Approve the Water Authority

The Tellico Village Water Authority Initiative

 

Are You Ready To Take Action? Print the Consent Form Now. Please drop off at the Welcome Center – 202 Chota Road or POA Admin Office – 112 Chota Center 

Acting Now to Secure Tomorrow

Important Information 

FREQUENTLY ASKED QUESTIONS

Has the POA researched to see how many new Water Authorities have tried to form in the state in the last five or ten years? Do you know how many were created?

 There are presently seven Water Authorities in the State of Tennessee. The most recent Water Authority is the Cumberland Plateau Water Authority, which was created in 2022.  All Water Authorities were created by the Tennessee Legislature, most of which were established in the last 20 years.

 

Like many Villagers, I was surprised to learn that water and sewer projects need to be funded to the tune of $31 million in the next five years. For those of us who pay attention to this stuff, for the past two or three years, we have been told the Village will need $13 to $20 million over the next ten years to tackle improvements in the system. Further, recently the construction of a holding tank and the erection of a water tower were supposed to lower these $13 to 20 million expenses aided by a $2 million government grant. What happened to increase these costs to $31 million over five years?

Since 2017 a few water and sewer studies have been completed to deal with very specific issues. Those studies provided plans and costs to fix that specific issue. In 2020, PSAC requested a full system-wide water study for the Loudon County portion of the Village. That study took over a year to complete. The findings were presented in January of 2022. It offered two phases that totaled 13 million dollars without inflation. This includes several booster pump upgrades and line upgrades. At this time LUB built an additional storage tank off Maple Hill and PSAC wanted to see the impact it had on our system pressure. After further study, an elevated storage tank option was investigated. This was presented to the Board in March of 2023. This option will take the 13 million dollars down to around 7 million and will fix our pressure issues for current build-out.   

Next, we ask for a full sewer system master plan also for the Loudon County portion of the Village. The results of that study indicated the need for 24 million dollars over the next five years. When both studies are combined the total with estimated inflation is 31 million dollars. Click here for the project timeline and what is included in each project.  

Currently, we are in the process of a full Kahite Water and Sewer study, we expect it to be complete by March/April of 2024. The sewer holding tank that the Board approved earlier this year is in the design phase and is currently at 30%. The goal is to have that completed by the end of the year and construction in 2024.  

In considering this option of creating a Water Authority, did members of the staff or Board of Directors visit or meet with representatives from newly formed or current Water Authorities to gain insight into the pros and cons of their operations?

POA representatives have met with multiple representatives from the Tennessee Department of Environment and Conservation, the Tennessee Association of Utility Districts, State Legislators, local utility districts, and local government officials regarding the creation of a Water Authority. POA representatives will also meet with representatives from existing Water Authorities as this process proceeds.

 

Does the POA have any concept of how LUB and TASS will react to the Village establishing its own Water Authority? Have there been conversations with these utilities about this Village initiative?

We have had conversations with both LUB and TASS. They are in support of us becoming a Water Authority. This will not have a negative impact on their operations as the existing service agreements with these utility providers will remain in place.  

 

How is the POA going to sell this idea to the legislators in Nashville? I don’t think you can say Villagers do not want to pay for infrastructure improvements, so we want to create this Water Authority. What position is the POA going to take with these governmental bodies?

We have and will continue to talk to legislators about our needs. It is very uncommon for a community to own and maintain a water and sewer system. Since we are not a government entity, we do not have the ability on our own to seek grants or long-term (30+ yr.) financing. This is the reason we would like to become an Authority. It will allow our aging infrastructure to be upgraded sooner while stretching the cost over a much longer more affordable term. 

Will a set of governing documents need to be created for the Water Authority? Who will create them? Who will need to approve these documents? And will Villagers have a chance to review these documents?

Yes, a set of governing documents will need to be created. The Private Act of the Legislature creating the Water Authority will broadly establish the rights and obligations of the Authority. Further, the Water Authority will be subject to all regulatory requirements of the Tennessee Department of Environment and Conservation in its operations. Finally, as a governmental entity, the Water Authority will be subject to the other applicable legislative and regulatory requirements mandated by the State of Tennessee.   

Will the Water Authority have a physical location in the Village? Has any consideration been given to where that office might be situated to help address issues?

To start we will lease the Water Authority space at our Public Works Facility. Long term they may choose to move to a new location 

The Water Authority is going to have a governing Board, correct? How will this Board be chosen? Who is on this Board? How long do they serve? Can they be removed? Will they be term-limited?

