With the water purchase contract between the city of Smithville and DeKalb Utility District (DUD) expiring on Dec. 31, the mayor and aldermen called for a workshop last week to discuss a new agreement.
Among those who addressed the city council were J.R. Wauford, the city’s engineer for more than 50 years, Nashville attorney Dewey Branstetter, Jr., who represents DUD, and city attorney Vester Parsley, Jr. DUD Chairman Roger Turney, board members Joe Foutch and Hugh Washer and DUD manager Jon Foutch also attended the meeting.
Among Wauford’s suggestions was that the city officials ask DUD to sell the city the water lines and customers connected to smithville's system at four metering points.
According to Wauford, the metering points at Hobson Street, Evins Mill Road, Midway (Old Sparta Highway) and Highway 56 North would give the city water system room to expand into these areas. The engineer said those locations would be difficult for DUD to serve, and he felt such a deal would benefit both parties.
Increasing the city's service area by such an agreement should allow the city to charge DUD a more reasonable rate without an increase in rates for city customers, Wauford said. Some of the named areas are already provided sewer service by the city.
Wauford told the mayor and aldermen that he felt that if an agreement is not reached, the city might legally charge the DUD as much $7.50 per 1,000 gallons of water, the price it currently charges other outside customers.
The city now charges DUD $2.05 per 1,000 gallons.
“We could look at what the incremental rate would be,” Wauford opined to the council. “In other words, what would it take if DUD would sell you those customers? What would your rate to them need to be to avoid having to raise rates on Smithville's customers?” Wauford inquired.
Wauford told the assembly that water rates to city customers might have to be increased by as much as 20 percent if the city loses DUD as a water customer.
A recent study, paid for by the city and  performed by Warren and Associates,  concluded that the actual cost for the city to produce 1,000 gallons of water is $2.67.
City officials sent a written ten-year proposal to DUD in April, offering to sell them water at $2.20 per 1,000 gallons for the first five years of the contract, and  $2.40 per 1,000 gallons for the last five years. The proposal included a minimum purchase requirement.
In their response to the proposal, DUD officials said they would agree to the offer without the minimum purchase clause.
Branstetter told the board that the ball was in the city’s court.
“The last contract that you submitted, we sent back a letter saying we would agree to it with certain modifications that didn't impact on the price,” the DUD attorney said. “From our standpoint, we're waiting to hear back from you. We certainly want to enter into negotiations and enter into something that works for everyone.”
Parsley responded that the April proposal stalled because of DUD opposition to the minimum purchase provision.
“When we (city) got the letter back, they  said they liked our rate structure. However, they didn't like the quantity that we were requiring,” Parsley said. “That was the big sticking point. There was no quantity listed that they would accept. That sort of left us high and dry. They liked the rates we proposed but they weren't willing to buy a certain quantity.”
Branstetter replied that he felt that the DUD’s position was understandable.
“I think that is reasonable to expect,” he said. “If we're going to enter into a long-term contract with the anticipation of building our own water treatment plant, it would not be realistic for us or in the best interest of our customers to enter into a minimum purchase amount.
“We might be able to do that while the plant was being constructed,” he continued. “We anticipate needing to continue to buy water even once our water treatment plant is completed. Its anticipated we would want to buy some water from the city of Smithville and there may be points where its smart for you to buy some water from us somewhere down the road. We want to work together for something that is in the best interest of everyone, recognizing that DUD's first obligation is to its own customers,” Branstetter concluded.
“Of course we've got an obligation to our customers too, and we're already charging them higher rates ($5 per 1,000 gallons) than we're charging DUD ($2.05 per 1,000 gallons), and have been for years,” Parsley retorted.
The DUD’s Plans for a new water treatment plant are stalled until the outcome of a legal challenge in Davidson County Chancery Court by the City of Smithville and DUD ratepayers. The hearing has not yet been scheduled.
The aldermen could take no action on the matter at the workshop, but city officials agreed to study the matter further and send a proposal based on Wauford's recommendation to DUD. A final vote on the  agreement would then be held at a regular or special-called city council meeting.