The Nashville Utilities water customer at the center of a nearly two-year-long federal court battle with Brown County Water Utility is not bringing in much money for the town, according to its water bills.
Between its two buildings, Hard Truth Hills buys an average of 127,712 gallons of water per month from Nashville Utilities — a far cry from the estimate of as much as 1 million gallons a month mentioned when the development was under construction.
At the time that estimate was made, the owners were planning to move their Quaff ON! brewing operation to the site as well, which would have greatly affected the water consumption. That move hasn’t happened, and it isn’t certain if it ever will.
In June 2017, Brown County Water Utility filed a lawsuit against the Nashville Town Council to gain rights to provide water to the 300-plus-acre Hard Truth Hills site directly.
A few days before the suit was filed, the town had hooked up the under-construction development to a Nashville Utilities water line. Hard Truth Hills had to pay about $100,000 for that, said President and CEO Ed Ryan.
Hard Truth Hills has been a water and sewer customer of the town ever since. The land was later officially annexed into Nashville; annexation proceedings had started early in 2017 at the land owners’ request.
Last week, Ryan said BCWU had told him when Hard Truth Hills was being built that they could get him a cheaper water rate, but his company decided to go with water service from the town anyway.
“It felt like the right thing to do,” Ryan said. “We were annexed into the town, we buy our water from the town, we give our sewer to the town. So, that’s how we got to where we are.”
Over the past two years, attorney fees on both sides of this case have been piling up. In just one meeting last month, the town council authorized an estimated $10,000 to $12,000 more on top of what it has already spent to prepare this case for trial; in the span of 11 months, Brown County Water Utility spent more than $190,000 on attorney fees, according to court paperwork.
The case is scheduled to go before the Southern District Court in Indianapolis the first week of June.
The outcome could have a bearing on other rate payers throughout both water systems, as each side is asking for the other to pay its attorney fees if it wins. Also, both water companies have argued in court paperwork that not getting this customer’s business could be damaging to their bottom line.
The numbers
Ryan brought the water bills for Hard Truth Hills for April to the newspaper office on May 6. He said he had received notice that he probably would be subpoenaed, so he wanted to share publicly what he planned to tell the court.
Between Feb. 14 and March 14, Hard Truth Hills’ two buildings — a distillery/restaurant and a welcome center — used a total of 55,400 gallons of water.
The total bill due to Nashville Utilities was $651.24 for water that month.
The sewer charge also appears on the same bill; that portion is $1,100.31, including a hold-over balance of $270.51.
The average monthly water bill for the two buildings is $1,457, including tax.
Throughout the past year, Hard Truth Hills has used nearly 1,300,000 gallons of water, according to its bill history. Its average use is 127,712 gallons per month.
When Hard Truth Hills was being built, the company’s engineer, Clint Hammes, told Brown County Water Utility engineer Darrell Baker that the complex would consume as much as 1 million gallons of water per month once a brewery and distillery were operating on that property, according to court paperwork. The million-gallon estimate is mentioned multiple times throughout court filings over the past several months.
Last week, Ryan characterized that million-gallon estimate as “a 10-year look at what could possibly happen.”
Initially, the estimated water demand was 350,000 gallons per month. The actual average monthly use at Hard Truth Hills is less than half of that now.
Once construction progressed on Hard Truth Hills, the owners decided against moving the Quaff ON! brewing operation to the new complex. That altered the water demand significantly.
In the meantime, the owners invested money into the current brewery on State 135 North to expand its brewing capacity, so there are no plans to move the brewing operation “anytime soon” to Hard Truth Hills, Ryan said last week.
Over the past year, the brewery’s three buildings on 135 North have consumed an average of 154,083 gallons of water per month, with an average monthly water bill of $1,752 including tax.
On its own, Hard Truth Hills’ water use is “not very much,” Ryan said. “No one has taken the time or listened to me, so,” he trailed off, motioning to the water bills he was handing to the newspaper.
