The News Courier in Athens, Alabama

Local News

September 4, 2013

Water board defends debt

ATHENS — Limestone County Water and Sewer Authority Board Chairman Jim Moffatt defended spending nearly $20 million to increase the authority’s debt load to $87 million, calling it an investment that will pay off in the long run.

Moffatt chaired an informational session Wednesday at the request of the Limestone County Commission. The board is scheduled today to vote on whether to build a 36-inch pipeline under the Tennessee River to begin pumping as much as 20 million gallons a day, depending on growth needs.

The projected cost of the project is $17 million for the pipeline and pumping station and an additional $2.5 million to run a transmission line on the other side of the river to the Decatur water treatment plant. The total cost of the Decatur-side transmission line is $5 million, but it is being split with Decatur.

Commission Chairman Stanley Menefee was the first to take the floor in questioning the water board chairman.  Menefee said he has been getting a lot of questions, mainly those concerning how the pipeline expense would affect monthly rates.

“When it comes down to it, I would like to see another view on coming under the river,” said Menefee. “I don’t understand the rush. When you get across the river you still have to run water lines to wherever and still hold the rates down.”

Menefee questioned why the authority didn’t take the city of Athens up on its offer of 5 million gallons per day, which would handle the county’s needs for several years. He also asked why the authority didn’t further explore buying water from Huntsville to service the southeast quadrant of the county where the highest growth is expected to occur.

“Personally, I want another point of view,” said Menefee. “We owe it to the ratepayers.”

Moffatt said the authority has “looked at all options” and called Huntsville “the 9,000-pound gorilla in the room.”

“They have enough water at the line, but they are not competitive with Athens and Decatur,” said Moffatt. “Huntsville is not expressing a desire to sell water to us, at least not in the amount that we need.

“We had a good talk with Athens last week but, unfortunately, the infrastructure cost would not make them as economical as Decatur. The county water system was made up of four small water systems and had very little infrastructure – pipes – leading back to Athens.

“The only way to get what we need would be to build our own 36-inch pipe to the treatment facility and that would not be as cost-effective as going to Decatur. Decatur has tremendous capacity (68 million per day) and is incredibly cheap.

“They are willing to enter an agreement with us for 20 million gallons a day, with 8 million available immediately upon completion of the pipeline.”

Moffatt said the authority could buy water from Decatur at $1.37 to $1.40 per thousand gallons, and “no one comes close to that.”

Menefee countered with the fact that the county does not yet have a guarantee of a large water consuming industry locating in South Limestone and that ratepayers would have to stand the cost until a large customer comes online.

Moffatt said the board had placed into effect a 5-percent rate increase per year that enabled the authority to go to the bond market for infrastructure improvements.

“We don’t like to spend $17 million and let it sit in the ground unused,” said Moffatt. “It will make money. You ask if there is no new users. But when industries are looking at a community they want to know what the county can give them. They want to know what we have for power, what we have for water. They’re not asking, can you get these?”

Moffatt said the authority currently has $12 million in reserves and sold its sewer lines to Huntsville for $10 million and refinanced two bond issues. He assured his audience that the authority could well afford the cost, but didn’t want to take money out of reserves, so it might have to go to the bond market to finance part of the Decatur project.

Board member Johnny Hatchett asked Menefee why he and other commission members were just now getting around to asking these questions.

“For 18 months we’ve been chasing this and why do you wait until we have a contract in hand before you start expressing your feelings?” said Hatchett.

Menefee said he hadn’t thought the authority would actually proceed with the Decatur plan, although the water board has been discussing the Decatur option for some six years.

“I have personally told you about discussions and you never showed up,” said Hatchett. “We’re at a point where we have to have water.”

County District 4 Commissioner Ben Harrison questioned why the authority couldn’t take advantage of several short-term solutions that would supply more than enough for current needs.

Moffatt called those “Band-aid” solutions that would add up in cost to more than the Decatur option.

Harrison referred to talk of a new industry coming into South Limestone County, and Moffatt cautioned him not to talk about the secret industrial project.

Harrison retorted with a comment that he hadn’t signed a confidentiality agreement.

“I haven’t signed anything either, but I wouldn’t want to stop prospects because I talked,” said Moffatt.

Moffatt said the authority is still operating well in the black and in the recession years of 2008, 2009, and 2010, “still had revenue over expenses.”

“If not for our debt, we would have no pipe in the ground,” said Moffatt.

The county currently has 300 miles of 3-inch pipe in the ground, according to Authority Manager Byron Cook. Each year, the authority takes on another section to replace and upgrade to 6- and 8-inch pipe.

The pipes are 40 years old, and to replace all 300 miles would cost $300 million, Moffatt explained. The pipes were placed in the ground by Farmers Home Administration and it was a federal requirement 40 years ago that no pipe could be larger than 3 inches.

“They wouldn’t allow more than 3-inch pipes to get as much line in the ground as quickly as possible and as cheaply as possible,” said Moffatt. “It was that way all across the nation.”

Because of the small-diameter pipes, fire protection and leakage are issues. County water currently has a 35 percent water loss. Cook said some of that might come from the joints in the 3-inch pipe, which are at 20-foot intervals and could allow water to leak into creeks or underground caverns.

Also, Cook said he will  bring a request to the next regular meeting of the water board to replace outdated meters throughout the county. “Water is going through the meters, but it’s not all getting counted,” said Cook.

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