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State adds pressure over towns water rates

Town Council Face Legal Action

City Mayor, Alderman face subpoenas over proposed water rate changes.

By Marlana Ward

The State of Tennessee Water and Wastewater Financing Board (WWFB) recently issued a letter to the Town of Mountain City expressing their rejection of the town’s proposed rate changes as well as ordering immediate action by the Board of Mayor and Aldermen to come into compliance.
The order issued by the state is a continuation of the situation discussed previously by the Board in earlier meetings including its October session, when Shaw explained that the State had become involved with the town’s rate situation after an audit, which showed the utility operating in the red for two years in a row.
The town followed the direction and requested a rate study to be performed by the Municipal Technical Advisory Service (MTAS). The city used suggestions from the study to form its own proposed rate increase schedule, which was then submitted to the state.
The Water and Wastewater Financing Board’s order for immediate action on the part of the Mountain City Council was the result of the review.
“I gave each of you a copy of another order from the Water and Wastewater Financing Board,” Shaw said as she introduced the topic for discussion. “They met and rejected MTAS’s recommendations on our water and sewer rate increases and gave us another order of what we have to do.”

Included in the order issued to the town were the following:
•The city shall hire a qualified expert to complete a comprehensive cost of service study of the Town’s water and sewer system. The qualified expert shall be pre-approved by Board staff. The Town shall be under contract for the said cost of service study by December 31, 2018, and shall notify Board
staff of the contract by January 15, 2019.
• If the Town does not provide Board staff with the information required in paragraph 1 by January 15, 2019, Counsel shall issue a subpoena for the attendance of the Town’s Board of Mayor and Aldermen at the Board’s March 14, 2019, meeting.
•The Town shall submit the completed cost of service study and supporting documentation to Board staff by May 31, 2019.

Shaw went on to say that she had been in contact with the Finance Board and that there were two qualified experts they recommended for use.
“The offices suggested, the quoted cost of a rate study was $15,000,” Shaw said.
City Mayor Kevin Parsons was the first of the council to respond. “Here’s what I would like to do,” Parsons began. “I would like to see if we could get our legislatures up here and have a work session and let’s talk to them about this. This is another overreach of our state government. It is our local board that controls this and that makes me mad.”
Unhappy with the State’s involvement and the additional cost to the city to conduct another study, Parsons said, “Our residents are burdened enough already. “I am trying to save money, and instead we are asked to spend more even though our proposal showed that we are out of the red.”
“Well, I’m sorry, but they are very plain,” Shaw explained. “The Comptroller’s office had told me that they had even read the article in the local newspaper about the water and sewer rate increases and they weren’t happy about how it all transpired. We have to have a contract with these people by the end of the month.”
Reasoning on the reality of the issue Shaw added, “I don’t think we have any other choice. We do what the Water and Wastewater Financing Board tell us to do, or I guess we go to court. I am asking for permission to contract with somebody. We have to get this underway. The study has to be back to the Finance Board by May 31.”
While replying to the concern of the cost associated with the hiring of a State-approved expert to conduct a study, WWFB spokesperson John Dunn, stated, “The Water and Wastewater Financing Board discussed and passed a motion requiring the town to hire a qualified expert to perform a cost of service study. The Board felt this was an important step.”
Dunn added that while the WWFB office has not seen any initial cost estimates from the town or received a request to approve the qualified expert, “the Board believes this study could potentially save the town and its ratepayers much
more than the cost to complete the study.”
Parsons asked the council members if they would be available for a continuation of the council meeting on December 18, saying, “If we can get our state senator and representative here at the same time we can express our opinion about this and then we can make a better decision.”
Alderman Lawrence Keeble expressed his belief that the town should not tarry in acting on the order received from the Finance Board. “I don’t know if we want to open a can of worms or not,” he stated. “The state board is going to win in the long run. I think we need to act.”
City Attorney George Wright said that postponing the decision until the meeting on December 18 could delay the town’s ability to enter the ordered contract with the qualified expert by the deadline given.
Alderman Bob Morrison recognized the same concern, but offered a solution.
“I think we are all in agreement that we will have to do this regardless. I think Sheila can go ahead and maybe even get him up here and whatever we need to do to get the process started and get the paperwork in by the deadline to the state.”
While in agreement with having the expert attend the upcoming workshop meeting, Parsons voiced his continued stance saying, ‘The expert can answer questions the board may have regarding what the study would further do beyond what MTAS had already done.
The group then suggested having the contract in hand and ready to sign if it was decided to move forward as directed by the state.
“When we have that workshop on the 18, if everyone is in agreement, we will use that date, and he can take it back with him,” suggested Vice Mayor Jerry Jordan.
Parsons later told the Tomahawk, that “if that what it takes, I am looking forward to stand in front of the Financing Board.”
The meeting closed with a recess rather than adjourned to reconvene on December 18.