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VOL. 10 | NO. 51 | Saturday, December 16, 2017

The Cutoff

The complex backstory of the Memphis cutoff of new sewer connections to areas outside the city

By Bill Dries

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When Memphis leaders got together with suburban mayors in September at Agricenter, it was to talk about a unified countywide approach to getting Amazon’s $5 billion HQ2 project.

It was supposed to be a time for leaders of the county and its seven cities to talk about their common good, regionalism and all things they agree on, with none of what they disagree on at least for the moment.

But Bartlett Mayor Keith McDonald got to what was on most minds as soon as everyone was seated. Memphis had, without any notice, cut off new connections to the city sewer system outside the Memphis city limits just a few weeks earlier.

McDonald’s question was whether it applied to Bartlett’s agreement with the city of Memphis for some, but not all of its sewage needs.

“I brought it up early in that discussion just because everybody was talking about we need to work together,” McDonald said. “I did make a comment to the effect of that has to hold true for everybody.”

Shelby County Mayor Mark Luttrell would later refer to it as the “800-pound elephant in the room.”

“How are you going to provider sewers to Amazon if you do get them?” Luttrell told county commissioners the day after the Agricenter meeting. “They are rather resolute with their policy. But the issue now is becoming exceptions to the policy and getting that clearly defined.”

Memphis Mayor Jim Strickland has said the sudden roll-out of cutting off sewer connections was a mistake and should have included more advance notice.

The action itself, however, was quite deliberate. It is the tip of a spear aimed at the larger issue of the city’s relationship with the rest of Shelby County, even in the most basic services local governments provide.

There has been decades of debate about smart growth and the subsidies for services, especially in areas that are developed near cities instead of within those cities. Strickland has specifically linked the cutoff to his desire to see Memphis’ population become more dense.

“Cities don’t usually provide services outside city limits,” Strickland said. “Traditionally, Memphis has built sewers outside the city limits because they knew they were going to annex those areas. That’s been happening for 40 or 50 years.”

But that changed when the state ended annexation by ordinance in 2014 and required referendum approval by voters of areas to be annexed. That was followed by the Shelby County Commission’s decision to end the practice of requiring city approval of developments within three miles of the city limits.

“Our responsibility ought to end at our city limits,” Strickland said.

SENDING A MESSAGE

Strickland’s decision moved the matter out of discussions with consultants and other visionaries and delivered it to the doorstep of those who take construction plans and start moving dirt – developers.

“The impact on property values will be felt by citizens in the county,” developer Kevin Hyneman said. “There are hundreds of acres of property that once had access to sewer and the assessor took that into consideration when valuing the property.

“There will be millions in lost real estate tax revenue to the county when the values are adjusted for no longer having utilities,” he said. “Perhaps the Shelby County Commission will need to tap the Shelby County Schools' budget to offset the loss of revenue from much lower property values.”

“There will be millions in lost real estate tax revenue to the county when the values are adjusted for no longer having utilities. Perhaps the Shelby County Commission will need to tap the Shelby County Schools' budget to offset the loss of revenue from much lower property values.” – Kevin Hyneman, developer

 

The Memphis-Shelby County Division of Planning and Development put the number of parcels affected by the cutoff at 77, including some multi-lot parcels.

“A number of developers had planned developments that were at various stages of completion,” said assistant county attorney Carter Gray. “There is a lot of variety of where they are.”

Alan Crone, special adviser to Strickland, said he is not aware of any major development deals that have fallen through specifically because of the sewer cutoff.

Strickland said he’s talked with seven developers who have claimed the city has a legal obligation to continue to provide sewer service outside the city limits.

“Two of those – the (city) lawyers have agreed we do have a legal obligation. The other five are being looked at more closely,” he said. “If there are others on top of those – because we think there are several dozen in the pipeline – if they submit the paperwork we will give them an answer in 30 days.”

That would apply to areas in not only what was the Memphis annexation reserve area, but land in the annexation reserves of five of the six suburban municipalities surrounding Memphis. Germantown does not have any reserve areas.

“The general tone of the discussions … is the question of, ‘is the county going to get into the sewer business?’” Gray said. “That’s a major policy decision and a long-range issue that has to be dealt with, depending on the city.”

Shelby County public works director Tom Needham said it would take three to five years for the county to get into the sewer business and Luttrell’s administration is not putting a price estimate on what that would take yet. Needham also said such a move would involve the county and city working out a possible transfer of sewer lines the city of Memphis has built into the unincorporated county.

Strickland confirmed that specific possibility.

“At some point, we would probably transfer ownership of that system so that the city is only serving city residents,” he said.

The Memphis cutoff comes as the city is in the midst of a $250 million overhaul and renovation of the city sewer system. Normally a low priority because of its lack of visibility, the fixes to the sewer system are not a choice. They are required by a federal court consent decree the city entered into with federal and state environmental officials in 2012 during the administration of Mayor A C Wharton.

The city spent about $80,000 on cleaning up the immediate effects of a 2016 raw sewage spill into Cypress Creek and McKellar Lake that included a fish kill. That was a sewage line break that spewed 50 million gallons a day of untreated wastewater into the creek, which empties into McKellar Lake. After a bypass was installed, a second sewage leak was found and fixed.

