Partners Acting for a Cleaner Environment

Supplemental Environmental ProjectSemi-Annual Report

Volume 12

Twelfth Semi-Annual ReportJuly 1, 2010- December 31, 2010

Submitted to EPA on January 28, 2011

I certify under penalty of law that this document and all attachments were prepared under my direction or supervision in accordance witha system designed to assure that qualified personnel properly gather and evaluate the information submitted. Based on my inquiry of theperson or persons who manage the syste~n, or those persons directly responsible for gathering such information, the informationsub~nitted is, to the best of my knowledge and belief, true, accurate and co~nplete. 1 am aware that there are significant penalties forsubmitting false information, including the possibility of fine and imprisonment for knowing violations.

D. W~ ~y ~ate

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Table of Contents 1. Introduction

2. Deposit of Funds to the SEP Escrow by KUB

3. Disbursement of Funds from the SEP Escrow by Escrow Agent to the

Third Party Administrator to Pay Plumbers for Services Completed

4. Balance of Funds in the SEP Escrow

5. Payment of Funds by Third Party Administrator to Plumbers

6. Location of Private Residential Properties Where Services Have Been Performed Under the SEP Program

7. SEP Implementation and Ongoing Tasks

8. Tasks Scheduled for the Next Six Months Appendix A Grant and Loan Program Income Guidelines

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Supplemental Environmental Project

Twelfth Semi-Annual Report July 1, 2010, through December 31, 2010

1. Introduction

KUB is required to perform and complete a Supplemental Environmental Project (SEP) as set forth in Section VIII. Supplemental Environmental Project and Appendix B Supplemental Environmental Project of the Consent Decree (CD). This project was undertaken in connection with the settlement of a civil enforcement action taken by the United States for violations of the Clean Water Act. This Semi-Annual Report covers events from July 1, 2010, through December 31, 2010. In addition to the required SEP funding, KUB has also voluntarily established a low-income, no-interest loan program. This program serves customers earning a predetermined percentage of median income that is above the level that would qualify for SEP funding. The cost of the lateral repair or replacement is added to the customers’ KUB bill over a period of 48 months. One customer was approved for the no-interest loan during this reporting period and no disbursements were made.

2. Deposit of Funds to the SEP Escrow by KUB

No deposits to the SEP Escrow Account were scheduled during the reporting period. The next deposit to the Escrow Account is scheduled for February 11, 2011.

3. Disbursement of Funds From the SEP Escrow by Escrow Agent to the Third Party Administrator to Pay Plumbers for Services Completed

A total of $185,635.77 was disbursed from the SEP Escrow Account to the Third Party Administrator during this reporting period. The disbursements are shown in the table below. Date of Invoice Amount Invoiced Number of Laterals

Repaired/Replaced Amount Disbursed

7/6/2010 $29,019.00 16 $29,019.00 8/3/2010 $19,529.23 8 $19,529.23 9/7/2010 $27,280.00 13 $27,280.00

10/21/2010 $52,343.66 22 $52,343.66 11/1/2010 $32,985.88 14 $32,985.88 12/2/2010 $24,478.00 10 $24,478.00

Totals $185,635.77 83 $185,635.77

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4. Balance of Funds in the SEP Escrow

The balance in the SEP Escrow Account, as of December 31, 2010, is $472,023.68. The disbursements from the escrow account and the accrued interest for this reporting period are shown in the table below.

Date Deposit Disbursement Accrued Interest Balance 7/1/2010 $29,019.00 $18.98 $628,554.83 8/1/2010 $19,529.23 $21.77 $609,047.37 9/1/2010 $27,280.00 $20.90 $581,788.27 10/1/2010 $52,343.66 $15.78 $529,460.39 11/1/2010 $32,985.88 $14.52 $496,489.03 12/1/2010 $24,478.00 $12.65 $472,023.68

5. Payment of Funds by Third Party Administrator to Plumbers

In this reporting period, the Third Party Administrator made the following payments to plumbers for services completed at the properties listed below.

