Brown County Water Utility has sued the Nashville Town Council in federal court, alleging that the town is encroaching upon its service area.
At the center of the issue is Quaff ON! Brewing Co.’s plan to expand to Firecracker Hill. Both entities want to serve the new development, Hard Truth Hills, which is part of the Big Woods family of companies.
Big Woods/Quaff ON! is the town’s biggest water customer, already consuming about 30 percent of the water it distributes throughout its entire system. After the expansion, the company is expected to use three to five times more water to brew more beer and distill more liquor.
Nashville Utilities is itself the biggest customer of Brown County Water Utility.
If the town were to lose Big Woods as a direct customer, other water customers would feel the effect, town council President “Buzz” King told Brown County Water Utility in May.
“Such a scenario is unfair to the town and its customers, jeopardizes the town’s ability to provide competitive, economically feasible rates to its users, and is inconsistent with the spirit and terms of the contract,” King wrote.
On the other hand, if BCWU were to lose the ability to serve the Firecracker Hill expansion, Brown County Water will “suffer irreparable damage,” board President Ben Phillips said in written testimony to the court.
That includes jeopardizing its ability to repay federal loans it took out for a different project in 2010, he said.
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ABOVE: Indiana Utility Regulatory Commission filing by Nashville Town Council
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ABOVE: Federal court filing by Brown County Water Utility
Financial challenges
Brown County Water Utility is a private entity owned by its members. It is not an arm of county government.
The company filed its complaint June 20. It’s asking the Southern District of Indiana court in Indianapolis for an injunction, which would stop the town from serving the new development with water.
BCWU’s lawyers argue that its client has the right to serve Firecracker Hill because of the federal loans it has yet to pay off.
Lawyers cite a 1961 federal act which says that during the term of such a loan, service shall not be “curtailed or limited” within the loan recipient’s boundaries.
Phillips said in his written testimony that the company borrowed $5.3 million through USDA Rural Development in December 2010. That was to build a new water treatment plant and a storage tank, and to drill new wells near the northern Brown County line.
BCWU is paying $19,533 a month to the federal government, court documents say. At the end of 2016, it owed $4,973,674.92.
Its federal loans are to be paid off by December 2050, Phillips said.
In March 2016, the company also took out an $8.1 million loan from the Indiana Finance Authority’s State Revolving Loan Fund for a different water infrastructure project, according to documents filed last April with the Indiana Utility Regulatory Commission. That loan was to be paid off in 20 years.
Between the 2010 and 2016 projects, the debt Brown County Water Utility is paying off averages $730,560 a year, IURC documents said.
Nashville has only recently gotten to the point where its water utility is right-side-up. In 2013, the town council talked briefly about selling it because it was losing money. Part of the reason was because of high water loss rates due to old, leaky meters and pipes.
The town is now getting ready to start a major water infrastructure project of its own.
Last year it was awarded a $1.2 million federal loan through USDA Rural Development and a $592,000 grant through the state’s Community Development Block Grant Program.
The town plans to replace water meters, extend a water main to Freeman Ridge Road, demolish an old water tank, and replace an old booster station in Schooner Valley to allow water from East Monroe Water Corporation to flow into town when necessary.
The town buys the majority of its water from Brown County Water Utility, but it also has a contract with East Monroe.
The town has no way to produce its own water, and no water plant to treat it if it did, said Nashville Utility Manager Sean Cassiday.
Territory claims
The territory map BCWU gave the court shows its water service area stretching from the Trafalgar area to near the Jackson County line and spanning nearly all of Brown County east to west. Its map does not exclude the town of Nashville.
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An earlier version of that map which BCWU included in a 2014 engineering report shows the town’s service area shaded in blue, and it appears to include at least part of Firecracker Hill. The town’s engineer, Mark DeBruler, pointed that out in testimony to the Indiana Utility Regulatory Commission in June.
The town council drew up a service area of its own last month and filed it with the Indiana Utility Regulatory Commission for approval.
The town is claiming all land in town limits, plus more than 100 other properties outside town limits where it already has water meters and customers, in addition to all of the Firecracker Hill property Quaff ON! now owns.