The Board will be set by the POA Board of Directors. It will include one POA Board Member and four property owners. They will serve three-year terms on a two/three schedule. The Water Authority Commissioners will not be term-limited but may be removed for cause. This is common practice for other utilities and water authorities in the State.   

 

Will the Water Authority Board meetings be open to the public, streamed, and have Q & A sessions?

Yes, the Water Authority meetings will be open to the public, and hopefully, streamed. Like any public meeting, there will be an opportunity for a Q&A session.  Further, as a State governmental entity, the Water Authority will be subject to all Tennessee Open Records and Open Meetings requirements.   

Who will oversee the day-to-day operations of the Water Authority?

We intend to select the most qualified individual we can for this important position of supervising the day-to-day activities.   

Presently, the Village purchases water at a wholesale rate from the Loudon Utility Board (LUB) and Tellico Area Services Systems (TASS). Will this arrangement continue with the new Water Authority? Are there any other options?

Initially, these arrangements with LUB and TASS will continue, and existing service agreements will be assigned to the Water Authority. The WA Board will have the latitude to explore other options in the future if they choose to. 

 

In the Town Hall, a comment was made that the Village will need to present a budget to the state. Part of the budget will need to include money from our reserve fund. Has the amount of this contribution from the Village’s reserve fund been determined?

We will take the R&M (repairs and maintenance) reserve balance from the 2022 budget and take off any water and sewer costs spent in the 2023 budget, and what has been added in 2023. We estimate it will be around $3.5 million dollars.  

Villagers will need to know what amount of the reserves are being invested. This will be our sunk costs. Do you have any idea when and how much this amount will be determined?

The Water / Sewer Reserve balance 12/31/2022 = $2,490,462

This should already include the $1,046,966 contribution in 2022.  Hence, the bottom line would = $3,935,986 (2,490,462+1,735,000-289,476)

There is a range of water and sewer-related equipment and materials owned by the TVPOA Public Works Department. Villagers have paid for these items. Is the plan to transfer these assets to the new Water Authority? Any idea about the value of these assets? All of this information will need to be included in the submission to the state.

The Private Act Legislation creating the Water Authority will not contain an itemization of assets to be conveyed to the Water Authority from the POA. However, the POA will be required to provide its operating budget, including an itemization of assets, and anticipated operating expenses, to the State Comptroller for approval.   

In addition to all equipment and materials, there is a highly qualified workforce with extensive familiarity with the current Village water and sewer system. This has value too. Will this point be made to the state when the plan for the new utility is forwarded to the state?

Yes, we recognize the value of our employees, and this will be a point of emphasis in the state submission.  

 

The new Tellico Village Water Authority will be able to seek grants from government and non-government entities. Do we have any idea how many grants have been awarded to Loudon County, the city of Loudon, and the city of Lenior City in the past five years? Some counties and cities are good at getting grants; some are not so good because of their ratings. Knowing the success level of these government entities will help the Water Authority understand the grant climate in which they will operate.

As a water authority, we will not be required to rely on the county for government grants. It will be eligible as a government entity  

At the Town Hall, a reference was made that a portion of the funding for the Water Authority would come from issuing bonds. Does anyone in the finance department have experience with this process? Or is there someone with experience in issuing bonds on the Finance Advisory Committee? If this is going to be a major revenue stream, how is this going to be handled?

The POA may consult with the Tennessee Department of Environment and Conservation, the Tennessee Association of Utility Districts, financial institutions, bond underwriters, other water authorities and utility districts, and other state agencies as it evaluates the issuance of bonds in the future.  

There has been talk about grants, bonds, assets, and such. The financial health of this Water Authority will be the monthly bills paid by the 5,600 residences and all the commercial water demands. Am I right? And what is the monthly revenue stream from these bills? Annually amount?

Just like any utility, the users will fund the operation along with any governmental grants that can be secured.  

 

Will the POA create a detailed business plan and budget to submit to the state which is going to have all this information. Will a high-level budget summary covering all this information be shared with Villagers before being presented to the state?

The state has a template that the POA will update and submit back to them.  

After, looking at the recording of the Town Hall meeting, I am confused. Why do we need 51% of property owners to agree to this Water Authority and not two-thirds?

