The Signal Mountain Town Council has postponed its decision on whether to sell the town's water system to one of two companies that have offered to purchase and manage it - or for the town to continue to maintain the water system itself - in order to have the Municipal Technical Advisory Service look further into the viability of the town retaining ownership and maintaining the system.
"I don't want to do business with anyone who rushes us to make a decision this big," said Councilman Dan Landrum, before making the motion during the council's Monday night meeting to have the third-party organization look into the viability of keeping the system.
The decision was made after 18 residents spoke in favor of doing more research into keeping the system. The council also agreed to allow an ad-hoc group that wants to form a committee to determine the viability of the town keeping the system, which had requested to make a presentation at the July 9 meeting, to give a 15-minute presentation during the council's August meeting.
Signal Mountain Mayor Chris Howley and Town Manager Boyd Veal last week concluded negotiations with the two companies vying to purchase the town's water system - Tennessee American Water and Walden's Ridge Utility District.
The proposals, along with comparisons between the two, were sent to town councilors June 25, Howley said during the council's work session held June 29.
Walden's Ridge Utility District, which is headquartered on Signal Mountain. (Staff photo by Myron Madden)Several significant revisions were made to the water system buyout proposals from the two companies after the negotiations.
WRUD's offer went from $3.8 million to $4.3 million. The company would charge its monthly base rate of $25.47 per 2,000 gallons for current customers and $6.61 per each additional 1,000 gallons, for a total of $38.69 per 4,000 gallons. WRUD promised to lock in that rate for two years, as opposed to the original five.
The current monthly base rate for town water customers is $20.19 per 4,000 gallons.
TAWC's offer went from $3.4 million to $4.25 million. Instead of adopting the town's current base rate for five years, Tennessee American would require the town to raise it by 8 percent before acquiring the system. The new base rate of $21.81 would stay the same for five years, but that figure does not include any capital improvements.
State law allows Tennessee American to pass along the costs of any approved capital improvements to ratepayers as a "capital recovery rider" on their monthly water bills.
The Tennessee Public Utility Commission approved a 2.48 percent rate increase for TAWC this year, an increase of $0.54 on the average customer's water bill. In 2017, a 3.57 percent rate increase, or an increase of $0.77 on the average customer's bill, was approved. Any future requests for rate increases by Tennessee American approved by the regulatory agency would be reflected on town customers' bills as capital riders, despite the base rate staying the same, Veal explained.
As to the prospect of a buy-back clause, should the town want to return to the water business, both companies repeatedly agreed to one during public meetings. WRUD reaffirmed this. Tennessee American, however, now would only agree to a condemnation proceeding, in which the property could be condemned by eminent domain and the purchase price would be based on the evaluation of that property - a change from previous promises.
Because the town is considering the sale of a public utility, state law requires that the town's planning commission be given an opportunity to make a recommendation about the sale. The planning commission has a 30-day window to make a nonbinding recommendation before the council can take action, said Town Attorney Phil Noblett.
Veal said they plan to send three questions to the planning commission: Should the town council authorize the sale of its water system to Tennessee American Water? Should it authorize the sale to Walden's Ridge Utility District? Or, should the town continue to operate its own system?
In this April, 19, 2018, staff file photo, Valoria Armstrong, left, president of Tennessee American Water, and Kevin Kruchinski, director of operations, talk about a proposal to sell water to Signal Mountain at Tennessee American Water's administrative offices on Wiehl Street.Noblett recommended councilors wait until their July meeting to address sending the questions to the planning commission, as opposed to taking a vote at the June 29 work session. The council decided to follow his recommendation, which means no action can be taken on the sale of the water system until at least 30 days after the questions are sent to the planning commission.
While the council prepared to vote on whether to send the questions to the planning commission, resident Don Strickland stood up and informed the council that he did not believe it was legal for it to vote because members had not given citizens adequate notice of the meeting, citing a 1999 Court of Appeals of Tennessee case, Englewood Citizens for Alternate B vs. Town of Englewood, which ruled that two days' notice must be given.
Veal responded said the town's charter allows the council's meetings to be called within 24 hours.
The town emailed the agenda for the June 29 meeting just one day earlier, though the public had been notified of the rescheduled meeting by email and through the town website weeks before.
However, the town didn't notify the public that the start time of the meeting had changed from 12:30 p.m. to 1:15 p.m. until 8:30 a.m. the day of the meeting. The time change was required in order for Councilwoman Amy Speek to attend, as her new job prevented her from attending at the original meeting time of 12:30 p.m., officials said.
Veal said the agenda was not sent to the public until June 28 because the council was waiting to confirm it had a quorum.
Email Emily Crisman at ecrisman@timesfreepress.com.