Hamilton County sewer authority could see major changes

Hamilton County sewer authority could see major changes

April 22nd, 2016 by Andy Sher in Business Around the Region
Tennessee State Rep. Mike Carter attends a dedication ceremony Thursday, July 31, 2014, in Harrison, Tenn., naming a section of Highway 58 as a memorial to volunteer firefighter Shane Daughetee who lost his life battling a house fire in 2007.

Tennessee State Rep. Mike Carter attends a dedication...

Photo by John Rawlston /Times Free Press.

NASHVILLE — Hamilton County officials are exploring possible changes to the county's troubled sewer authority that apparently could include partnering with the city of Chattanooga's wastewater operation, Rep. Mike Carter, R-Ooltewah, said on the House floor Wednesday.

Carter's initial comments about the creation of a much larger sewer agency came as he tried to address local colleagues' concerns about his bill dealing with the troubled Hamilton County Water and Wastewater Authority.

The original bill sought to "wind down" the WWTA's operations and abolish it in 2021. Sen. Bo Watson, R-Hixson, who has the Senate companion measure, has previously said the bill is intended to create a sense of urgency for local officials in addressing the sewer authority's many problems.

A former attorney for the WWTA, Carter pushed on the House floor an amendment to a bill to accelerate the previously passed Senate bill's "sunset" date by two years to July 1, 2019. The bill also sets up a series of reports to the state on the status of the authority's financial obligations, including millions of dollars in state loans and bonded indebtedness, prior to being eliminated.

But when the bill and amendment popped up on the House floor Wednesday, alarmed Reps. Marc Gravitt, R-East Ridge; Patsy Hazlewood, R-Signal Mountain, and JoAnne Favors, D-Chattanooga, questioned what was going on with the change to the 2019 sunset date.

At their request, Carter changed the provision back to the original 2021 sunset provision and it was later passed by Watson in the Senate and sent to Gov. Bill Haslam for his consideration.

But the House debate appears to provide a glimpse into what may come under consideration for WWTA.

After explaining various provisions of the bill, Carter told the House Wednesday that "I presume and the rumor, and that's all it is, is that one large authority for Chattanooga, Hamilton County, all of the cities and even North Georgia, is in contemplation of being formed."

WWTA owns and operates the public sewer system in the unincorporated areas of Hamilton County as well as the municipalities of East Ridge, Lakesite, Lookout Mountain, Red Bank, Ridgeside, Signal Mountain and Soddy Daisy.

Chattanooga has its own sewer operation, although the city-owned Moccasin Bend Treatment Plant handles most of the sewage treatment throughout the county.

Gravitt, Hazlewood and Favors said they were concerned that if WWTA were abolished, their cities and towns, as well taxpayers, might get soaked by having to assume a good part of the sewer authority's $10 million-plus bond and loan debt.

"As you know, I'm vice mayor for the city of East Ridge, and WWTA services our city for our sewers," Gravitt told Carter. "What is going to happen to the indebtedness that the WWTA now incurs once they are in 'sunset'? The numbers I'm hearing, it's going to be north of $10 million. Who is going to be responsible for that debt?"

Carter replied the bill "expressly provides" that during the "wind down" phase "there must be equitable distribution of that debt." But he emphasized any new entity that emerges from WWTA "will assume all that debt."

But if any city wanted to take any WWTA infrastructure assets in their communities and commence their own sewer operations, Carter said, "then there would be [debt], I assume" that would be apportioned to that city. But he emphasized "it's not required" any town or city do so.

"The bill merely requires an equitable distribution that some debt of that would come back to you if you got some asset from that [dissolution]," Carter stressed. "But I'm not aware that's being contemplated.

Whatever happens would have to be approved by the Tennessee Department of Environment and Conservation, as well as state Comptroller Justin Wilson, Carter said.

"I assume that new entity will assume all of that debt," Carter said. "If one of the cities, say East Ridge since it's your [Gravitt's] question, decides that you want to run your own sewer system, go back into the [sewer] business then there would be [debt], I assume."

Carter said he's not aware of any city expressing a desire to start its own sewer operation. And he emphasized several times, "it's not required" that East Ridge or any of the towns or cities take control of portions of WWTA's infrastructure.

"The bill merely requires an equitable distribution that some debt of that would come to you if you got some asset from that [dissolution of WWTA]," Carter stressed.

Carter later told the Times Free Press local officials may want to explore any number of options, including turning the sewer service over to a private company to operate.

"I don't know," Carter said. "I'm telling you that the options I'm told are being considered are considering all private industries that run these, creating one large one [authority] or creating two smaller ones. I'm not involved."

Carter said he's spoken with WWTA's chairman and attorney, as well as Hamilton County Mayor Jim Coppinger, "but we haven't discussed any specifics. We've talked about the plan, the framework under which they operate. We haven't talked about what they're doing."

He said the authority "has got to get more efficient, and they have to be able to develop a more regional approach, it seems to me."

Coppinger, meanwhile, is urging caution on any actions taken in the aftermath of the WWTA sunset legislation.

"We don't want to make a knee-jerk reaction concerning anything involving WWTA," he said.

Red Bank Mayor John Roberts said Thursday it's too early to propose specific solutions. The first step, he said, will be for the municipal leaders to sit down and discuss the situation with County Mayor Coppinger.

"I believe we can find a cure," said Roberts, citing a good working relationship with the county mayor.

If the new legislation allows, Coppinger said he would like to take the opportunity to do a "top-to-bottom" review of WWTA's operations and services. He also praised the authority's board for its efforts to balance the effectiveness and efficiency of the organization.

The county's sewer authority has $10 million in clean water loans from the state, plus several million dollars in outstanding bonds issued through Hamilton County government.

WWTA also faces a multi-million-dollar class action lawsuit filed by Heritage Apartments Inc. over the authority's $8 per customer sewer lateral line charges. The Tennessee Supreme Court recently allowed that litigation to go forward in Hamilton County Chancery Court.

Moreover, the sewer authority also has federal Environmental Protection Agency clean water mandates to meet to avoid dumping raw sewage into the Tennessee River. Chattanooga entered into an agreed order three years ago and is spending $250 million to correct problems.

Meanwhile, the House on Wednesday took final action and sent to the governor a second bill sought by WWTA to address billing problems. Those began some four years ago when investor-owned Tennessee American Water announced it was stopping its decades-old practice of including WWTA and Chattanooga sewer charges on their bills.

Because a number of customers quit paying — county officials and lawmakers say the problem now largely centers on renters — WWTA and the city of Chattanooga sewer fee revenues plummeted.

WWTA began aggressive efforts to collect from landlords and even new tenants for the debts. That generated a huge controversy with apartment complex and duplex owners saying they shouldn't be punished for scofflaws' actions.

Gravitt's just-passed bill authorizes and requires the sewer authority to create written "acknowledgements" for the provision of services, which would be made available to a property owner who leases residential property or the property owner's agent.

The document would have to be completed by a tenant at the time the tenant enters into or renews a residential rental agreement.

Paul Leach contributed to this report. Contact Andy Sher at asher@timesfreepress.com, 615-255-0550 or follow via twitter at AndySher1.