Property Address Plumber Amount 1012 Texas Avenue East TN Rooter $3,224.005408 Morning Dove Circle East TN Rooter $1,444.002836 Gibbs Drive Lyon Plumbing $3,260.001613 Wilder Place Lyon Plumbing $1,410.003211 E. Fifth Avenue Hayes Plumbing $5,380.601932 Rosedale Avenue FM Plumbing $1,322.001211 Minnesota Avenue East TN Rooter $1,860.631609 Hazen Street Lyon Plumbing $1,628.001109 Groner Drive Lyon Plumbing $2,970.001806 Hazen Street FM Plumbing $1,948.002907 Bragg Street Lyon Plumbing $2,915.001659 Laurans Avenue FM Plumbing $1,442.00121 Morningside Drive East TN Rooter $3,159.001111 Texas Avenue East TN Rooter $1,312.004403 Barbara Drive Lyon Plumbing $2,085.001903 Laurans Avenue Lyon Plumbing $1,420.001531 Hazen Street Lyon Plumbing $2,155.001825 Laurans Avenue Lyon Plumbing $2,601.004501 Greendale Road FM Plumbing $2,755.005309 Shamrock Drive FM Plumbing $1,608.001128 Texas Avenue FM Plumbing $2,020.001646 Laurans Avenue FM Plumbing $1,491.001230 Texas Avenue Lyon Plumbing $1,315.005409 Shannondale Road Lyon Plumbing $2,110.001120 Magnet Place Lyon Plumbing $1,851.001225 Minnesota Avenue Lyon Plumbing $2,650.005405 Morning Dove Circle Lyon Plumbing $2,130.002641 Chukar Road FM Plumbing $2,308.002029 Fine Avenue FM Plumbing $916.00

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5409 Morning Dove Circle FM Plumbing $2,250.003606 Grace Street Lyon Plumbing $3,400.004604 Pinecrest Drive Lyon Plumbing $3,825.001121 Magnet Place Paul Hayes Plumbing $1,740.004805 Holston Drive FM Plumbing $4,100.005407 Shannondale Road FM Plumbing $2,294.001720 Laurans Avenue Paul Hayes Plumbing $1,360.001114 Goner Drive Lyon Plumbing $1,525.004503 Cardinal Drive Lyon Plumbing $1,845.005309 Shannondale Road East TN Rooter $1,571.001700 Laurans Avenue East TN Rooter $1,387.001507 Minnesota Avenue East TN Rooter $6,863.521023 Groner Drive Lyon Plumbing $2,506.882608 Chukar Road Lyon Plumbing $2,610.501812 Hazen Street Lyon Plumbing $2,145.001921 Natchez Street Paul Hayes Plumbing $2,446.004406 Greendale Road Paul Hayes Plumbing $2,084.001917 Laurans Avenue Paul Hayes Plumbing $1,443.001705 Hazen Street FM Plumbing $1,720.004405 Barbara Drive FM Plumbing $2,350.005317 Shamrock Drive FM Plumbing $2,135.004401 Fulton Drive FM Plumbing $5,120.001537 Hazen Street FM Plumbing $1,985.002021 Fine Avenue Paul Hayes Plumbing $2,730.00723 Witt Place Paul Hayes Plumbing $1,718.00101 Morningside Drive FM Plumbing $2,706.881012 Beck Place East TN Rooter $1,717.002113 Jefferson Avenue East TN Rooter $2,686.004708 Barbara Drive FM Plumbing $5,963.002107 Fine Avenue Lyon Plumbing $2,020.005400 Morning Dove Circle Lyon Plumbing $1,851.001827 Prospect Place Lyon Plumbing $1,380.001114 Magnet Place Lyon Plumbing $1,738.002105 Jefferson Avenue FM Plumbing $2,345.002654 Sunset Avenue Paul Hayes Plumbing $1,940.002123 Seminole Avenue East TN Rooter $2,785.005402 Greencrest Road FM Plumbing $2,238.001016 Groner Drive FM Plumbing $2,218.00138 Pickering Street Paul Hayes Plumbing $1,4151014 Parish Street Paul Hayes Plumbing $1,640807 Graves Street Paul Hayes Plumbing $1,708311 Naueda Lane Paul Hayes Plumbing $9042725 Sunset Avenue Paul Hayes Plumbing $1,7102626 Delrose Drive Paul Hayes Plumbing $2,323503 S. Chestnut Street RD Plumbing $3,000715 S. Cherry Street RD Plumbing $3,148.76914 Donnell Street Paul Hayes Plumbing $2,205900 Graves Street East TN Rooter $2,308

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1050 Groner Drive FM Plumbing $3,215.00616 McConnell Street FM Plumbing $3,211.00504 Surrey Road FM Plumbing $2,844.002109 Jefferson Avenue Lyon Plumbing $3,647.00942 Groner Drive Lyon Plumbing $1,750.001601 Hazen Street Lyon Plumbing $1,970.002433 Selma Avenue Lyon Plumbing $2,421.252743 Sunset Avenue Lyon Plumbing $1,445.005110 Fennel Road Lyon Plumbing $1,446.002020 Washington Avenue Lyon Plumbing $1,577.001122 Trigg Street East TN Rooter $2,288.002415 Wilson Avenue Paul Hayes Plumbing $2,080.001518 Robert Huff Lane Lyon Plumbing $2,500.002024 Natchez Street Lyon Plumbing $2,502.001613 Crestview Street East TN Rooter $1,957.601950 Saxton Avenue East TN Rooter $2,241.002745 Lay Avenue Lyon Plumbing $2,240.001018 S. Elmwood Street Paul Hayes Plumbing $1,855.002732 Sunset Avenue Paul Hayes Plumbing $2,240.003009 Boyds Bridge Pike Paul Hayes Plumbing $2,615.00

