Pikeville and the Tennessee Department of Correction are working on a deal for the city to operate the water treatment plant at the former Taft Youth Development Center property on the Cumberland Plateau.
"It does look very promising, but there's nothing concrete," Pikeville Mayor Phil Cagle said Monday. "It's in the process of working out all the details and working out whether we're going to work out a lease."
The city, TDOC and the Southeast Tennessee Development District are studying the idea, Cagle said.
As the proposed operator, the city would have to upgrade the small plant to make sure it meets the same standards as Pikeville's newly revamped water system in town, he said.
State officials project it will cost about $3 million to prepare the plant.
Pikeville has some leftover money from the prison waterline project that connected the city to the Bledsoe County Correctional Complex, next door to Taft, he said, adding that he hopes there will be some other state money available for the project.
The mayor said the city might apply for a couple of $500,000 grants, and neighboring Van Buren County could apply for another grant to help out because residents there are connected to the Fall Creek Falls Utility District.
"It will be a money maker for the city," Cagle said of the future impact on Pikeville, which in recent years has abated water problems through major upgrades.
The plant at the former Taft facility can serve as a backup for the prison and other areas in emergencies, he said.
"To me, it's just a no-brainer," Cagle said. "It would be beneficial to the state, would be a great asset to the city of Pikeville and definitely will improve the quality of water for all the people in the Fall Creek Falls Utility District, including Fall Creek Falls State Park."
Pikeville taxpayers and water customers won't see a financial impact, but there will be a "small increase in water rates" for Fall Creek Falls area customers, he said.
"Since the plant provides water to citizens and Pikeville brings 1 million gallons of water per day, it makes sense to combine the water from Pikeville with Taft systems," TDOC spokeswoman Dorinda Carter said Monday.
About 1,700 people in Van Buren County get water through the water system at Taft, Carter said.
Carter and Cagle said city and TDOC officials will meet again this week to continue planning.