BRISTOL, Tenn. (WJHL) — A South Fork Utility District (SFUD) customer has written the utility’s board chairman requesting four of the five members’ resignations and plans to petition for their removal otherwise.
Keith Lunsford sent commission chairman James Graham a letter Tuesday citing his intent to seek the removal of Graham, secretary Barry Jessee, treasurer Joe Warren and Tim Leonard. Jason Webb, the other commissioner, is not included in the list. The letter also asks for the board members to resign before their next board meeting.
Lunsford’s letter comes a week after the Tennessee Comptroller’s Office (TCO) released the results of an investigation in which it found “questionable payments” of nearly $1.7 million to businesses owned by the SFUD’s district manager, Garry Smith.
That investigation, which noted multiple “potential conflicts of interest,” has been provided to Second Judicial District DA Barry Staubus.
The letter also follows Sullivan County Mayor Richard Venable’s April 8 call for the entire board to resign. It references the TCO investigation, saying its findings “show a substantial lack of judgment and the basic lack of knowledge of the governing policies for seats held by each board member.”
The letter claims members “disregarded, ignored, and lost focus of most, if not all, of their ‘Board Responsibilities and Duties’ found on your website.”
Lunsford told News Channel 11 Thursday his motivation to start a petition stems from the investigation’s findings and from what he said are steep rate increases since Smith took the reins as district manager in 2018.
News Channel 11 reported Tuesday that in 2019, customers paid just over $37 a month for typical usage of 4,000 gallons to either of SFUD’s two predecessor utilities, which merged in 2020. At SFUD’s current rates, that same amount of water costs almost $61.
“My grandfather lived in this district, and he lived on $660 a month social security,” Lunsford said. “That’s all he had. If he went from paying $30 a month to $60 a month, that’s a huge impact on his budget.”
Lunsford said many of the district’s 3,400 customers are low or moderate-income, including many schoolchildren who attend Emmett Elementary.
“It’s taking food out of kids’ mouths for these poor people,” he said.
Lunsford also took issue with Graham’s Monday response to Venable’s call for resignations, including Graham’s claim that Smith was brought in because of multiple serious problems with long-time contracted utility manager Tipton Construction.
“There were no issues with service from a customer perspective,” Lunsford said of the years that both predecessor districts used Tipton. The TCO investigation reveals that one pre-SFUD district, Holston, hired Smith as its manager in April 2018, and the other, South Bristol-Weaver Pike, did so in May 2018.
Past audits of the South Bristol district show varying amounts of water leakage using several factors, including the percentage that “non-revenue water” comprises of the system’s total cost to operate for the year.
In each of these, the totals are lower in each of the years 2015 through 2018 than in 2019, the first year with Smith managing the district. The percentage ranged from as low as 1.6% to as high as 7.7% between 2015 and 2018, but was 10.0% in 2019.
Annual operating expenses for South Holston increased steadily but at fairly small rates from 2015 through 2018. They started at $801,000 in 2015, inched up to $811,000 in 2016 and rose a bit more than 10% in 2017, to $894,000. The increase dropped to about 7% in 2018, rising to $954,000.
After the management change, operating expenses nearly doubled to $1,770,628 and the utility showed a loss from operations of $757,913.
The main changes came in repair costs — most of which went to Smith’s companies according to TCO’s investigation — and salaries.
Repair costs averaged about $185,000 annually from 2015-2018. They were $702,945 in 2019.
Combined management, office management and professional/engineering services fees averaged about $60,000 annually from 2015-2018. In 2019, salaries and related expenses, management fees and professional services totaled more than $233,000.