6. Location of Private Residential Properties Where Services Have Been

Performed Under the SEP Program

Private service laterals have been repaired or replaced under the SEP program at the following locations during this reporting period.

Owner Property Address Work Complete

Date John R. or Mary Jane Allen 1211 Minnesota Avenue 7/1/2010Jamesena Saffell 1609 Hazen Street 7/2/2010Terry B. or Yolanda D. Black 4501 Greendale Road 7/7/2010Doris G. Darden 5309 Shamrock Drive 7/7/2010Wendee D. Jones 1128 Texas Avenue 7/8/2010Dorothy A. Yarbrough 1109 Groner Drive 7/12/2010Russell T. or Minnie A. Jones 1806 Hazen Street 7/12/2010Carolyn A. Lockhart 2907 Bragg Street 7/14/2010Mary N. Lee 1659 Laurans Avenue 7/14/2010Ruby J. Woods 1646 Laurans Avenue 7/14/2010Kathleen Gaiter Lowery 121 Morningside Drive 7/15/2010Mabel L. McLain 1225 Minnesota Avenue 7/16/2010Joshua B. or Brook A. Wicks 4805 Holston Drive 7/16/2010Azalee Rice Hall 1111 Texas Avenue 7/22/2010Janice M. Tarwater 4403 Barbara Drive 7/22/2010Edith P. Love 1903 Laurans Avenue 7/28/2010Donna L. Kimber 1531 Hazen Street 7/29/2010Bonnie Martin or Margie Pratt 1825 Laurans Avenue 7/29/2010Sarah Lee Mills Lawrence 1230 Texas Avenue 8/3/2010L. E. or Lillie H. Sharp 5409 Shannondale Road 8/4/2010

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Daniel Earl or Bozena J. Gerstmyer 2641 Chukar Road 8/4/2010Steven H. Cox 2029 Fine Avenue 8/4/2010Debra L. Daugherty 5409 Morning Dove Circle 8/6/2010Connie E. Crossley 5407 Shannondale Road 8/9/2010Stella Ruth Stooksbury 5405 Morning Dove Circle 8/10/2010Larry J. Mathis 1120 Magnet Place 8/16/2010Jennifer D. Baysinger 3606 Grace Street 8/19/2010John L. or Pauline Jackson 4604 Pinecrest Drive 8/23/2010O’dell Draper III 1121 Magnet Place 8/24/2010Olivia Hayes Davison Sumpter 1720 Laurans Avenue 8/26/2010Frances L. Crawford 1507 Minnesota Avenue 8/26/2010Donna R. Tobe 4503 Cardinal Drive 8/31/2010Hattie B. Bingham 1114 Groner Drive 9/1/2010William or Elizabeth Roach 5309 Shannondale Road 9/2/2010Herbert A. or Rosemon J. Leonard 1700 Laurans Avenue 9/3/2010Juanita E. White 1023 Groner Drive 9/3/2010Daniel E. Hurst 4401 Fulton Drive 9/9/2010Philip B. or Sarah Gardner 2608 Chukar Road 9/10/2010James McCleary 1812 Hazen Street 9/10/2010Charles E. Sr. or Mary C. Langston 1705 Hazen Street 9/10/2010Judith D. Margetts 4405 Barbara Drive 9/10/2010Nannie M. Moore 1921 Natchez Street 9/13/2010E. Louis or N. Katherine Mouron 4406 Greendale Road 9/13/2010Mikail or Cathy Renee Abdul-Rahman 1917 Laurans Avenue 9/13/2010John J. Lawlor 5317 Shamrock Drive 9/14/2010Louis A. or Tamika L. Guillebeaux 1537 Hazen Street 9/15/2010Linda Gail Clark 101 Morningside Drive 9/16/2010Amber Crouse or Steve Blackburn 2105 Jefferson Avenue 9/20/2010Cynthia Barrett 2021 Fine Avenue 9/21/2010Peggy C. Harper 723 Witt Place 9/22/2010Barbara or Mary E. Cutwright 1012 Beck Place 9/24/2010Walter Nelson 2107 Fine Avenue 9/24/2010Shirley or Sandra Lemons 2113 Jefferson Avenue 10/7/2010James B. or Iris L. Nicely 4708 Barbara Drive 10/12/2010Charles R. Jr. or Zelma Carson 1114 Magnet Place 10/14/2010Nancy Sue Clifton 5400 Morning Dove Circle 10/15/2010Elizabeth Jones 1827 Prospect Place 10/19/2010Lula Harolyn Thompson 2654 Sunset Avenue 10/20/2010Ada T. Forbes 2123 Seminole Avenue 10/21/2010Gail C. Hatcher 5402 Greencrest Road 10/22/2010McKinley or Helen Margaret McElroy 1016 Groner Drive 10/22/2010Lucille Roddy or Rachel Jack 616 McConnell Street 10/29/2010Kimp Billingsley 503 S. Chestnut Street 10/29/2010Hubert or Marjorie Clemons 138 Pickering Street 10/29/2010Geraldetta M. or Walter Dozier 715 S. Cherry Street 11/1/2010Ruby L. or Betty Jean or Eugene or Maxine Evans 1014 Parish Street 11/1/2010Charlotte L. Taylor 1518 Robert Huff Lane 11/3/2010