We are conveying as an asset – the Village’s water and sewer system to the new Water Authority – we are not attempting to change the Covenants and Restrictions which require a two-thirds vote by property owners. Article VIII, Section 4(I) of Declaration of Covenants and Restrictions for Tellico Village expressly authorizes the Association to transfer all or any part of the Common Properties, including the water and sewer infrastructure and associated water and sewer reserves, to any public agency, authority, or utility where an instrument is signed by POA members entitled to cast a majority of all votes (i.e., 50% plus one). The process of conveying these assets to the Water Authority does not require an amendment to the Declaration (which itself requires a two-thirds vote), but merely the signatures of a majority of all POA members

Are there any clearances required from the Tennessee Valley Authority or the Tellico Reservoir Development Agency to create the Village’s own Water Authority? Have there been any discussions with officials from these agencies about the new Water Authority?

No.

Talking about government groups, what about discussing this with Representative Russell and Senator McNally? Has this been done? The Village will be looking to these gentlemen to help push this through their respective bodies in Nashville. What is their reaction to this proposal?

POA representatives have met with both Representative Russell, Senator Swan and Senator McNally and they are actively supporting the process of enacting Private Act Legislation to create the Water Authority.    

 

Do Loudon County and Monroe County Mayors support the authority?

Yes, both Loudon County Mayor, Buddy Bradshaw and Monroe County Mayor, Mitch Ingram support the pursuit of a Water Authority.

Will the POA create a business plan? Will it be shared with Villagers before it is sent to Nashville?

Yes, an operating plan will be created along with an initial budget that will be submitted to the state.  

At the town hall, an approach was discussed of getting 54 Villagers to visit 100 homes each to obtain signatures to accomplish getting 51% of signatures. Will these people be educated on the nuances of this water authority plan? I suspect they’ll be knocking on the door of Villagers who will have no concept of what they are talking about and need an elevator speech to inform these people.

Yes, volunteers will be educated to help their neighbors understand the Water Authority concept and benefits. This approach will be used only if we do not receive the needed signatures.  

 

Will the volunteers who help collect signatures need to be notaries? I have needed documents notarized before and I had a difficult time trying to find one notary.

No, they do not have to be notaries. Article VIII, Section 4(I) of the Declaration of Covenants and Restrictions for Tellico Village expressly authorizes the Association to transfer all or any part of the Common Properties, including the water and sewer infrastructure and associated water and sewer reserves, to any public agency, authority, or utility where an instrument is signed by POA members entitled to cast a majority of all votes (i.e., 50% plus one). This Section does not require notarized signatures.   

How are you going to recruit these people to get these signatures from residents?

We have already had several Villagers volunteer to assist in a door todoor campaign. We will be reaching out to other organizations such as Neighborhood Watch, COPS, and others to see if they are willing to assist in sharing the information as well. 

I know the whole purpose of starting a Water Authority is to manage our infrastructure expenses differently. Will this potentially lower our monthly water rates in any way?

It is too early to tell if the monthly expenses will go down. Overall, the main benefit is the long-term maintenance and financing options available to a government entity like a Water Authority.  

A lot of different ideas have been broached through this Q&A session. It was suggested at the town hall meeting that the POA hoped to have the new water authority in place by next July. Is this realistic?

We hope to get approval in the Spring of 2024 leaving a few months to get the water authority operational. Once the signatures are acquired, we can start gathering all the information needed for the state and be ready to submit if legislation is approved.  

What happens if I don't want to sign the agreement?

No one is required to sign the agreement, but the POA Board of Directors and Tellico Village executives believe it is in the long-term best interest of Tellico Village.

Is there a chance the state legislature will deny our request to form our own Water Authority?

Anything is possible, but considering the due diligence already conducted, along with support from Tellico Village residents and local elected officials, we believe it is unlikely as long as we get signatures from 51% of property owners. 

New- Where I used to live, I got my water and sewer from a utility district. Every month the district tacked onto my bill an administrative fee and then they made some infrastructure improvements and I started getting an infrastructure surcharge. Is this what is going to happen with this new Water Authority to cover the added staff and loan costs created by this new entity?

The Water Authority will need to cover its ongoing operational expenses through the water and sewer rates that it charges to its customersThese rates will need to comply with rate requirements from TDEC and the State ComptrollerThe Water Authority will attempt to fund certain infrastructure improvements through loans, grants and bondsHowever, the debt service will still need to be paid through the water and sewer rates over time.  A primary advantage of the Water Authority is that it is able to obtain financing at more favorable rates over longer terms and also is eligible for certain grants.   

New- The new Water Authority will have the ability to get loans, seek grants, and issue bonds. These are all things that the POA cannot do now. I get it. The stated requirement of $31 million is not going to be completely covered by these loans, grants and bonds. Where will the balance of this money come from?

