LCUB merger nears

LCUB merger nears?

Jeremy Nash news-herald.net

Lenoir City Utilities Board and Martel Utility District could soon consolidate.

Shannon Littleton, LCUB general manager, said talks have been ongoing for several months and attorneys from both sides have been exchanging a merger document to “try to get some agreeable language between the parties.”

“I think there are lots of reasons why we’re discussing merging,” Littleton said. “One of the big things is Martel generally is a small utility district and given the cost of services these days with such a small group of people to have to absorb those costs that are associated with just providing the minimal, the bare essentials, it just makes more sense for a smaller district to be merged with a larger group of customers to help absorb the everyday cost associated with delivery of water services.”

LCUB voted 7-0 on Monday to take the next step toward consolidation, with board members George Bove and James Brandon motioning and seconding, respectively.

“Greater market share and a healthier system is going to benefit everybody,” Bove said. “Simply put, if there’s more of us paying in, then maybe we all don’t have to pay as much. I don’t pay, I live in Knox County, but I have rental properties here in Lenoir City, they pay it, and I’m concerned about those folks. Again, if there’s more of us paying then maybe all of us won’t have to pay so much. It’s pretty simple, that’s it.”

Littleton said board members with MUD must give the go-ahead. MUD is scheduled to meet at 4 p.m. Tuesday at 6875 Lakeview Road, Lenoir City.

Littleton said the next step would be for Lenoir City Council to give approval during September meetings. The matter would then go to Loudon County Mayor Rollen “Buddy” Bradshaw in his “quasi-judicial role.”

“He’ll have a public necessity hearing,” Littleton said. “Essentially what he will be hearing are the facts, ‘Is this for the good of the public that we have this hearing?’ So he’ll meet with citizens and us and Martel and whoever else is concerned about the issue, then make a decision, ‘Is this good?’ If he decides this is good for the public, then he’ll execute an order for it to be done.”

Littleton said a tentatively scheduled consolidation date is Nov. 1.

A two-person advisory committee from MUD would be created by Lenoir City Council within 30 days after the consolidation date and serve one term for 10 years. Members would be paid a per diem of $100 per meeting for a maximum of 12 meetings per year, and be entitled to family coverage under LCUB’s health insurance similar to its “A Scale” employees.

“They know their system, they’ve been dealing with it for years,” Littleton said. “So they’re going to be sending recommendations, system upgrades, maybe even some budgetary-type concepts to this board until we get comfortable with their system, for lack of better terms. Does it take 10 years? Maybe not, but we’ll just have to go through that process and see.”

Current MUD general manager Gayle Matlock would retire but remain available for advice and consultation on an “as-needed basis” for a year afterward.

“LCUB will pay Ms. Matlock total compensation of $45,000 for her consulting services, payable in equal monthly installments over the one-year period,” the draft reads, adding she will also be eligible for LCUB’s health insurance until reaching the eligible age for Medicare.

Distribution manager Larry Butler, on or before the consolidation date, would resign from MUD and be hired as a full-time “A Scale” employee for LCUB. All other part- and full-time employees of MUD will separate from employment by the consolidation date with the understanding there is no obligation to bring them back.

Littleton believes “99 percent” of the reason for MUD to consolidate falls on difficulty to maintain operations.

MUD on March 25, 2003, issued a $624,000 Waterworks Revenue Bond from the U.S. Department of Agriculture. As of Dec. 31, that amount is down to $492,368.

“The way the merger’s going to happen there will be a majority of the debt of Martel will be gone by the merger through assets of Martel,” Littleton said. “There will be some expenditure, a couple hundred thousand dollars in expenditure of the LCUB for it to purchase what’s remaining of Martel. There will be a rate reduction on the water side. That is yet to be 100 percent in concrete ... (because) our rate structures are different.”

MUD was founded in 1962 with 50 customers, according to the utility’s website. The customer base has grown to 1,800, none of whom use in excess of 100,000 gallons of water per month.

“From a utility perspective we all know numbers of customers matter and we’re able to spread cost, i.e. this is the situation going on the Martel system, it’s a small system, so they’re unable to spread normal everyday costs I think fairly among their customers,” Littleton said. “So those costs can spread over a larger group of people. ... It’ll be better off, more rate stabilization for the Martel customers, and I think in turn it’s probably going to be rate stabilization for LCUB customers, so I think it’s a good marriage.”

A MUD representative could not be reached by News-Herald presstime.