Shelbyville City Council voted unanimously Friday to apply for a $2.9 million American Rescue Program fund grant which would provide funds for sewer rehabilitation, but it was originally far from a done deal.

The 6-0 vote at a special called meeting followed a study session in which Council member Henry Feldhaus, Bedford County-Shelbyville Partnership Director Shane Hooper, and others urged that part of the funds be used to extend sewer lines to the new industrial park off Highway 231 North, as opposed to all the money being designated for repairing and upgrading current lines.

 “This gives us some money without having to go borrow it, a way to get sewer north of the business park to help that area develop rather than cut it off,” Feldhaus said.

Feldhaus provided state and local figures showing that Shelbyville Power, Water and Sewerage System over the past four years, has had revenues of approximately $5 million or more, with a net income of $900,000 to $1.3 million, and as of June 30 had almost $3.4 million cash on hand.

“This is just on their sewer statements, it has nothing to do with the water or electricity sides,” Feldhaus said. “They’ve got their own revenue streams, they’ve got their own customer base.

“The City of Shelbyville does not need to be (spending) on something like sewer lines that are 50 years old that need to be addressed by their (SPWSS) capital program and their revenue streams, not take one-time money that we can use to bring generational change and economic development and some amenities to Shelbyville and attract more tourism dollars and that kind of thing. That’s about as precise as I can be.”

“It’s time for the system to pay to fix itself,” Feldhaus said.

Shelbyville Power, Water and Sewer System Board Chairman Dobee Mallard defended the system, providing documentation of millions of dollars worth of continual repair and rehabilitation work stretching back to 2007.

Mallard handed Council members a handout listing 15 years and $31 million of system funds used for rehabbing, repairing, and replacement of the current system. One work crew is devoted solely to that function, Mallard said.

The handout listed yearly expenditures of $190,000 to $300,000 for work by that crew, along with more than $800,000 rehab/replacement extensions within the past year, and more than $1.8 million of SPWSS funds in addition to Community Development Block Grant projects, which are funded partially by the program.

“We never asked you (the City) for any money,” Mallard said. “To insinuate that we don’t build this into our everyday operations is a little bit insulting.”

“The figures show that we reinvested about $32.5 million back into our sewer system,” SPWSS General Manager Jason Reese said, with around $22 million going for a new sewage treatment plant completed around 2014.

“We do spend money and time taking care of our system. We do leverage grant funds because that’s how we keep our rates low. That’s in our and our ratepayers’ best interest.”

Mallard pointed out that SPWSS constructed a $5.5 north side electric substation from system funds at no cost to taxpayers to handle anticipated growth. Similar action is needed with sewer and wastewater to handle rapid northside growth, Mallard said.

“What we’re faced with now is a lot of growth...even though we’ve constantly rehabbed and have spent over $31 million in the past 15 years, right now is the particular time that the Little Hurricane Sewershed, where all the pressure from the north side is coming, we need rehab in that area right now,” Mallard said.

The Council was told approximately 1,500 new homes, all requiring sewer connections, are proposed for that area.

“We’ve got to spend the money there whether it comes from this grant...it’s up to you where you want to spend those dollars,” Mallard said. “We think it’s best spent rehabbing the Little Hurricane Basin lines. Don’t be confused with sewer to Project Cardinal (the recently-announced Duksan Electera plant to be constructed soon) because that’s totally separate and is already funded.”

“Everything from the north side including Project Cardinal ends up in that Little Hurricane sewershed and that Shaw Road pumping station back to the sewer plant. For us to have the volume without running new lines...If we stop stormwater infiltration and we repair what we have, we gain a ton of volume to be able to take the growth on the north side.

“Our recommendation is to use the money to rehab what we have at this point. And we also, to be a partner, and not be accused of being good stewards, we also said, ‘Use it all for rehab and we’ll do the match out of the system coffers and not ask the system for one dime.’ ”

SPWSS system engineer John Freeman presented a map, showing large areas where subdivisions are being proposed just north of McDale Lane. Freeman said getting a handle on drainage from that area will allow the City to absorb the new growth’s sewer flow with “no problem.”

Parts of the sewer system in northern Shelbyville have been overwhelmed by heavy rain this summer, including a 4-inch downpour in less than an hour during August. That storm caused extensive flash flooding on the city’s north side.

Council member William Christie said the smell of raw sewage was evident near the intersection of Jennings Lane and Galaxy Drive due to sewage overflow that day.

State regulations allow only a certain number of overflows, referred to as “infiltration”, before a moratorium on new development is enforced until problems are resolved. The City is nearing its limitation, the Council was told at a study session earlier this month.

“My issue is if we didn’t have this $3 million gift from the federal government, how would we be addressing this,” Feldhaus asked. “I have no doubt that the house is on fire out there and it needs to be put out. This is not totally a rehab grant.”

Feldhaus said the grant’s terms require 25 percent be spent on “critical needs” but the other portion may be spent on expansion and “generational change.” That term has become a key phase used by Hooper and Feldhaus concerning the grant.

Council member Marilyn Ewing said the needed repairs are “crucial and critical.”

Hooper emphasized the need for all entities, including governing bodies and utilities providers serving both Shelbyville and rural areas of Bedford County, to “work together.” He urged expansion of City sewer lines to Nearest Green Distillery and the area around the proposed Tennessee Downs auto lifestyle complex. The amount of proposed tax revenue from restaurants and other businesses around those projects, as well as the upcoming Middle Tennessee State University aeronautics campus, was played up.

 “It’s not (the fault of) economic development or the people who are trying to make Bedford County and Shelbyville better that the current system isn’t quite where it needs to be,” Hooper said. “We shouldn’t say we’re going to sacrifice the future because we’ve got to do something right now. Let’s come to a compromise here.”

The Tennessee Department of Economic Development specifically said the money can be used for growth and expansion as well as rehab, according to Hooper.

“We have businesses that are ready to go that need our support,” Hooper said.

Consulting engineer Greg Davenport said the $3 million may not be enough for the amount of rehab work needed. He feels that SPWSS has not neglected the needed work but faced other needs that took priority.

“Shelbyville is not unlike any other town in the Southeast that has an aged sewer system,” Davenport said.

“I just hate to walk away from some money that we can use for expansion of the line, toward making some of these economic developments happen, and just totally giving it to another government entity, that has its own revenue stream, that ought to be coming up with rate plans,” Feldhaus said.

Feldhaus “strongly” encouraged SPWSS to come up with separate rate plans for sewer customers on and off the City water system.

Mallard said Bedford County officials had turned down an opportunity for SPWSS water to be supplied to the industrial park area.

“We could have sold them water cheaper than they could make it, and then we could have had water sales revenue to help subsidize the extension of the sewer,” Mallard said.

Hooper urged the Council to eventually annex revenue-producing areas and land in the northern Shelbyville area such as Nearest Green Distillery and Tennessee Downs.

Deadline for filing the application is Oct. 1.