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East Sevier County Utility District Board should be ousted, state watchdog says

SEVIER COUNTY, Tenn. (WATE) — A state review board has approved a recommendation to oust the entire East Sevier County Utility District Board and to seat a new one.

The recommendation from the State Comptroller of the Treasury comes on the heels of complaints about extensive water outages and poor water quality from the utility’s customers on English Mountain. WATE has reported customer complaints for several years.

President Roy Ivey, Barbara Darby, and Janice Brooks-Headrick comprise the three-member board. Each has served at least nine years in their position.

An attorney representing the utility district said at a Utility Management Review Board meeting Thursday that Ivey intends to resign.

None of the three have filed annual training statements since 2018, the state’s report says. By state law, commissioners are ineligible to receive payments if they do not file the annual training statement. However, the state report says the commissioners continued to receive payments.

“Board staff believes the current Board of Commissioners each should repay the
District for all payments and benefits paid to each Commissioner,” the report states.

Several issues were brought up in the state’s report, including a potential conflict of interest because the utility district regularly conducts business with an excavating company that is owned by the board’s president.

“Board staff believes it is in the best interest of the East Sevier County Utility District and its customers that a new Board of Commissioners be seated, to provide adequate oversight and ensure the utility operates in the best interest of its customers,” read the report.

During a Thursday, Dec. 8, Utility Management Review Board meeting, one customer dug through a bag and pulled out bottles of discolored water she said came from her home.

“All I am asking for, all I have ever asked for, all I want is clean, drinkable, consistent water at a fair price,” she said.

In 2016, a resident provided this photo of brown water in a glass that the East Sevier County Utility District said was safe to drink. In 2013, Don Dare spoke with several people severed by the utility after they had been without water for 10 days.

Another issue brought to light in the state’s report is a concern that the board “failed to ensure consistent water service by failing to maintain or upgrade infrastructure.”

Water loss rate: 63%

Perhaps most startling information in the state’s report is the statistic that ESCUD is reporting a water loss rate of 63%.

“ESCUD reported producing 38 million gallons and selling 14 million gallons resulting in water loss of roughly 63%,” the report.

Water losses as reported by the state, per year:

Board staff does not attribute the dramatic increase in water loss from 2018 to 2019 to Alliance’s
operation of the system. Instead, Board staff believes Alliance began reporting the water loss
numbers more accurately which is the reason for the rise in water loss. However, Board staff is
concerned that “the severe water loss by volume has not improved,” the report states.

The report says the board also failed to conduct a rate study in the past five years “to properly allocate costs across the utility’s customers.”

ESCUD charges water customers $53 for the first 3,000 gallons and $49.50 for the first 3,000 gallons of sewer. There is also an additional charge for sewer service based on the number of bedrooms in the home.

Failure to seek funding for capitol improvements

The commission told the state that grant funding has not been available for utility districts to improve their water infrastructure. However, in 2020, ESCUD was awarded a $443,000 grant through the USDA.

“Board staff is not aware of why the Board of Commissioners did not direct any relevant parties to pursue other funding than this grant in this instance,” the report states.

Conflict of interest

The utility district reported to the state that they have done business with Ivey Excavating — a business owned by Ron Ivey, the board president.

Ivey’s business was paid $5,000 for a poured concrete pad for a storage tank at a well. The state notes that they “do not believe the Board of Commissioners exhausted all options in searching for a disinterested contractor for this work.”

‘Failed in their fiduciary duty’

A full list of why the review board believed the commissioners failed “in their fiduciary duty” includes:

What happens next?

The approval of the recommendation does not mean the commissioners have been ousted — that will require a separate hearing.

Board members can still resign between now and that hearing, according to state information. If that happens, new board members will be nominated by the utility district. The county mayor has 3 chances to approve or decline those candidates. If an agreement isn’t reached on board members at that point, the commission will then vote on the new board without the mayor’s input.

An attorney representing the utility district said at a Tennessee Comptroller of the Treasury Utility Management Review Board meeting Thursday that Ivey intends to resign from the board.

The section of the UMRB Agenda related to the East Sevier Utility District Board. The full agenda can be viewed here.