The Water Authority will attempt to fund certain infrastructure improvements through loans, grants and bonds.  However, any infrastructure and operational expenses that are not covered by such financing methods will need to be covered by the rate payers and any available reserves of the Water Authority.  The Water Authority is required to establish water and sewer rates to reasonably cover its operational expenses, debt service, and future reservesThese rates will need to comply with rate requirements from TDEC and the State Comptroller. 

New- The Village needs $31 million to cover improvements to the community’s aging water and sewer system. Do we need all that money right out of the gate in 2024? Are these investments spread over a number of years?

No, not all of the $31 million will be needed if the Water Authority is created in 2024. The projected investments are anticipated to be made over the next five years. 

New- Is there a project schedule of these five-year $31 million investments? What are we actually getting for this money?

We have a tentative plan in place that was created by our Public Services Advisory Committee along with our engineering firm. Click Here  

New- We all know that the building boom over the last two years is contributing to the concerns related to our water & sewer system.  Has the POA considered suspending lot sales and issuing new building permits to avoid a catastrophic event from happening before our systems can be updated to meet the demand?"  

The POA is not legally authorized to suspend building as lot owners have a right to build on their private lots. Currently, there are no POA lots for sale. 

New- The Cumberland Plateau WA legislation includes a statement regarding easements: "The Authority may condemn in its own name any land, rights in land, easements, and/or rights-of-way, which in the judgment of the board are necessary for carrying out the purposes for which the Authority is created"
  1. The proposed Water Authority legislation will not be including any right to eminent domain.  We don’t feel that eminent domain is necessary or appropriate as the easements and water infrastructure are already in place.
  2. See #1.
  3. Yes, the POA already has detailed information about existing easements and infrastructure.   This information will be provided to the Water Authority upon creation.
New- The POA Q&A is very unclear about how the head of the WA will be selected. Question: "Who will oversee the day-to-day operations of the Water Authority?" 2. Will this position be filled based on a search of both internal and external candidates? 2. Will the TVWA Board be responsible for conducting the search and hiring the individual?

The WA board will oversee approving all staff levels, the operations, and capital budget.

1. Our plan would be to offer the current staff the chance to work for the WA and the WA board would be a part of that process.  After that, the board would have the ability to hire and fire as they see fit through the director.

2. Will the TVWA Board be responsible for conducting the search and hiring staff? Yes, they will consider current POA Employees that may be interested as well as conducting a search for the best applicant.

New- Once all the required state regulatory filings are made and there is good clarity about the Water Authority structure, finances, and management organization, I understand the TVPOA Board will make a final go/no-go decision. 1. Will the POA Board return to the residents for another vote (in addition to the original 51% approval vote) prior to making the "go/no-go" decision?

Step one in this process is for a majority of property owners to approve the transfer of the Water and Sewer Assets from the POA to the Water Authority.  To do this, you will need to sign the consent form. By signing this form, we are not automatically transferring the assets but allowing the Private Act legislation to be written and submitted in the spring legislative session. This is why we are asking you to please act now to keep this important initiative moving forward!!

Step two would be for the Private Act Legislation to be presented in the spring 2024 legislative session. This will take place in February and March.

Step three is to get the State of Tennessee Comptroller to approve the preliminary water authority budget and operations plan.

Step four- Once the Private Act legislation becomes law, the POA Board will give the proposal a final review and make the decision about whether or not to move forward with the Water Authority.

It is important to note that we are still researching and asking questions of the State and others. We will continue to do so as we move through this process. At any step in this process we can decide not to move forward if we feel it is not in the best interest of Tellico Village.

New- The stated capital requirement for the TV WA is $31m over 5 years. $31m divided by 6500 property owners is about $4800. Spread that over 5 years is $79/month. Bring in the commercial accounts and it would be even less. 1. Why are we chasing setting up a WA for $79/month? Is there a clear financial benefit to creating the TV WA? Are financial pro-formas available to demonstrate this benefit?

We can’t charge all property owners a fee outside the utility bill. That would be a special assessment and would need a vote from 2/3 of the property owners that would need to be notarized. Therefore, the cost would not be shared by 6500 it would only be the utility users which is around 5500. The WA would be able to spread the cost out for a longer period which would allow future residents to help pay for the infrastructure. This option would put all the cost of current homeowners. We are working on the proformas and modeling. We hope to share these at the Town Hall Meeting on December 21st.

Questions

We know you may still have a few questions. Please use the contact form below to send those our way. We will get back to you as well as post them under the FAQs on this page.

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