by Leslie Lytle, Messenger Staff Writer

“If we have a $500 ERU [Equivalent Residential Unit] Impact Fee, and we have one hotel come in, we can do away with the $5 service fee and reduce the rates for most residential homes,” argued Alderman Nate Wilson at the Sept. 28 Monteagle Council meeting, urging the council to consider imposing Impact Fees on new development to avoid increasing water and sewer rates. The council has grappled with needing to increase rates since July when the State Revolving Fund (SRF) refused to loan the city money for critical sewer needs if Monteagle did not raise rates. The SRF maintained the city could not repay the $4 million loan because, by law, the new infrastructure would require Monteagle to fund the depreciation for the infrastructure, that is, set aside money to replace it.

The SRF recommended a 13 percent increase over the next 12 years and 23 percent over the next two years to fund two critical sewer projects: rehabilitation of the pump station behind Waffle House and reducing Inflow and Infiltration of ground water into the sewer system, which decreases the system’s capacity. Wilson pointed out much of the infrastructure improvement confronting the town resulted from addressing new development’s needs. An Impact Fee in addition to a tap fee would help the city recover infrastructure upgrade costs. Wilson acknowledged a high Impact Fee could discourage development. A low Impact Fee of $500 per ERU (equal to one house) would have a small impact on home builders, but could yield $35,000 in revenue for one 70-unit hotel, a small expense for a large-scale developer. Wilson also proposed considering an Impact Fee of $250 per ERU that doubled each year, stressing the importance of keeping the fee low. By comparison, Rutherford County’s Impact Fee is $7,000 per ERU and Franklin, Tennessee’s fee is $24,000 per ERU.

Another solution to the rate-increase dilemma suggested by Wilson called for increasing the rate per gallon charge for high use commercial customers and charging a $10 per month Dormant Service Fee for part-time residents with zero usage. Explaining the rationale, Wilson said current commercial rates decrease as usage increases. In addition to raising revenue, increasing the rate would encourage conservation. For part-time residents, Monteagle must maintain water and sewer service, yet receives no revenue on the months with zero usage. Wilson proposed an increase in commercial rates from $15.13 to $15.26 per 1,000 gallons for the first 1,999 gallons and an increase to $17.11 above 12,000 gallons. The rate increase coupled with a Dormant Service Fee could raise the same amount of revenue as a 13 percent rate increase over 12 years.

Emphasizing the benefit of an SRF loan as opposed to bonds, Mayor Greg Maloof cited the 1.8 percent SRF interest rate compared to the 4 percent bond interest rate. Also significant, SRF could forgive up to $2 million on the $4 million loan if Monteagle completed both projects.

Alderman Grant Fletcher expressed concern the council only had until November to propose a revenue solution that satisfied the SRF. The SRF approved the rate structure changes submitted by Monteagle’s engineer. Adding an Impact Fee to the calculation would require reevaluation by the SRF. “There’s going to be a lot of math involved [SRF] is going to have to approve to show we’re getting to the same point,” Fletcher insisted.

“The SRF is aware of the ERU conversation,” Wilson said.

The council will take up the Impact Fee proposal in the weekly workshop and hold a special called meeting at 9 a.m., Oct. 13.

In other business, the council approved a resolution affirming “the vested property rights” of the new Petro project owners, Saffron Development and Builders. “There have been issues concerning the Exit 135 truck stop area,” Maloof said. “It has gone to court four or five times to talk about vested rights, if the building permit had expired, etc. This puts all those arguments to bed. The building inspector can accept minor revisions to the site plan. The developer has been working with us. We don’t anticipate any problems. We feel this is the best solution. Anything further we shall see what happens.”

Building inspector Travis Lawyer confirmed, “There was a stop work issued [on the Petro project] to allow submission and verification of documents. The order has been lifted. There are zero construction deficiencies. The new property owner strives to comply with the requests we’ve given to him. They’ve been very good to work with.” Lawyer noted the planning commission approved the project’s site plan conditionally in July 2021, but the revised site plan showing detail on the conditions (lighting, landscaping, and a wetlands buffer) was never submitted for approval, and there was no timeline for meeting the conditions. “There was a building permit issued,” Lawyer said. “The new property owner wants to get along with the community. The three conditions the planning commission previously required are going to be met.”

Monteagle’s attorney prepared and recommended passing the resolution. Wilson abstained, complaining, “I would be prepared to accept these development rights in simple form. This is four pages of legalese.” Fletcher abstained, saying he lacked information since he was not present for the conversation with the attorney.

The council also passed a resolution approving the Tennessee Department of Transportation repairing landslide damage on old Highway 41 from Pelham. The landslide area is within the city limits.

On Nov. 3, Monteagle voters will select alderpersons to fill the seats currently held by Alderman Dan Sargent and Wilson. Sargent and Wilson will seek reelection. Also seeking election to the council are Jessica Blalock, Felicia Ladd, and David Pilcher. Sargent encouraged residents to vote. “I’ve received a lot of questions in the past four years since I’ve served on the council. When I ask the people with questions if they voted, they often say to me, ‘I can.’ Honor Monteagle and the constituents. Come to the polls and vote. It’s easy to sit home and do nothing.”