Will The City Of Edina Lose Two Chief Water Customers?

Will The City Of Edina Lose Two Chief Water Customers?

By Beth Hunolt
 
 During recent board meeting at the Knox County School District and the Knox County Nursing Home District the topic of water suppliers has brought concern to several people.
 The City of Edina is the current supplier to both the Knox County School and the Knox County Nursing Home Districts. The school, not the city, in fact owns the water lines that run east, to the school. The school purchased the lines and entered into a contract with the City of Edina in 1964, when the school was built, to provide water and sewer for the school district. When the nursing home was built in the early 1970’s it was decided by the sitting board members to tap into the school’s existing water lines since there were no other available water suppliers at that time.
On October 21st, at the Knox County Nursing Home District meeting, it was announced by Administrator Tim Schrage, that he had been unofficially informed by the Knox County Water District No. 1 that in the next couple of months they would become the water supplier for the nursing home and that they will make the connection for them at no charge.
Mr. Schrage informed me that the Nursing Home District’s sprinkler system’s 13,000-gallon underground water tank was collapsing and that the Knox County Nursing Home District will have to spend nearly $23,000 to remedy the problem. Administrator Schrage also told me that he had contacted both the Knox County Water District No. 1 and the City of Edina to comply with the mandated Missouri state standards regarding the nursing home’s 34 year-old sprinkler system. Mr. Schrage told me that the City of Edina offered to replace the school’s six-inch water line, which also supplies the nursing home with water, with an eight-inch water line.
Out of this chain of events, the question of who has the rights to service the school and nursing home districts came into light. Is it the city’s right to continue providing the two districts with water as a “grandfathered” customer or if the Knox County Water District has the right to enforce the federal protection law, which states that rival competitors cannot infringe upon their supplying territories, since the districts are not located within the City of Edina?  
The Knox County Water District No. 1 is the current supplier of all of Knox County as well as portions of southern Lewis County, with the exception of the cities of Edina, LaBelle and Lewistown and is currently serving the Jim Sears Technical Center located next to the Knox County Nursing Home District, as well as other surrounding residents of that area.
Knox County R-1 School’s Superintendent DJ Leverton had this to say, “…The school had been contacted by the City about the possibility of replacing the existing waterline to the school. The cost of this project was estimated at $75,000 with the city, the school and the nursing home sharing the cost. I then was informed that the Water District was in the process of trying to become the new water supplier for the school as well as the nursing home. The communication between the Knox County Water District and the school has always been unofficial and there have never been any formal agreements between the Knox County Water District and the school. The school has not had any problems with the service from the City of Edina nor have we requested a change of service…I do not know what meeting or arrangements have taken place between the City of Edina and the Knox County Water District. I have been told unofficially that the City of Edina will not purse any litigation against the Knox County Water District to retain the service rights to the school due to the legal costs of such a venture…”
The Knox County School District uses over 1.4 million gallons of water yearly and the Knox County Nursing Home District is estimated by the city to use roughly the same amount as the school district. The City of Edina is currently contracted with Clarence Cannon Wholesale Water District for the estimated gallons of water that would have been purchased by the Knox County Nursing Home District and the Knox County R-1 School Districts, the city is in turn responsible for making up the difference in the unused gallons. The city’s estimated loss of revenue would be around $12,000 a year, along with the cost of the Clarence Canon Wholesale Water District’s contracted gallons of water. The Knox County Water District No. 1 and the City of Edina are currently using the legal aid of Prosecuting Attorney, David Brown, to try and work out a fair deal for all involved parties.

One Response to Will The City Of Edina Lose Two Chief Water Customers?

  1. RH

    November 18, 2009 at 6:32 AM

    Title 7, US Code 1926(b) says, in essence, that water districts that are indebted to the federal government have the “absolute” right to be the exclusive seller of water within their service areas.

    This federal protection doesn’t apply to just anyone. To qualify, a water system must show that it is indebted to the federal government or to some entity that purchased the district’s federal loan, and also show that water service has been made available by the district/association in question.

    The goal of the law is to make sure that small and rural communities are able to repay loans. This is done by preventing another system from coming in and cherry picking all or part of the system.

    Why would such legal protection be necessary to ensure loan repayment? Simple. Through the years, municipalities have tried to find creative ways to get at the most lucrative portions of a water system’s territory. The problem with such predatory action is that it leaves the remaining customers responsible for repayment of the loan. If there are fewer water district customers, the cost per district customer is greater — and the chance for default is higher.

    However, fire protection for schools, hospitals and nursing homes has to be considered.

    On September 27, 2007, the U.S. District Court for the Western District of Oklahoma entered a new decision addressing several aspects of the “made service available” test under Section 1926(b). The decision contains two critical treatments of this test. First, the Court determined that fire protection is relevant to the “made service available” test. Specifically, the Court stated: “By accepting loans from the FmHA, the District agreed to abide by the governing federal regulations. Those regulations provide that fire protection service is to be supplied to the extent practicable. 7 C.F.R. § 1780.57. It thus becomes an issue of fact whether such service was practicable with respect to the Disputed Customer”.

    Is the Knox County Water District capable of providing fire protection for the school & nursing home?

    Will their fire insurance rates be affected by this?

    Will the water rates increase?