Tega Cay officials ask for patience, clarity in water service deal

cwhite@fortmilltimes.comApril 18, 2014 

— After an April 8 vote in favor of purchasing the Tega Cay Water Service system, the Tega Cay City Council hosted a special meeting April 15 to address the questions and concerns residents had about the potential purchase.

City Manager Charlie Funderburk said the purchase has been an ongoing process and that the council settled on a buying price of $5.85 million, which Jim Sheedy, the city’s utility agreements lawyer, said is a relatively low cost compared to what the system was appraised for. Sheedy said the appraised value of the TCWS service was based on three factors, including the cost of building a new system, and the city ultimately decided it was worth $7.59 million.

Sheedy then explained why the city was able to get the utility to accept $5.85 million for the system.

“For anyone who may be wondering how this quickly went from $7.86 (million) down to $5.85 (million), a decrease of roughly $2 million in the negotiations in a relatively short period of time, the answer is that TCWS wanted a quick sale before it put any more money into repairs,” Sheedy said.

Tom Oakley, chief of staff at Utilities Inc., TCWS’ parent company, wasn’t at the meeting but said in a phone interview last week that TCWS already has put money into repairs and will continue to do so until the transaction is complete.

The company has increased its spending on improving the system since receiving a consent order from the S.C. Department of Health and Environmental Control, Oakley said.

“TCWS has been spending on the order of $2 (million) to $3 million dollars per year on improvements, and the rate of spending has accelerated as a result of the consent order,” Oakley said.

Although it is unclear how long the deal and repairs may take, council members said they wanted to host last week’s meeting early to address residents’ questions and concerns and head off rumors.

“It’s really important that all of you here tonight or watching on television encourage those who are not so they understand more, and so they understand what is accurate, so they can continue to spread it to other neighbors and they really know what’s going on,” Mayor Pro Tem Jennifer Stalford said.

“It’s really important that the correct information is what’s perpetuating throughout the community.”

If the purchase goes through, consultants estimate that repairs and replacements to the system will cost around $6.5 million. Although the costs may seem staggering to some Tega Cay residents – it’s equal to the city’s current operating budget – Sheedy put to rest any rumors of the plans bankrupting the city or causing higher tax rates.

“It is not expected that the acquisition and repair of this system will have any impact on any of the other city functions,” he said. “This is being viewed and analyzed as a standalone and self-justified financial deal.”

Funderburk stressed that the city will not follow through with the deal unless it’s convinced it will make back, through user fees, the money it invests to buy and upgrade the system.

“This system will have its own system revenues, its own system expenditures,” Funderburk said. “The city is only moving forward with this if it can be self-supporting.”

In the public forum portion of the meeting, Tega Cay resident Jerry Church questioned whether or not grants could be secured to help pay for the system repairs. Sheedy said the city still is exploring those sources.

“While we are not close-minded in terms of available money, especially free money, I can say that we’ve kept a fairly open mind looking at both federal and state opportunities,” Sheedy said.

City engineer Joel Wood said upgrades and repairs to prevent a repeat of the sewage overflows that have plagued TCWS are foremost on the city’s agenda.

“As you know, this system has experienced sanitary system overflows, and that is an embarrassment to the city, because TCWS does not get credit for it,” Wood said. “The city gets the blame for it, whether it’s theirs or not.”

Although Wood said stopping the spills completely is impossible, he hopes the city will be better equipped to handle any issues with a proactive approach.

The city has been operating a similar-sized system, the Tega Cay Utility Department, for almost 15 years, and some residents might be unaware of that, he said.

Tega Cay resident Terry Hunt asked how the city purchasing TCWS would affect the rates of TCUD. Sheedy said it is not likely that TCUD rates will be equal to TCWS because the systems are different, so rates for TCUD ratepayers are likely to stay the same.

Resident Pam Gibbs Smith asked how quickly the purchase could be completed. Sheedy said the council is trying to finalize the deal as quickly as possible but was loathe to make a prediction. Funderburk previously said the deal could be done in the next week or two.

Wood said that even after the purchase is complete, the city’s work in terms of repairs would only just begin.

“My estimate was that it would take approximately two to three years to complete and go through this $6.5 million worth of expenditures and upgrades,” Wood said.

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