by Leslie Lytle, Messenger Staff Writer

At the Oct. 26 meeting, the Monteagle Council took two unprecedented actions regarding water and sewer rates. The council passed a progressive rate increase for 2027, with higher rates for customers who use more water. The council also passed a rate increase for 2028 which the town hopes to be able to repeal by implementing an Impact Fee.

The council has grappled with the rate increase issue since August. Confronted with rehabilitating an aging sewage pump station and remediating Inflow and Infiltration of rainwater into the sewer system, which decreases the sewage treatment plant’s capacity, Monteagle applied for a State Revolving Fund (SRF) Loan. The SRF refused to make the $4 million loan unless Monteagle increased water and sewer rates, maintaining that without the rate increase the town could not repay the loan. Mayor Greg Maloof pointed out the only other option was bonds, with a 4.5-5 percent interest rate compared to SRF’s 1.8 percent interest rate.

“You’re going to have your service interrupted if we don’t do these improvements,” stressed Alderman Grant Fletcher. “This is not just about growth.”

Both the 2027 and 2028 rate increases have two stages, with a second increase coming in July. In determining the best way to increase rates, the aldermen focused on not increasing the burden on low-income and low-use customers. “This is the first time Monteagle has had a progressive rate structure,” said Alderman Nate Wilson. “This is appropriate for a town that has limited water resources.” By the new rates, which go into effect Jan. 1, 2027, the more a customer uses, the higher the rate. The new rates also shift more of the burden to sewer customers who will benefit most from the sewer improvements.

“Hopefully, with an Impact Fee coming into play we can repeal [the 2028] rate increase,” Fletcher said.

Wilson explained an Impact Fee was a fee paid by new water and sewer service customers to recoup the cost of water and sewer improvements needed to accommodate new customers. The Impact Fee suggested by Wilson would be based on ERUs [Equivalent Residential Units], meaning large projects such as hotels would pay higher fees. Wilson observed Sewanee had lower water and sewer rates than any other utility on the plateau, but Sewanee recouped infrastructure improvement costs caused by new customers by charging high tap fees. In Sewanee a two-inch commercial tap costs $30,000; in Monteagle a two-inch commercial tap costs $5,000.

“I hope we can act and get an Impact Fee on the board,” Wilson said. “We [would] only need one reasonable size development to be able to satisfy SRF.”

Both rate increases, each calling for a cumulative rate increase of 3.2 percent, passed unanimously on a first reading vote. Monteagle will publish the new rate schedules on the website following second-reading approval.

Taking up a related issue, the council voted to condemn a 0.18-acre tract needed for the pump station project. Wilson called the interaction with the property owner “friendly.” The town’s appraisal and the property owner’s appraisal were “too far apart,” Wilson said. The courts will decide on just compensation.

In a split vote, the council passed an amendment increasing the budget for the sludge-screw press by $24,925. No contractors bid on the project, complaining the budget was too low and did not account for the cost of electrical engineering. Wilson objected to the budget increase including a $5,375 fee from Monteagle’s engineering firm LJA for rebidding the project. “They didn’t guide us right,” Wilson argued. Alderman Dan Sargent countered, “We agreed to let this bid go in the way it went in.” Alderman Dean Lay and Wilson voted no. Fletcher voted yes, but expressed disapproval of the rebidding fee.

Maloof urged residents to conserve water, noting the lake level was down to 7.2 inches. Monteagle’s water supply was close to the Drought Plan “trigger point” which would make conservation mandatory, Maloof said.

Wilson announced the Tennessee American Planning Association recognized Monteagle as the community with the Best Small Town Planning in the state for the work addressing the downtown corridor. Monteagle also received a $550,000 grant from the Tennessee Conservation Heritage Trust Fund for a park at Laurel Lake to help protect the water supply from development. The South Cumberland Community Fund will assist the town in writing grants to secure the additional funding needed.

Mayor Greg Maloof did not seek reelection. Dean Lay, the only candidate for the office, is expected to begin overseeing meetings in November. Residents recognized Maloof with a standing ovation. Wilson lauded Maloof for his integrity and dedication to the position. “Greg Maloof has put in more hours than any of the folks that I’ve seen in this office in the 22 years I’ve lived in Monteagle,” Wilson said.