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Yvette R. or Jeffrey L. Troutman 807 Graves Street 11/3/2010Gloria or Michael A. Stevenson 508 Surrey Road 11/4/2010David F or Vickie A. Caldwell 504 Surrey Road 11/8/2010Wendy A. Sherrod 311 Naueda Lane 11/8/2010Magdalene Gamble 2725 Sunset Avenue 11/9/2010Arica Rowan 1050 Groner Drive 11/10/2010Foy R. Bowles 2109 Jefferson Avenue 11/10/2010Georgette F. Phillips 914 Donnell Street 11/10/2010Margaret H. Lovely 942 Groner Drive 11/11/2010Carolyn Wilson 2626 Delrose Drive 11/11/2010Janie G. Donaldson 1601 Hazen Street 11/12/2010Vicki C. Reed 2433 Selma Avenue 11/12/2010Walter L. or Connie Conwell 900 Graves Street 11/12/2010Barbara J. Bowman 2743 Sunset Avenue 11/15/2010Andrew J. Jr. or Neva B. Buckner 5110 Fennel Road 11/22/2010Thomas E. or Henry B. Woods 1122 Trigg Street 11/22/2010Floyd E. Sr. or Dorothy L. Hurst 2020 Washington Avenue 11/23/2010Rosa Ann Flack 2415 Wilson Avenue 11/23/2010Debbie E. Hall 1018 S. Elmwood Street 11/29/2010Morline D. Jones 2024 Natchez Street 12/2/2010Gethsemane D. Patel 2732 Sunset Avenue 12/2/2010Zina or Zadie L. Johnson 1613 Crestview Street 12/3/2010Janie M. Gillespie 1950 Saxton Avenue 12/3/2010Sarah A. Long or Betty Dirl 2244 Cityview Avenue 12/3/2010Sherrie L. Taylor 3009 Boyds Bridge Pike 12/6/2010Joann Jack Glenn or Shirley Jack Layne 1503 Robert Huff Lane 12/6/2010Sandra Bennett 2745 Lay Avenue 12/7/2010Rebecca T Walker 2640 Sunset Avenue 12/7/2010Henry C. or Bonnie B. Case 2801 Avondale Avenue 12/7/2010James E. Battle 314 Ben Hur Avenue 12/7/2010Jimmy Lee or Sheila Marcella Bagwell 2854 Gardenia Drive 12/8/2010Evelyn C. Hurst 1517 Colby Way 12/8/2010Mary A. or James Harris 3000 Delrose Drive 12/9/2010Jerry A. Cook 1701 Wilder Place 12/10/2010Denisha M. Hardin 2717 Brooks Avenue 12/10/2010Barbara Jean Tate Whittington 1603 Crestview Street 12/15/2010Carlette Johnson 1201 S. Elmwood Street 12/27/2010Crystal Rader 1047 Addison Street 12/27/2010Mindy N. Moore 2115 Chicago Avenue 12/27/2010Donald W. Hill 1208 Beaman Lake Road 12/28/2010Leo W. or Dorothy Whiteside 1216 Pickwick Road 12/28/2010Paris H. or Velma E. Ruth 1900 Fine Avenue 12/29/2010Durell or Lennie McGalry 322 Ben Hur Avenue 12/29/2010Asbury Hugh or Vivian Smith 1204 Pickwick Road 12/29/2010Edna R. Greene 5901 Green Valley Drive 12/29/2010Jo A. or Mildred C. Leonard 1714 Wilder Place 12/31/2010

