The water system in the town of Signal Mountain is aging and needs a proactive approach to modernize and improve it, said Town Manager Boyd Veal. He started looking for the most efficient way to accomplish what was needed, about three years ago. The options that are now being considered are for Walden’s Ridge Utility District or Tennessee American Water to buy the system, with an optional proposal from WRUD to run it and Signal Mountain retaining ownership.
A third option is for the town to continue owning of the system and operating it.
At a special called meeting Monday night for the purpose of discussing the water system, Mr. Veal said that, while the town has done a good job of running it, the system has grown and aged and the evolution of the system has not kept up. To determine the best way to proceed, Mr. Veal said he needed to see proposals from other entities to compare with the way that the town, itself, could make the improvements.
In 2011, Arcadis did a study that identified work that was needed on the water distribution system. Of the four recommendations, Signal Mountain has completed two of them by contracting out the projects. Last year $900,000 was spent on water delivery projects by improving fire flow and replacing the water lines along James Boulevard. The average cost per linear foot was $148.51 to make these repairs, said Mr. Veal.
In addition to system repairs, the wage comparison between Signal Mountain water department employees and comparable positions at WRUD and Tennessee American found that Signal Mountain workers were always paid the lowest. The town’s pay structure relates to similar positions in other departments such as public works, police and the fire department. If adjustments are made to the pay scale of water employees, increases could potentially need to be made for the other departments.
If the town continues to own and operate the water system, Mr. Veal said the worst problems would be the first to be fixed, which is to replace PVC pipes. The replacement of these pipes, based on last year’s cost, is estimated to be $2,660,408. With the addition of engineering expenses, replacing them would be a $3 million project.
Taking into account both the personnel and systems improvements, it has been determined that the overall impact on customer rates would be an increase of between 29.75 to 37.5 percent. This does not include the replacement of cast iron pipes that also has been identified as necessary or upgrading water meters, which is also needed.
Comparing the same level of capital investments committed to from WRUD or Tennessee American, the impact to residential rates would be in the range from 25.42 percent to 54.5 percent. No matter who operates the water system the rate increases will be relatively comparable, said Mr. Veal.
Some of the costs associated with the improvements could be recouped over time, such as those related to meters and water leaks, said Vice Mayor Dick Gee, but increasing the pay scale of water employees could potentially lead to increases in payroll across the board.
Both of the proposals that were received for taking over the water distribution have a condition that water rates will be frozen for five years. City Manager Veal said that those proposals are all still negotiable. He said the town would not be able to run the system without raising rates.
“When I look at $3 million-$4 million of investment, I’m not sure ownership is what we need,” said Mr. Gee. “Well said, I agree with your assessment,” said Councilman Robert Spalding. Mayor Chris Howley said that each council member needs to do their own research before a decision can be made, and public input has not been accomplished yet, said Mr. Veal. On May 8 at 7 p.m. the council will hold a budget meeting. The council members will also discuss how to go forward with the water at that time.
Other meetings scheduled for the city council include the next regular council meeting on May 14 and the next agenda meeting on May 25.