"Elimination of a Negative Value": What's a Sewer Worth?

August 7, 2019

Walker County tax map image of the McLemore (AKA Canyon Ridge) wastewater treatment plant the Dade water board is considering giving away.  

 

How much is a sewer worth?

 

That's the question The Dade Planet has been striving to get answered since, at a meeting on July 8 called specially for the purpose of "Discussion and possible action on Sale of Property," the governing board of the Dade Water Authority appeared determined to give it away instead.

 

For eight years, because of a favor to an earlier developer that backfired when he bankrupted, Dade's nonprofit water company had been operating a wastewater treatment plant in a luxury golf community in Walker County. Now it proposed to remedy the situation by signing away the facility to another developer gratis and allowing Walker to be the responsible government entity.

 

The idea of a poor county's water company making a present of that magnitude to the developer of an upscale golf resort caused some jaws to drop. Anyway, can government entities just give assets away? asked a concerned citizen at the July 8 meeting, or doesn't there have to be a consideration, or payment, involved? That's right, said Dade County Attorney Robin Rogers, who acts as the water board's legal adviser, But since the facility was bleeding money--the water company's new manager, Jeff Pendergrass, and longtime assistant manager, Sherri Walker, had told the board the Canyon Ridge (now renamed "McLemore") sewer had racked up a loss of $49,878.38 in the first half of 2019 alone--the consideration in this case was "elimination of a negative value."

 

It occurred to The Planet that "elimination of a negative value" is what sewers are all about in the first place. They carry off life byproducts people would rather not look at too long or think about too hard. But how much is that worth in dollars and cents?

 

To the householder, a sewer is the urban alternative to a septic tank, which costs anywhere from $1500-$4000 to buy and install, after which the owner faces a lifetime of policing elderly relations who might flush their cigarette butts and children who might flush their Little Mermaids. Whether it's cheaper to the householder to be on sewer or septic is a complicated question. If you have a septic tank, at least the action figure your neighbor's kid flushes next door is no skin off your nose, whereas in a sewer system one resident's dental floss can clog up the whole neighborhood's plumbing. Still, with septic you're out the $1-4K initially, and solely responsible for the bill if the system goes south thereafter.

 

To the municipality, of course, a sewer is essential. Where people live in close proximity to each other, the alternative to a sewer is human waste clogging the streets, causing disease, blighting life and scaring off tourists, industry and prospective residents.

 

And to the  developer, an existing sewer has got to be worth something, right? Because if he didn't have one to service his development, wouldn't the first thing he'd have to do be build another one?

 

So, asked The Planet of general manager Jeff Pendergrass, who began work at the water authority in May, replacing Doug Anderton, who was retiring after 49 years at the helm, what was the value, as listed on any official source, of the McLemore/Canyon Ridge sewer plant, that he had recommended signing away?

 

Pendergrass declined to answer at all, asking The Planet instead to submit any questions in writing to the water board. This The Planet duly did, but Board Chairman Eddie Cantrell answered only in the vaguest terms--“We are working on a valuation and we are working to get the best deal possible"--so The Planet tried again, this time submitting basic questions about the sewer plant to the board's legal advisor, Robin Rogers. Rogers referred The Planet's questions full-circle back to manager Pendergrass.

 

This time Pendergrass did email a rudimentary answer, whether on the attorney's advice or in the interest of eliminating the negative value of The Planet's persistence, The Planet can only speculate. To wit:

 

"$30,043 per Walker County Tax Assessment (See Attachment)."

 

It didn't sound like a very good answer--$30K for a sewer plant? In fact, the Walker County tax deed Pendergrass had attached didn't list a sewer plant on the property at all, just 3.6 acres of rural land plus a couple of sheds. For comparison, The Planet checked out, on the Dade County tax rolls, the Trenton wastewater treatment facility, which has serviced the small country town for nearly 30 years now, and was surprised to find the same story: No buildings were listed on the deed, just 2.2 acres, and the assessed value was even lower--$15,000. 

 

Dade Chief Tax Appraiser Paula Duvall could not say why no buildings were listed at the Trenton site--surely a sewage treatment plant counted as a building? But she explained that the deeds on the tax rolls assess value for tax purposes only. The county is of course not going to tax the municipal wastewater plant, so photographing and assessing such a building would not be a priority.

 

She also said that the county property tax is assessed only on  "real property"--buildings and land--as opposed to "personal property"--other items, including equipment--which would be what all the vats and piping and pumps involved in treating sewage would be considered.

 

Which didn't help much in establishing a realistic value for either the Trenton or Canyon Ridge sewer, but Jerry Henegar, who serves as utility/fire commissioner on the Trenton City Commission, fortuitously called back at this point and was able to help out in that regard, if only for the Trenton facility.

 

The Trenton plant, said Henegar, actually contains not just one but three buildings.He did not know offhand how much the facility had cost to build, but he had an insurance assessment of it from a couple of years back: $1.7 million.