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7. SEP Implementation and Ongoing Tasks

KUB implemented the Private Lateral Program (PLP) in 2005 to address defective laterals and improper connections within its collection system. Prior to program implementation, KUB performed an initial analysis to determine the approximate number of defective laterals in KUB’s wastewater system and smoke testing was chosen as the primary tool for determining defects and prohibited connections requiring enforcement action. Also, during the development of this program, homeowner income information from all areas of the KUB wastewater service area was obtained to establish hardship eligibility guidelines for funding assistance provided under the SEP for private lateral rehabilitation. KUB conducted a careful examination of expected lateral failure rates, and looked at 2000 Census homeowner income information to determine how to best establish income limits for financial assistance and extend this support to as many customers as possible. The income limits selected were those from the Housing and Urban Development (HUD) guidelines for very low income households, where very low income is defined as less than 50% of the median income based on family size. HUD guidelines are widely used in many homeowner assistance programs and include limits for homeowner incomes defined at very low, low, and moderate levels relative to median income for service area. In the first two years of the PLP, the very low Income limits updated annually for earning growth by HUD were used in determining a property owner’s eligibility for funding under the SEP Grant(1) program. During this time, KUB gained information about the number of defective laterals in its system, the best tools for evaluating the collection system problems, and the income qualification rate for financial assistance where defective laterals are identified. In addition to smoke testing, closed circuit camera televising (CCTV) was evaluated for use in determining defects in 2006. CCTV of private laterals after mainline rehabilitation quickly became the most preferred means of accurately determining defects to avoid unnecessary repairs, and it continues to be the primary tool for determining the need for lateral rehabilitation. All private laterals are subject to inspection as prescribed in the CSSAP, and this specific tool has been very effective in resolving any questions related to required corrective action and enforcement. In many cases CCTV has confirmed the need for only a point repair and as many as one third of all defective laterals have required only repairs rather than extensive replacement. Although the defective lateral rate varies with the specific area of the system, KUB has observed an average lateral failure rate of 35 percent. In the first two years of the program implementation, KUB also determined from the PLP data that areas with the highest failure rate also had a large number of tenant occupants. By the end of 2007, the average tenant occupancy rate of properties requiring lateral repair was at least 40%. These situations greatly reduced the expected number of property owners eligible to apply for assistance.

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An analysis of upcoming projects associated with the CAP/ER based on historical failure rates and Grant approvals indicated that 50% of the median income was too low for many homeowners to qualify. Thus, an adjustment was made to the income guideline limits for Grant qualification to permit more property owners to qualify for funding assistance over the remaining five years of the program. On January 1, 2008, KUB moved the income guidelines for Grant(1) program qualification from 50% of median income (very low income) to 80% of median income (low income). This adjustment was communicated in the Sixth SEP Semi-Annual Report. The SEP states that very low, low and moderate income levels are eligible to receive funding assistance. Beginning January 1, 2010, KUB increased the income guidelines for Grant(1) program qualification from 80% of median income (low income) to 95% of income (moderate income). The 95% level is defined as moderate income by the US Department of Housing and Urban Development (HUD). The increase follows research of homeowner incomes in the Knox County area based on 2000 Census data obtained from the Knoxville/Knox County Metropolitan Planning Commission. KUB continued to use these income qualifications throughout 2010 resulting in an increase in the number of approved applications. The expectation is that this trend will continue over the remaining three years of the program, ensuring support for customers who need assistance the most during the remainder of the SEP period. KUB will continue to analyze information related to defect rates and income qualification as necessary to satisfactorily complete the SEP in accordance with the Consent Decree. Effect of Previous Income Qualification Limits: During this reporting period, sixteen property owners qualified for Grants due to the increase in the income guidelines effective January 1, 2010.

8. Tasks Scheduled for the Next Six Months

The following tasks are scheduled for the next six months: Continue to identify properties with defective laterals or prohibited connections. Continue private lateral enforcement notifications. Make payments from the Escrow account for work completed under the SEP. Make ninth funding deposit to the Escrow account.

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Appendix A Grant and Loan Income Guidelines

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GRANT AND LOAN PROGRAM INCOME GUIDELINES

Family Size Grant Program

95% of Median Income Loan Program

100% of Median Income 1 $39,710 $41,800 2 $45,410 $47,800 3 $51,110 $53,800 4 $56,715 $59,700 5 $61,275 $64,500 6 $65,835 $69,300 7 $70,395 $74,100 8 $74,955 $78,900

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