The T.E. Maxson Wastewater Treatment Facility in southwest Memphis and the M.C. Stiles Wastewater Treatment Facility in Frayser are undergoing major renovations that represent advances in how the city’s wastewater is treated before it is discharged into the Mississippi River.

On a windy, unseasonably warm day in November, city leaders broke ground at Maxson. The odor from some of the 70 million gallons a day of wastewater that comes through the plant was a constant companion. Once the work is done, the wastewater there and at Stiles will be treated with peracetic acid in a new disinfection process.

Dave Zimmer, North American Unit president of CDM Smith Inc., the engineering and construction contractor on the city project, said the technology to come is “good enough to convert wastewater into drinking water.”

“The water that would leave this plant will be of higher quality than the river itself,” he said.

Meanwhile, Peroxychem, the Philadelphia-based company that makes the peracetic acid, known as PAA, is building a $9.6 million production plant next to the Stile plant. Peroxychem is leasing the land from the city.

The city is also in the midst of a 10-year review and inspection of sanitary sewer lines that began in November 2013. SARP 10 is the Sewer Assessment and Rehabilitation Program that is currently inspecting the sewer lines to see what work and upgrades they need.

It is hazardous work. The crews doing recent inspections in the Downtown area donned metal suits that looked like deep-sea diving suits and futuristic looking metal instruments as they went below city streets as traffic was diverted above them. The precise locations of certain parts of the sewer system are kept secret for security reasons.

CITY WON’T GET DUMPED ON

Some in Strickland’s administration say starting with sewage sends an unmistakable message to those outside the city who have made it clear they want nothing to do with anything connected to Memphis.

“We’re not taking their shit anymore – literally,” is how one City Hall leader who would not speak on the record summarized Strickland’s edict.

McDonald said some Strickland administration officials at the Agricenter session took offense at his questions, but ruffled feathers on both sides were later smoothed over.

Bartlett has its own wastewater treatment plant for its north basin, an area that includes the bulk of Bartlett’s undeveloped land within the city’s boundaries.

McDonald was quickly assured by his own attorneys and the city of Memphis that Bartlett’s “evergreen” agreement with Memphis, last negotiated about five years ago, is intact and not affect by the cutoff policy. With that, he agrees with Strickland’s general philosophy.

The philosophy is an important shift in the relationship between developers and local government – from local government responding to where builders build to developers building where the sewer system already exists.

“For those who have facilities for part or all (of the wastewater treatment), it kind of pushes those developments into those areas because those developers, they are in business to make money and they are going to look wherever they can go,” McDonald said. “They are not just going to sit on the sidelines typically. It drives some of them to us.”

The city of Memphis provides wastewater treatment for the south basin area of Bartlett. And Bartlett has extended the sewage treatment it does outside its city limits.

“We have a few places that are not in the city limits that we serve on our system in the north and I understand,” McDonald said of the Strickland administration’s stand. “You are really not wanting to provide a lot of utilities outside of your municipal area particularly if you’ve got a limited amount (of capacity) you can handle. So I believe I understand his position. For myself, and probably Germantown as well, we just wanted to be sure that they felt like we felt – that they were secure.”

Bartlett’s last annexation of land by ordinance stopped at railroad tracks near the Brunswick community.

“And I did that because I didn’t want the people on the other side of the tracks to not have the same level of service. If a train stopped there, we have to go all the way out and around on Austin Peay to get back to them,” McDonald said. “By then somebody might be dead or a house might have burned completely down. We stopped there and the anticipation was we would move forward when we could build a fire station on that side of the tracks.”

But with no more annexation by ordinance for the last four years, McDonald said someone in that area would have to request annexation before Bartlett would attempt it.

“As far as any area that doesn’t have sewer and is not in our municipality, I think if they want municipal services they ought to be developing and moving into a municipality,” McDonald said. “If they want to be out in the county, they should do septic tanks.”

That is the same thought Crone has had.

“I don’t think that’s in the best interest of Germantown, Bartlett, Memphis, Millington or any of the municipalities to have municipal and urban growth in unincorporated Shelby County,” he said.

Instead, he and Strickland and McDonald each said in separate interviews that a developer who needs sewer services should look to build in a city with such services, or seek to have their property annexed by a city.

“I think it makes sense with where the city is in its stated plan to right-size itself,” county commission chairwoman Heidi Shafer said. “The county can definitely gear up to do it. … I don’t anticipate unincorporated Shelby County becoming more municipal.”

But she said it’s not as simple as septic tanks outside the city limits.

“I’m not in favor of trying to provide all municipal services to people who are living in and paying taxes for a rural area,” she said. “But you can’t have septic running into the groundwater.”

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 83 363 9,932
MORTGAGES 91 378 11,692
FORECLOSURE NOTICES 14 53 1,687
BUILDING PERMITS 213 788 21,098
BANKRUPTCIES 50 213 6,650
BUSINESS LICENSES 40 125 3,564
UTILITY CONNECTIONS 30 139 4,122
MARRIAGE LICENSES 12 91 2,270

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