In Friendsville, a new sewer main along a property line starts a monthly charge on the utility bill even when the house stays on its septic tank. The City of Friendsville's sewer expansion project page says owners on the new line do not have to hook up, and that a sewer improvement fee is added "once the line is available to your property." The city's utility policy manual calls that fee "a mandatory charge" that "is not subject to waivers or reductions."
That rule would be minor in a large city system. Friendsville's sewer system is small and under state financial-distress review, and a state-recommended study of what its rates need to be is due in 2027. So the sewer status of a Friendsville house sets a monthly cost that may change again. For a buyer comparing an in-town Friendsville home with one in Maryville or out in the county, it belongs in the math with taxes and insurance.
The Fee Follows the Pipe, Not the Plumbing
The policy manual ties the improvement fee to physical access: it applies where a city sewer main "runs adjacent to or along the property line." The manual describes the fee as the customer's share of the cost of making the system available and ready for service. The city's posted rate schedule lists the "No Hookup Sewer Improvement Fee" at $22 a month for residential properties and $36 for commercial ones.
The pipe is spreading. Friendsville's HUD Special Appropriations grant project, estimated at $2,040,000, extends sewer to areas with failing septic systems, "particularly where properties lack the space for septic repair or replacement," according to the city. The streets named in the project scope are:
- West Hill
- Church
- West College
- West Morgan
- North Morgan
- Young
- Miser Station
- North Farnum Street, extending into the school to connect to the pump station
The existing collection system is about five miles long. It runs from Unitia Road at Highway 95 along Highway 321, through Dunlap Hollow, down South and North Farnum streets and to East Third Avenue near Friendsville Elementary. On those streets and the new grant streets, two houses that look alike can carry different monthly costs. The difference depends on where the main sits and whether the house is connected.
Connecting is not cheap either. The city's project page says the cost of connecting to the sewer system "once averaged $5,000" and "now typically costs around $16,000," and puts the jump down to post-COVID material and labor prices. The same page says the city is working with HUD to develop a grant program to help eligible residents with connection costs.
Three Houses on the Same Bill Cycle
Here is how sewer status can change a residential bill. The table uses the city's posted rate schedule for the improvement fee and the September 2026 Utility Board vote, covered below, for the connected flat fee. The improvement fee has historically matched the flat fee, so ask for a current bill to see the amount actually charged.
| Situation | Monthly sewer line on the bill | One-time cost to change it |
|---|---|---|
| On septic, no city main along the property line | None | Not applicable |
| On septic, city main along the property line | Mandatory improvement fee, listed on the city's rate schedule at $22 residential | Connection, which the city estimates at about $16,000 |
| Connected to city sewer | $27.50 flat residential fee plus a usage charge based on water use | Already connected |
All three houses pay for water. For a standard 5/8-inch meter, the minimum water bill is $34.94 plus tax for the first 1,000 gallons, then $10.18 per additional 1,000 gallons. Friendsville buys its water from South Blount Utility District and the Tellico Area Service System, according to the city's 2026 water quality report.
For a lot buyer planning new construction inside the system, the posted schedule lists a new 5/8-inch water tap at $2,550, a 5/8-inch meter at $325 and a new 1.5-inch residential sewer tap at $1,500.
Why a System This Small Is Under State Review
The rates are moving because of the system's size. In a staff summary prepared for the Tennessee Comptroller's Board of Utility Regulation, Friendsville reported that its sewer system has 95 customers. The city's role is collection only, and sewage is pumped to a treatment facility owned by the Tellico Area Service System. With so few accounts, every pump repair, pipe replacement and depreciation charge is split among very few bills.
The same September 10, 2026 board packet lists the sewer system's operating revenues at $28,828 for fiscal year 2025. On a standard accounting basis, the system looked healthier than ever that year. Its total net position rose from $752,105 in FY2024 to $1,132,780 in FY2025, and its GAAP change in net position was a positive $380,675.