The town’s map also also includes 154 acres commonly known as “The Berry Farm” across State Road 46 from the former Little Nashville Opry, and 56 more wooded acres south of the Town Hill Road neighborhood. The Berry Farm and the Town Hill-area woods were already bordered by Nashville Utilities customers on three sides and the state park on the other.
The town’s map doesn’t take in any customers that are already being served by other companies, DeBruler told the IURC.
Brown County Water Utility has no service area on file with the state regulatory commission, but it’s not required to do so, said public information officer Megan Wade-Taxter.
The IURC has not made any ruling yet on the town’s service area request. It’ll look at the ability of another utility to serve that area, what its decision would do to water rates, how it would affect present and future economic development, and the history of utility service in that area, Wade-Taxter said.
If Brown County Water Utility wanted to file a petition to intervene, it could do that, and the IURC also would hear its testimony, she said. As of the end of June, BCWU hadn’t taken that step, according to the case file.
The next hearing is scheduled for September.
Going ahead
Both companies are making moves to serve this property while their claims are debated at the state and federal levels.
In April, the town signed paperwork to annex 94 acres of Firecracker Hill into town at the owners’ request, and company CEO Ed Ryan said he plans to ask for the other 231 acres to be annexed this month.
The town and Ryan signed a water and sewer service contract for the Hard Truth Hills development in May.
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Last month, the town went ahead and extended its existing water line on Old 46 by another 40 feet to reach Hard Truth Hills.
BCWU’s closest line is on Weddle Lane, about 300 feet from the northern property line of Hard Truth Hills. But it’s a 2-inch line, which is less than what the development needs, DeBruler said.
To reach the area of Firecracker Hill where the development is going, BCWU will need to cross private properties and install a 6-inch line. Then it would have to run a line up through the woods to get to the building site, DeBruler told the IURC on June 29. Or, BCWU could run a new 6-inch line south on Greasy Creek Road and east on Old State Road 46, right next to the town’s existing water line for about a half-mile, he said.
BCWU is currently working to get easements to run lines to the northern corner of the Firecracker Hill property, Phillips said last week. The company is paying landowners in the path $2.09 a foot to cross their land, and getting those agreements hasn’t been a problem, he said.
Lori Young, BCWU’s project engineer, told the court that the company could meet Hard Truth Hills’ water needs by September.
Ryan is estimating that at least part of the development could open this fall.
In his testimony to the state regulatory commission, DeBruler, the town’s engineer, estimated that BCWU would “easily exceed several hundred thousand dollars” to reach this potential customer. He called the project “impractical, redundant and unnecessarily expensive.”
Phillips last week said that bids are being let now, so he doesn’t have an exact figure, but he estimated it would cost around $100,000 to get to the northern Firecracker Hill property line at the end of Weddle Lane.
Brown County Water doesn’t have an agreement with the Hard Truth Hills owners that they’ll become customers if the utility runs water lines to them, but Phillips said the case in federal court should take care of that. “Unfortunately, that’s what lawyers are for,” he said.
“It’s concerning that we appear to be at a point where all the water users in the county are going to have to foot the bill for a decision that we were trying to avoid, and that’s the decision to spend money on attorneys and such that’s completely unnecessary,” said Town Manager/Economic Development Director Scott Rudd.
Before the Hard Truth Hills owners signed with the town for their water service, the town had offered BCWU a deal: the town would pay BCWU an extra 50 cents for every 1,000 gallons it distributed of BCWU’s water going to the new development.
“We would have much rather preferred to work something out like good neighbors, and that’s what the council tried to do and it was not responded to,” Rudd said.
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Phillips said it wouldn’t have made sense for BCWU to accept that offer because the town also buys water from other sources, and one day it could decide to take its water business — and this large new customer — somewhere else.
“And that’s not something that utility leaders ought to do — give away territory and then take a chance on losing it, when it was ours to start with, in our opinion,” Phillips said.
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Brown County Water Utility
Owned: By members of the utility as a non-stock, nonprofit company
Founded: Early 1960s; service began in 1964
Customers: 5,339 as of May 1
Water sources: Wells which draw from the Indian Creek aquifer, and purchased water from Citizens Water and Jackson County Water Utility
Nashville Utilities
Owned: By town government
Founded: Around 1950
Customers: 1,319 for water service as of June 29
Water sources: Purchased water from Brown County Water Utility and East Monroe Water Corporation
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