May 5, 2005

Rural Water, City Meet To Set the Record Straight on Recent Split

With city officials pointing the finger at rural water as the reason for a recent rise in the municipal water rates, the Consolidated Public Water Supply District #1 of Scotland County invited the Memphis City Council to an April 26th meeting to try to clear the air.

Mayor Mike Stone and Aldermen Ron Gardner and Lucas Remley met with the rural water board for a meeting, as described by board president Dorsey Swearingen, to set the record straight.

The water board presented a number of records dating back to early 2001 when the city and CPWSD#1 began discussing the future of the contract between the two entities which supplied water from the city to rural customers. The agreement, which was entered into back in 1979, was good through 2014. But the growing demand of the rural water district had begun to stress the citys water plant capacity.

In 2001 the two groups began investigating options to alleviate the problem. One option was the creation of a new city water plant. The other choice was for rural water to find a new source of water.

On March 28, 2001, attorney William Alberty sent a correspondence from rural water to the citys attorney John Slavin, requesting proposed water rates if the city were to build a new plant or expand the existing water source.

In June of 2001 Allstate Consultants, the citys engineer, presented a number of projections for a new city water plant. The engineers proposal projected a $3.3 million cost to build a new water plant. A variety of funding options, including a lease purchase, USDA Rural Development loans and grants, and a MDNR-SRF rural water loan/grant created a wide range of water cost projections ranging from $3.32 per 1,000 on the low end all the way up to $4.44 per 1,000 gallons. Those production projections called for the equal sharing of debt reduction between the city and the rural water district.

This information was passed on to the rural water board in July of 2001.

Faced with the specter of raising water costs for its customers from the then current rate of $2.56 per 1000 gallons as high as $4.44, the CPWSD#1 informed the council, via correspondence between the two parties attorneys, that the rural water district was going to consider pursuing different avenues for water supply for its customers.

Swearingen told the city representatives that the rural district had been more than willing to continue purchasing water from the city until it became cost prohibitive. This had become apparent to the board back in 2001.

Alderman Gardner questioned why the board members had not returned to the discussion table, as they had pledged to do following the two groups one face-to-face meeting in the spring of 2002.

CPWSD#1 board member Jamie Triplett told Gardner that several of the board members had attended a meeting that summer in Macon with state officials as well as then Mayor Ron Alexander and former city water superintendent Bob Ellicott.

Triplett and the other rural water reps told Gardner and the city reps that they had been led to believe at this meeting that the plan from Allstate Consultants was the lone option being pursued.

This is what we had to work with, Triplett said pointing to the citys engineers plans. What were we to do?

Swearingen reiterated the stance.

The bottom line was we gave Rathbun $2.10 per 1000 gallons and you were charging us $2.52 per thousand back then, Swearingen said. Based on Allstates proposal, the best we were looking at was $3.96 per thousand.

Gardner questioned why, if unsatisfied with the figures, didnt the board come back to the council and ask for a better deal.

Triplett and the rest of the board members that attended the Macon meeting all indicated that they were given the impression then that the citys offer was final.

It was presented to us by representatives of the city in a take it or leave it style, Triplett said. We assumed you all were aware of this and had agreed to it.

Gardner, Stone and Remley all indicated they were never in agreement with any proposal that would have chased the rural water customers away from the system and pointed out that they were unaware of the bulk of the negotiations.

Some of this stuff, Ive never seen before, Gardner stated as he reviewed the correspondence between the two parties attorneys as well as the engineering designs. The rest of it I saw for the first time this morning at city hall when I was trying to prepare for this meeting.

Ultimately both parties agreed that the lack of communication ultimately doomed any joint effort between the two entities and that it is now too late to change the outcome.

We had to protect our customers, said Bill Camp. We were working with the best available information as provided to us by city representatives.

Alderman Remley questioned if rural water could ever return to the city, pointing out that Rathbun rates ultimately would have to raise and also pointing out quality issues.

But Swearingen indicated that the CPWSD#1 had entered a 40-year contract to purchase water from Rathbun. He noted that at the Macon meeting, the rural board had extended an offer to the citys reps to allow them to enter the joint effort to connect with Rathbun to help maintain lower rates for the city customers.

Why would you want to cut your communitys throat? asked Alderman Remley.

Alderman Gardner also questioned why the city would want to go from water ranked in the highest 10 percent for quality to Lake Rathbun which he indicated was annually rated in the bottom 30 percent for water quality.

Triplett responded, comparing the issue to the citys power system. You can generate electricity, but you buy it cheaper from elsewhere. Dont you owe it to your customers to do the same thing for water?

Ultimately the rural board indicated it felt obligated to insure water service and also guarantee an affordable rate, both of which it believed it did by connecting to Lake Rathbun.

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