USDA Rural Development has approved loan and grant funding for DeKalb Utility District's proposed water treatment plant.
During a DUD board meeting Thursday, Chairman Roger Turney announced that Congressman Diane Black has confirmed that the water utility will receive a $5,000,000 loan and a grant of $1,250,000. 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 will be funded through a bond issue.
Buddy Koonce, Jr. of Goodwyn, Mills, Cawood, the DUD's utility engineer said that plans are being drawn up and will be sent to the Tennessee Department of Environment and Conservation. Once funding is all in place and the state approves the plans, bids can be let on the project. That could come as early as this summer.
But as the DUD board moves forward with its plans, officials of the City of Smithville and others want more answers as to why another plant is needed for the county.
Hunter Hendrixson, Secretary-Treasurer for the City of Smithville, addressed the DUD board Thursday asking why they felt a water plant was needed when the city can sell them all the water they need at cost. "From the city's standpoint, our plant is a four million gallon a day plant, and with DUD as a customer we're at fifty percent capacity and have been for many years," said Hendrixson. "Our contract with you (DUD) doesn't expire until December 31, 2013. The city would have been open to renegotiating the contract. I just wish the DUD and the city could have had a little better communications.I think the city sells water to you very cheap. I'd say its basically a break even. We're not making a fortune off of it. I'd just like to ask the question, why build a plant?"
Turney said the county would be better served by having another water plant. "One of the reasons is to be able to control our own destiny. To determine where we can go and where we can't go," said Turney. "Over the last several years, several things have happened worldwide that has made it imperative that whenever possible, it makes good sense for areas to have backup water supply systems. If you say, well nothing has happened in years, look what happened in Nashville just a few years ago. They were flooded by a one hundred year flood. They came so close. If there had not been interconnections between other utility districts around them, Tennessee would have had a disaster unmanageable. We think its beneficial for the whole county, Smithville, our customers, and everyone to have a second treatment plant in a day and world we live in today because who knows what could happen. Something might happen to both of us. Its entirely possible," he said.
According to Turney, other cities would like to have access to Center Hill Lake for their water supply and if the DUD doesn't take advantage of this opportunity, some other utility may. "Center Hill Lake, I think, is the best water supply in the State of Tennessee. The Corps of Engineers, over the years, is getting more and more restrictive because a lot of people are drawing out of that lake. Cookeville and other areas want more and more water all the time. We looked that over and decided if we don't get in line and get our piece of the pie in reserve, it may be gone. If we don't do this now, ten years from now we may say we want to build a plant, and the Corps of Engineers could say I'm sorry there's no water allocated for you and you can't do it. That could well happen," said Turney.
"This is an historical period in our history," said Turney. "Interest rates are at the lowest people have ever remembered. We've got loans committed to us. Just today we received from Congressman Diane Black's office confirmation of our $5 million loan and a $1.25 million grant to help fund this project. We are honestly not doing this to try to punish Smithville and we're not dumb. We realize its going to cost a little bit and our customers will have to pay a little bit more because of this initially. But we've had at least three different organizations look at our finances and look at the projections for what's going to happen over the next few years with the assumption that the (water) rates of Smithville continue to increase (to the DUD) about five cents (per thousand gallons) every year. Everything that's come back to us has said that financially in terms of our customers, in the long run they will benefit financially. Their (DUD customer) rates will be lower, because we will have more control," he said..
"We know that most industries like to have backups because if something happens to the water treatment plant that supplies them water, if they shut down, they lose. They love to have a backup. That would be a benefit," said Turney.
"We've been dealing with this for years now and we just think it's the time to go. Everything is in place at the right time. I honestly believe that DeKalb County, the City of Smithville, and everybody involved will be glad that this project was undertaken. We hope with the economic conditions we have now that we'll get some excellent bids because people are wanting jobs right now. That's kind of our rationale. That's not everything but that's some of the high points we looked at in determining whether or not to go on. We're trying to decide what's best for our customers and the whole county. And not just DeKalb County, but all the counties that we serve," said Turney.
Hendrixson asked Turney if the DUD had plans of expanding its reach into other areas.
Turney didn't rule it out. "With another water supply, if we had the water supply available, I know Rutherford County would give anything in this world if they could tie into Center Hill Lake," he said. "We're less than a half a mile from their water lines. The City of Woodbury, their water supply source is dwindling, going away. We're positioning, that if we had a water supply for them, they could tie on. Alexandria, we've wanted to serve Alexandria for years. We could tie them on. It may be a long time down the road, but I could see Dowelltown and Liberty. Eventually, they may want to tie on. I think there is potential for growth," said Turney.
Local resident Billy Hale expressed concerns about rate increases.
Turney responded that while rate increases would be necessary, they would not be as high as some have speculated. "There's been a tremendous amount of misinformation given out here recently," he said. "No where along the line have we talked about going up fifty percent on our rates. We had to justify and show to the state the potential income to pay for these loans and grants. They don't just give you the money on your word. You have to verify it with documents. At our last board meeting, we projected a seven percent increase this year, next year, and the next year. Three years running. That seven percent will be enough to pay for the water treatment plant. Our minimum bill now is $17.50. It will go up to $19.00. It will then go up to $20.30 and then to $21.75 over the next three years. We also figured our average customer's bill is now about $44.00. That will go up to $47.75. The following year, it will go up to $51.08 and then the following year to $54.55. On the minimum bill, that's $4.25 over four years. That's not even one cell phone call. That's insignificant in the times that we're living in. We're not talking about major income hardships on anyone," said Turney.
Tracy Foutch, owner of Foutch Industries, asked if the DUD and the City of Smithville could share their water supply to keep rates down. "Is it possible to share the water, since you both have a limited number of customers, where both the city and county could still supply the same customers and dilute the water rates for both and feed the same water towers from both ends?"
" I don't know of anywhere in the world, where that is done. That doesn't seem like something that would work," said Turney.
Rural Development funds will be used to construct a new Raw Water Intake, Raw Water Transmission Line, Water Treatment Plant and distribution system improvements. The proposed plant will be constructed near Holmes Creek Road and will have a capacity of three million gallons per day. The intake will be on Center Hill Lake, the Transmission Line along Holmes Creek Road and distribution lines will be along Allen's Chapel, Game Ridge, Turner, South Tittsworth, and Big Rock Roads, and Wheeler Lane.
The DeKalb Utility District serves parts of a four county area, DeKalb, Cannon, Smith, and Wilson.
Members of the DUD board are Roger Turney, Chairman, from Auburntown; Joe Foutch, Jimmy Womack, and Hugh Washer all from DeKalb County, and Danny Bass from Smith County.
Meanwhile, the Calvert Street Group, a public relations firm hired by the City of Smithville, has launched a campaign trying to convince DUD customers through telephone calls, on-line petitions, and other means that a new water plant is a bad idea and that it will result in large increases in water rates. The group seeks to rally vocal public opposition to DUD's plans.