Once the City of Murfreesboro sells its electric department, that asset will be gone forever.
City Manager Craig Tindall claims the power to make that decision rests solely with the seven members of the Murfreesboro City Council.
Here are some of our concerns:
• There is no indication the council plans to allow citizens to vote on the sale in a referendum.
• Only one buyer is being considered.
• It’s difficult to determine the utility’s value.
Tennessee Code Annotated 7-52-132 “Disposition of plant Election resolution Notice Ballot Election” lays out requirements for selling a municipal utility, including a citizen referendum. Tindall, who is the former city attorney, says he interprets state law to say the code does not apply to MED because the city a couple of years ago changed its charter to bring the utility more directly under the city’s control.
The Murfreesboro Post contacted the Tennessee Comptroller of the Treasury’s Office.
Comptroller Director of Communications John Dunn said, “We’re not currently aware of any requirements that would require Murfreesboro to receive bids prior to selling its electric department. Bids are more commonly used when a government entity is purchasing something. It would appear, however, that the City of Murfreesboro would be subject to TCA 7-52-132 if it chooses to proceed with selling its electric department. This law requires that not only the council approve the sale, but that it also be subject to a public referendum. See below. (referring to the code’s wording) Please note, this is just our opinion. Legal advice should be provided by the City Attorney or other hired counsel.”
While the office does not oversee utilities, it does provide some oversight of state and local government bodies in the form of financial audits, among other functions.
Another concern is MED’s value.
When the council tried to sell the utility in 2015, the city’s consultant set the value at $422.9 million, far above MTEMC’s offer of $150 million. Both sides now are working toward a price of $202 million plus other assets that Tindall says puts it closer to $300 million.
Tindall said the city used cash flow to set its value.
MTEMC’s valuation considered three approaches to set a value: cost approach, income approach and market approach. Each uses different factors and creates different valuations.
At one point during this negotiation the city’s valuation was over $267 million, while MTEMC’s fair market value estimate was $202 million.
These wildly varying numbers beg the question of how much is MED worth?
MED’s ratepayers since its founding in 1939 have paid for its assets and operations. Not all city residents are MED customers – some are MTEMC customers. Both groups will be affected by a sale. While MED customers have local utility oversight now in the form of MED’s board of directors and the city council, their representation will be diluted when they are part of the nation’s third largest electric co-op. If their voice is never heard now, it likely never will be.
The residents of Murfreesboro deserve to have the final word.
The Main Street Media editorial board is comprised of Publisher Dave Gould, News Editor Ivan Aronin and Reporter Jason M. Reynolds.