Ash-spill fallout: Were millions from TVA compensation fund misspent?

Sep 5 - McClatchy-Tribune Regional News - Bob Fowler The Knoxville News-Sentinel, Tenn.

It's been almost a year since TVA executives and Roane County mayors stood on the courthouse steps to announce a huge payment.

After months of talks, a deal had been struck for TVA to give Roane County governments $43 million to help offset the effects of the, 2008, ash spill at Kingston Fossil Plant.

But as the anniversary of that pronouncement looms, questions remain.

The special eight-member Roane County Economic Development Foundation created to approve funding requests has met four times since it organized.

That board -- four TVA executives and the mayors of Kingston, Rockwood, Harriman and Roane County -- has encumbered all but $900,000 of that payoff in those brief sessions.

Some contend the money was allocated for projects that have nothing to do with the ash spill, including $1.7 million for restoration of an old Harriman movie theater.

Others have questioned if funding those projects is a proper use of TVA ratepayer money.

The foundation's charter states the money is for "economic development projects, including infrastructure capital projects such as school, sewer and water projects, which will contribute to the long-term recovery and success of the communities affected by the ash slide..."

A University of Tennessee professor who studies environmental disasters and the responses to them calls the payment the equivalent of "slush funds that just go to these general purpose needs."

Dr. Gregory Button added that in other such calamities, nonprofits have administered funds to redress harm to the community or the environment.

Button calls the arrangement in this environmental disaster response "unusual."

He and Randy Ellis, recently elected to the Roane County Commission, also point out that no money was allocated to improve conditions for the people most directly affected by the ash spill.

The Swan Pond community next to the power plant continues to be affected daily by the disaster, Ellis said.

Residents there "received nothing from the $43 million," he said, and there were no community meetings to ask for citizen input.

Button and Ellis note the foundation doesn't include as members any local citizens hard-hit by the spill.

"I think it was the wrong move to put so many politicians on the foundation," Ellis said. "There should have been some regular people from the community."

Button asks if TVA continues to exert too much control over the purse strings. The money remains with TVA until formal requests are made via contractual agreements and is then released either over time or in a lump sum.

"Because it was perceived as ratepayer money, they (TVA) wanted to be involved in oversight," said Kingston Mayor Troy Beets, foundation chairman.

Then there are questions about how the money has been divvied up.

Ellis said Kingston made out well, receiving $5 million, while Harriman "got the short end of the stick" with a $2 million allocation.

Beets said Kingston was first in setting its priorities and was a "little bit more proactive and aggressive" in making its needs known.

The vast majority of the money -- $32 million -- has been set aside to address pre-existing school building needs. County officials acknowledge the TVA money was a godsend that offset the necessity for a property tax hike to pay for those school projects.

The origin of the payout

Days after the ash spill, TVA President and CEO Tom Kilgore stood before frightened, furious Roane County residents at two meetings.

Kilgore's appearances were part of TVA's initial public responses to the disaster. Some 5.4 million cubic yards of coal ash sludge had burst from a ruptured retention cell at the power plant, cascading into the Emory River and spilling onto adjoining countryside.

Angry residents wanted answers, and Kilgore offered reassurances, Beets recalled.

"He made the statement, 'I want to make you whole or better when I can,' " Beets said.

Thus was born the notion that TVA owed Roane County much more than just a cleanup of the calamity.

The county and cities would continue to suffer in numerous ways, local leaders said, and payback was due.

"It gave me the idea: What can TVA do to make the city of Kingston whole?" Beets said. "That was the impetus that started it."

City councils and a special committee in the winter and spring of 2009 discussed how best to use any TVA payment.

Cities made wish lists and set priorities.

Kingston in late January held a workshop, and the $5 million expansion of its sewer treatment plant was ranked the city's top need.

"This is a project that will be paying back years and years and years into the future," Beets said.

Kingston's methods set the precedent, and city councils in Harriman and Rockwood followed suit later that winter and spring.

The Roane County Long Term Recovery Committee was formed and became the conduit for funneling funding requests from local governments to TVA.

In early talks, TVA suggested a payment equal to three years of county property taxes on the 300 acres of Roane County inundated by ash.

"We kind of chuckled," Beets remembered. "We weren't even going to go there."

The recovery committee's counterproposal in April 2009 was to request from TVA the equivalent of 15 percent of the total cleanup costs. With that price tag estimated well above $1 billion, it would have meant more than $150 million.

It was TVA's turn to scoff, Beets said: "They kind of laughed and said, 'No, I don't think so.'"

The compromise was announced Sept. 14, 2009, on the courthouse steps. The amount would be $43 million, and the new foundation would have final say-so on funding request approvals.

TVA spokesman Barbara Martocci said that sum represents the equivalent of $10 million annually for four years, plus a prorated amount for the remainder of 2009.

She said TVA executives felt all projects requested by the county could be wrapped up within four years.

$6.7 million, 28 minutes

Mike Farmer, Roane County mayor at the time, called the establishment of the foundation "a big step in the recovery process."

But he added a caveat: It was only the first step "of a long and difficult process."

The TVA funding, Farmer said then, would help provide "economic enhancements to offset the impact of what happened..."

Foundation approval of funding requests proved routine. Members took 28 minutes during their first meeting Sept. 16, 2009, to approve spending more than $6.7 million.

By the foundation's third meeting last January, all but about $900,000 had been earmarked.

In addition to the Kingston sewer plant project, TVA funds are being used to rehab Harriman's Princess Theater, expand Rockwood's utility infrastructure at a cost of more than $1.9 million, pave streets in Rockwood and Harriman and improve county schools.

Other funding requests that have been approved:

n $1 million for a public-relations campaign to boost the county's battered image in the wake of the ash spill. That effort has yet to be launched and remains in limbo.

n $25,000 for an economic plan and tourism campaign for Oliver Springs.

n $30,175 for a retail marketing effort by the Roane County Alliance to bring new stores to the county.

n $160,296 to offset the loss of property tax after TVA acquired land in the ash spill zone.

n $200,000 for improvements to Harriman's library.

n $35,000 for a heating and cooling system in a new veterans clinic in Rockwood.

A couple of requests from private organizations weren't approved, Farmer said.

Also denied: A $5 million proposal from Roane County Highway Superintendent Tom Hamby.

When foundation members didn't consider his request last September, "I was really disappointed," Hamby said.

Hamby said he has, however, received a separate $1 million TVA payment to repair three roads damaged by the ash spill.

Nick Hunt contributed to this report. Bob Fowler, News Sentinel Anderson County editor, may be reached at 865-481-3625.

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