Most of that gain came from $386,226 in capital contributions in FY2025. Tennessee's financial-distress test leaves that kind of money out. Under Tenn. Code Ann. § 7-82-703, one of the triggers is a negative change in net position for two consecutive years, excluding grants and capital contributions. On that statutory basis, Friendsville's sewer system came in at negative $15,633 for FY2024 and negative $5,551 for FY2025. Board staff noted those two negative years and wrote that the utility "has been referred to the Tennessee Board of Utility Regulation ('the Board') for financial distress since 2026."
So grant money can build new pipe, but it does not count when the state checks whether the system is covering its own costs. The statute lets the board prescribe rates to eliminate negative net changes after a review and public hearing. If a utility does not adopt the prescribed rates, the board must petition chancery court to require them.
The First Increase Is Already on the Bill
A week before the state hearing, the city acted on its own. On September 3, 2026, the Friendsville Utility Board approved raising the residential flat sewer fee from $22.00 to $27.50 and the commercial flat fee from $36.00 to $45.00. It also voted to adjust commercial meter-based rates by the same percentage, according to the Citizen Portal summary of the meeting minutes. That summary lists the change as effective October 31, 2026, with residents notified in their October bills. The Citizen Portal meeting feed reports that the city administrator told the board the city must show progress to the Comptroller.
On the residential flat fee, that is a 25% increase. The flat fee is only part of a connected bill, because a usage charge based on water use comes on top of it.
The Rate Study Due in 2027 Sets the Next Number
The September increase was a first step. For the September 10 hearing, Comptroller staff recommended that Friendsville have the Tennessee Association of Utility Districts, or another qualified expert approved by board staff, perform a rate study. The study would review capitalization and debt policies, build a five-year capital asset budget, and review connection and tap fees.
The recommended deadlines are:
- December 31, 2026, to send board staff a copy of the contract with the expert.
- April 30, 2027, to deliver the completed study along with proof of implementation or a proposed plan to implement it.
- Up to two extensions of up to six months each, if the utility shows good cause.
The city is moving on this already. The November 5, 2026 Utility Board agenda lists a report on "Communities Unlimited- help with sewer rate study-Mandated by TN Comptroller." The staff summary also records the utility's view that regionalization "could be feasible but would require additional evaluation." For anyone buying in Friendsville this winter, the sewer rate on a connected house, and the fees on a house near a main, may change again after the study comes back in 2027.
The water side has been through a similar process. In a February 2, 2026 letter to Comptroller staff, the city answered a Board of Utility Regulation order on water loss. It reported that after a complete meter replacement, water loss fell from 34.85% in the final quarter of 2024 to 16.49% in the final quarter of 2025. The same letter said a downtown water line project replacing asbestos cement lines was about 90% complete.
Questions to Ask Before You Write an Offer in Friendsville
- Does a city sewer main run along this property line, or is one planned on the HUD grant streets?
- Is the house connected to city sewer or on septic, and what does a recent utility bill show for sewer?
- If it is on septic next to a main, has the improvement fee already been showing up on the bill?
- If connecting is part of your plans, what would a quote look like against the city's estimate of about $16,000?
FAQ
Does a Friendsville homeowner have to connect when a new sewer line arrives?
The city's sewer expansion page says no. As part of the grant, a tap is placed in the yard, but connecting is optional. The monthly improvement fee still applies once the line is available to the property.
Who treats Friendsville's wastewater?
The city has no treatment plant. Its collection system pumps sewage to a facility owned by the Tellico Area Service System.
When could sewer rates change again?
Comptroller staff recommended that the completed rate study, with proof or a plan for implementing its findings, be delivered by April 30, 2027. Extensions are possible for good cause.
This post is general information, not legal or financial advice. Confirm the utility status and charges for a specific property directly with the City of Friendsville and the right professional before you rely on them.
If you own a home on one of Friendsville's sewer streets and want to know how its utility setup affects what it could sell for, or you're weighing a house where the main runs right past the yard, the team at Mandy Street can help you factor it into the price. Start with your Instant Home Valuation, and we'll follow up with what we know about the street.
