that time we were fearful that if sometime in the future we decided to go ahead and build a treatment plant, that there might not be any water left for us. So we decided as a board at that time to go ahead and purchase from the Corps of Engineers that two million gallon allocation, so we’re paying for that. We have bought two million gallons of water in the lake for future use. That has to be paid for every year. We then started making long term plans,” Turney continued.
Had it not been for the City of Smithville’s intervention, Turney said the DUD water plant would have been constructed by now. “Under the board’s plan, the water treatment plant would have been completed by now if things had developed the way we wanted to. But unfortunately the plans for the water treatment plant came to a screeching halt in July 2012 when the so called ratepayers of DUD issued a petition with ten percent of the signatures of the ratepayers supposedly that said the rates we were charging were not right. It turns out that the petition was generated on behalf or at the expense of the City of Smithville. In fact, they hired a public relations firm out of Nashville to do everything possible to try to stop us from building a treatment plant. We were at this table. We had all the paperwork done to sign the bonds to proceed forward on the treatment plant and in about fifteen minutes before we signed those documents, the City of Smithville and the group they call the ratepayers of DUD presented that petition to the courts. Therefore the bond counsel would not sign off on the bonds at that time because of the litigation. So that put the plans at a halt,” Turney continued.
The DUD Board Chairman said records reveal that tens of thousands of city taxpayer dollars have been spent by Smithville trying to thwart the DUD’s plans. “The City of Smithville has decided that this is their main effort. Their main effort has been to stop us from building a treatment plant. To show you how intent the City of Smithville was in getting this done, when that petition was circulated, they offered the people that circulated the petition a prize for the one who got the most signatures. They also offered the Calvert Street Group a $25,000 bonus if we would agree not to build a treatment plant. So they were pretty adamant about trying to stop us from building a plant. At this time, at least from the records of the court hearing we had that day before the UMRB, the City of Smithville out of their taxpayer’s money has spent in excess of $78,000 to try to fight our water treatment plant plus legal fees and the legal fees out of Nashville I guarantee you are not cheap,” said Turney.
Meanwhile, Davidson County Chancellor Ellen Hobbs Lyle is expected to decide soon whether to uphold the Tennessee Utility Management Review Board’s dismissal of the City of Smithville and the DUD ratepayer’s petition seeking to stop DUD’s plans to build a water treatment plant. Following a hearing last April, the UMRB found that DUD’s rates at the time were reasonable, clearing the way for the utility to build the facility. The petitioners then filed an appeal with the Davidson County Chancery Court asking for a judicial review and reversal of the UMRB’s decision.
If the Chancellor rules in favor of the DUD, Turney said construction may soon follow. “We’re waiting and as soon as we can get comments from the Chancellor, the bond counsel has agreed, if she rules in our favor, that bond sales will go on and we’ll proceed on with our water treatment plant as soon as possible. Realistically, it will take from the time we start, about eighteen months. So we’ve got about eighteen months when we’ll have to buy water from Smithville. But as soon as we can get things rolling, we want to build our water treatment plant to take care of our customers the best that we can,” Turney concluded.