TVA land swap approved over Harris' objection

By Kathy Helms-Hughes
STAR STAFF
khelms@starhq.com

   The Tennessee Valley Authority Board of Directors approved all but one item on its agenda Wednesday, among them: the sale of TVA Power Bonds, a Tellico Reservoir land exchange, and nuclear and fossil fuel contracts for TVA power plants.
   The sale of permanent easements affecting 0.13 acres of land on Chatuge Reservoir in Towns County, Ga., was deferred for further review, according to Gil Francis, TVA Media Relations.
   The TVA Board voted 2-1 to approve the exchange of a portion of ground once held sacred by the Cherokee Nation to a company which plans to build residential housing and a championship golf course. The Little Tennessee River valley where Tellico Dam and Reservoir are located, once was home to Seven Towns, the historic center of the Cherokee Nation.
   TVA Chairman Glen McCullough Jr. and Director Bill Baxter voted to approve the land swap, with Director Skila Harris voting nay. When the item came up for consideration, Harris told the group that she was on the board when TVA adopted the original Tellico Land Management Plan. She said the plan involved a lot of thought and staff participation, and was a solid plan which did not need to be changed.
   Under the land swap, TVA will sell approximately 116.4 acres to LTR Properties Inc., developer of "Rarity Communities." The developer will purchase 273.6 acres which will be given to TVA, plus the difference in appraised value.
   "No one came and spoke about Tellico at all," Francis said. "TVA gave up 116 acres, but we got 200+ acres; plus the guy has to do a whole bunch of other things. He's got to pay a differential, which is going to be substantial. They haven't calculated that yet."
   The developer also will have to provide public access to the TVA property.
   "It took them 13 months to negotiate that before they brought it to the board for consideration," Francis said. The Cherokee Nation has approached TVA about the purchase of property in Venore, Tenn., where the Sequoyah Birthplace Museum is located. However, that is still in negotiations, he said. "They're just getting started."
   Francis said there are different configurations of ownership at TVA's various reservoirs, and that before development can occur along the 11,000 miles of TVA-maintained shoreline, "you really have to get the watershed team to get a tax map and figure out who owns it. Depending on where it is, it may not be owned by TVA. They may just own flow easement or flooding rights." Approval is on a case-by-case basis, he said.
   TVA also agreed Wednesday to supplement two contracts worth $45 million each for nuclear fuel and fuel engineering services at Sequoyah and Watts Bar nuclear plants. The contracts are with French nuclear giant Framatome ANP and Westinghouse. Framatome also will provide refuel floor support services and reactor component inspections at Browns Ferry Units 2 and 3, at a cost of just under $9 million, according to Francis.
   TVA also approved the issuance, sale and delivery of TVA Power Bonds. The previous day, TVA priced a $1 billion, 10-year global power bond at a coupon rate of 4.75 percent. The bonds will mature Aug. 1, 2013. They are non-callable and will pay interest semiannually.
   "TVA bonds are attracting foreign and domestic investors who want to diversify their holdings with safe, high-quality securities in a volatile market," said Chairman McCullough.
   TVA expects the bonds to be rated Aaa by Moody's Investors Service and AAA by Standard and Poor's. The semiannual interest payments will be made on Feb. 1 and Aug. 1.
   Citigroup and Morgan Stanley are the joint lead managers for the sale. Co-managers are Bank of America, Bear Stearns, Tokyo-Mitsubishi Inc. and Williams Capital.
   "All it is, is buying and selling bonds," Francis said of the board's action. "Let's say we issued a bond in the year 2000 and it had an interest rate of 5 percent; but it also had a call provision. That means that after a certain period of time we could call those bonds in, which we now would do, because we probably could get a bond for less than 5 percent.
   "It's just part of the refinancing of bonds to save interest costs. Basically, they would call in the ones that are outstanding and pay those off, and get a new bond and sell new bonds at a lower interest rate so that our cost for that money is less."
   TVA is selling bonds overseas as well as at home, according to Francis. "At one time we sold bonds in British Sterling," he said. "I know some retirement systems have invested in TVA bonds because it is a good investment.
   "If you're buying bonds, you're investing in TVA," he said.
   On Aug. 18, TVA will redeem all of its 2001 5.875-percent electronotesreg. due in 2011, and its 2002 5.375-percent electronotesreg. due in 2017.
   TVA issued approximately $40.8 million of the 2001 5.875-percent electronotesreg. and $37.9 million of the 2002 5.375-percent electronotesreg.. TVA electronotesreg. is a retail program that offers bonds in a variety of structures targeted to individual investors.
   The federal utility expects to save more than $850,000 in interest expense per year by redeeming the bonds issues and refinancing at lower interest rates. The bonds will be redeemed at 100 percent of their par value.
   The TVA board also granted approval Wednesday to file condemnation cases to acquire transmission line easements and rights of way in Bedford County, Tenn., and Scott County, Miss., and approved the sale of a 30-year term easement for a natural gas pipeline to East Tennessee Natural Gas Co., affecting about 0.3 acre of TVA land in Sullivan County, Tenn.