“Now, obviously, we plan to make more product there, but we’re already selling a lot,” Ryan said about the distilling operation at Hard Truth Hills. “We’re the No. 1 craft spirit in Indiana now, so could this double in five years? Sure. But it’s not like it’s suddenly going to go up tenfold in a year. It is what it is.”
When shown the actual water use figures for Hard Truth Hills last week, BCWU board President Ben Phillips said he could not comment on the case until after the June court appearance.
In an interview on April 24, he said that it was unfortunate that both sides had to be spending so much money on lawyers, but that all of this could have been avoided if the town wouldn’t have fought BCWU like it has. BCWU believes it has a legal right to this water customer by federal law.
“It would have been so easy for them to say, ‘OK, we’re not going to mess with you,’ but it was a little bit of greed on their part,” Phillips said about town leaders.
“I’m not going to say it was greed on our part, because we firmly believe, and we still do, that that was our territory, and they basically thumbed their noses at it.”
Gains and losses
Brown County Water Utility sells the water to Nashville which Nashville Utilities then resells to its customers, so the same water is being sent to Hard Truth Hills regardless of who the transmitter is. It’s just a matter of who gets paid at what rate.
The rate that BCWU gets paid from the town is $1.47 per 1,000 gallons it purchases, plus other charges of $11,264.32 per month.
The rate that BCWU gets from commercial customers like Hard Truth Hills directly is $13.16 per 1,000 gallons for the first 4,000 gallons, decreasing as more water is used. If more than 50,000 gallons are used, the rate is $4.79 per 1,000 gallons. There’s also a monthly meter charge and a service charge.
Those rates may change, though. BCWU recently filed a request with the Indiana Utility Regulatory Commission to adjust water charges after a study determined that there were imbalances in what certain classes of customers were paying compared to their use. If those are approved, the rate which Nashville pays BCWU for wholesale water will go up by 154 percent and the rate that commercial customers pay BCWU will go up by 35.56 percent, while the rate that residential customers pay BCWU will go down by 14.24 percent.
In court paperwork filed in August 2017, Paul Vink, one of the town’s attorneys, estimated that at the current rates, the most BCWU could stand to gain from taking on Hard Truth Hills as a direct customer would be $3,472.47 per month — if Hard Truth Hills was using 1 million gallons per month, which it is not.
Brown County Water Utility filed suit against the town in the summer of 2017 because Nashville was claiming this water customer in what BCWU believes to be its territory. Allowing the town to take this “significant customer” would “cause harm to the public, including Brown County Water’s other customers” and its ability to pay off federal loans, BCWU’s lawyers wrote.
Likewise, the town depends on the water business from the Big Woods family of companies, which also include Hard Truth Hills and Quaff ON!, wrote town council President “Buzz” King in a letter to Brown County Water Utility on May 15, 2017. In that letter, the town offered to pay an extra 50 cents to BCWU per 1,000 gallons of water it sent to Hard Truth Hills.
Two days before the deadline for BCWU to answer that letter expired, Ryan and the town signed a water and sewer connection agreement.
BCWU sued the town a month later. That summer, according to figures reported in court paperwork, BCWU spent approximately $95,000 to run a new, 6-inch water main to the back edge of Hard Truth Hills’ property, replacing a 2-inch line. That is the line to which Hard Truth Hills would have to connect if BCWU wins the lawsuit.
Last week, Ryan expressed concern about how the outcome of the case would affect his business. He said he’d been told that Hard Truth Hills would have to pay $100,000 or more to connect to BCWU’s new water line if BCWU prevailed in court; plus, he’s concerned that his company would have to spend another $400,000 on a separate water system for fire protection because BCWU’s is not rated for that purpose.
Because Quaff ON!, Big Woods restaurants and Hard Truth Hills pay for things as separate companies and are housed on separate properties, Ryan said he doesn’t believe that a win in this case for BCWU would mean that BCWU also would be able to take over water service to the brewery or other properties. “I don’t think so,” he said.
“But I have no idea where I’m going to get a half a million dollars.”