 

These days, said Henegar, the Trenton wastewater plant is not insured individually but rolled in with several other city properties, and anyway he didn't think the $1.7 million was a realistic assessment of what it would cost to replace the sewer figuring in modern equipment and today's costs. That would run closer to $3 million, guessed Henegar.

 

Henegar warned against comparing the Trenton and McLemore sewers. He'd  never seen the latter, he said, but he understood it was a more modern facility in which the treated wastewater was actually recycled to water the golf course grass.

 

Whatever the McLemore sewer was worth, though, Henegar said he didn't blame the water board for wishing to offload it. "Sewers are not a profitable business," he said.

 

Next to call back was Sarah Flynn of the Walker County Tax Assessor's office. Like Paula Duvall in the Dade tax office, she couldn't say why there were no buildings listed in the deed for the McLemore sewage plant, nor any photographs, but she was willing to guess it might be because it was in a gated community and hard to get into. Anyway, she said, as Ms. Duvall had about Trenton's, the county didn't tax the facility and so was not motivated to keep its deed updated.

 

What about before, asked The Planet, when the facility was privately owned? (Dade was obliged to take over the sewer operation in 2011 after the original Canyon Ridge developer, Randy Baker, went under during the housing market crash.) Ms. Flynn answered that in 2011, before it it reverted to Dade, the Canyon Ridge sewage plant had been rolled in with other "common area," as tax assessors refer to it, and valued at $398,000--but this was because it had been thrown in with 134 acres, a golf shop and a pool.

 

Sewers are given a very nominal value for tax purposes even in private developments, where they are usually maintained by homeowners association fees, said Ms. Flynn, no matter how much it had cost to build them. That, she said, was because: “It would have no value except to the people who use it every day.” 

 

Which brings up the interesting point that, whatever worth the sewer had to those 81 McLemore Cove users in terms of eliminating their er, negative values, it realistically could not eliminate anyone else's: Though Dade Water is named on the deed to the McLemore sewage plant as owner--and responsible to the Georgia Environmental Division for its hygenic operation--the plant is in situ at the golf community in Walker and as a practical matter Dade Water can't just scoop it up, carry it home and use it for something else. That must certainly figure in the water board's reasoning.

 

And so must Jerry Henegar's observation that there's no money in sewer operation. The Dade Water Board has repeated over the years that it did not wish to get into the sewer business, and researching the matter The Planet heard more pronouncements of that nature. The Planet had sought guidance on sewers from retired urban planner Helen Burns Sharp, who referred the inquiry to former Chattanooga Councilwoman Deborah Scott.

 

Ms. Scott wrote that sewers are money pits that usually have more liability--it's easy to rack up EPA fines, and people do sue--than cash value: "I know of no sewage plants that operate as super income producers," she emailed. "Perhaps they exist, but where? There is a reason why most are government owned." 

 

The same reason, no doubt, that government entities like the water board prefer not to own them. Still, the sewer giveaway seems a sweetheart deal on the receiving end, getting for nothing a facility the developer would otherwise have to pay to build from scratch. Thus the Planet once again petitioned manager Jeff Pendergrass:

 

"Are you really representing to me, the water board and the ratepayers that the value of the land as represented on the tax office deed, the $30K, is the value of the Canyon Ridge wastewater treatment plant?"

 

This time, Pendergrass answered, in an Aug. 2 email: 

 

"No. Attached is a copy of a Valuation Sheet that Sherri [assistant manager Walker] found in one of Doug Anderton’s old emails of the WWTP at McLemore Golf Resort that Ladd Environmental Consultants did for him back in October of 2018."

 

The value assessed the sewage plant on the attached sheet was a total of  $375,240.

 

Which seems a good place to close this account, before it gets long enough to be considered a negative value, and the reader pulls the plug. But not before The Planet faithfully passes on to its readers such other snippets of information the water company did at length produce about the McLemore sewer:

 

The sewer system at McLemore Subdivision consists of [wrote Pendergrass]:

  • 4 Lift Stations

  • Collection System (Piping)

  • Package Plant

  • Equalization Tank

  • Storage Tank

  • Reuse Reservoir

  • Pump House

He produced this schematic: 

 

The facility is located at 14653 Georgia State Highway 157, Rising Fawn 30738. "Dade County Water and Sewer Authority contracts out the daily operation, maintenance, sampling, and monitoring to three respective State of Georgia Grade 1 Certified Wastewater Operators," wrote Pendergrass, naming operators from Dalton and Trion public water plants.

 

At the July 8 meeting, the water board appointed a committee of three to consider what to do about the McLemore wastewater treatment plant. The committee did not reach a decision by the regular July meeting on the 22nd, but the board discussed its findings in executive, or closed-door, session, later saying it had reached no decisions.

 

The next regularly scheduled meeting of the water board is at 6:30 p.m. on Tuesday, Aug. 27, in the Dade Administrative Building.

 

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