Wednesday, July 28, 2010

Hard Labor Creek Reservoir Dam and Roadway Relocation Construction Now On Hold

Shovels Remain in Hand

All construction work on the Hard Labor Creek Reservoir in Walton County is now on hold with the exception of work on mitigation of the damage the planned dam and reservoir will do to streams and wetlands if the reservoir is built in the future.

Jim Luke, Oconee County commissioner and vice chairman of the Hard Labor Creek Reservoir Management Board, told me late last month that no formal vote ever has been taken by the Board to put construction on hold, but both counties have said to the Board that it should not move beyond the land acquisition and design stage on the project.

“The finance directors of both counties said the counties are not able to service more debt,” Luke told me in a telephone conversation on June 26.

Oconee County obligated itself in 2007 to pay the Walton County Water and Sewer Authority for a $19.5 million bond as its part of financing of the first phase of the project. Walton County borrowed roughly twice that amount.

The county has agreed to make semi-annual payments ranging from $309,486 to $1,228,500 over the life of the Hard Labor Creek bond, which mature on Feb. 1, 2038, according to Oconee County Finance Director Jeff Benko.

The principal, as of June 30 of this year, remains at $19.5 million, and interest on retirement is scheduled to be $17.9 million, according to Benko.

The debt for the Hard Labor Creek bond is part of a total debt of more than $44 million assigned to the Oconee County Utility Department. With interest, that debt goes to just less than $71.5 million.

At the May 25 meeting of the Board of Commissioners, Jimmy Parker of Precision Planning Incorporated (right), project manager for the reservoir, provided an update on the project.

He said the schedule calls for treated water from the reservoir to be available to the two counties in 2015. He acknowledged, however, that the date is now tentative.

“The schedule on this project is going to be based on the economic recovery and the demand for water in both systems,” he said. “I think the reservoir board is fully in agreement that they are not going to build a facility that is not warranted.”

The Oconee Enterprise missed the story, reporting in its May 27, 2010, edition simply that “Precision Planning engineer Jimmy Parker updated the BOC on the Hard Labor Creek Reservoir and a mitigation plan.”

The Athens Banner-Herald also did not report on Parker’s comment, though it did quote Luke in a story a month earlier as saying that the two counties have “started to drag our feet a little bit on the project.”

I talked by telephone with Parker on June 25 and with Luke on June 26, and both confirmed that construction work on the reservoir itself as well as on roadway relocation is frozen.

Parker said that all design work will be completed, but no dirt will be moved.

“We want to get this in a shovel-ready position,” he said. Parker told the BOC on May 25 that the goal is to have the reservoir ready for any state or federal stimulus funding, should they become available.

Parker told me that roughly $33 million is left from the $60 million from the sale of the bonds by the two counties, and that that amount will allow the reservoir board to continue purchasing land for the project. He said roughly half of the 2,380 acres needed already have been acquired.

The remaining borrowed funds also will cover the $9.8 million that will be spent on mitigation projects, a figure that Commissioner Luke called “interesting” during Parker’s presentation.

Parker said that the dam and flooding for the reservoir will do significant damage to Hard Labor Creek and wetlands surrounding it, since they will be flooded.

“When you remove the ecological habitat provided by the streams and wetlands in this area, under (U.S. Army) Corps (of Engineers) regulations it is a requirement...we have to replace that habitat.”

While much of the mitigation is in Walton County, four of the sites selected for mitigation will be in Oconee County.

Wetland mitigation is being done on land near little Lake Oconee on the Apalachee River near Moores Ford road. That land is owned by the Walton County Water and Sewer Authority.

The Oconee County Board of Commissioners voted on June 1 to proceed with streambank mitigation construction on streams on the Rocky Branch sewage treatment site near North Oconee High School and at Veterans Park sites in July 2010.

Streams on these sites drain to Barber Creek, which is a tributary of the Oconee River, meaning the mitigation will take place out of the immediate watershed of the reservoir.

The Board of Commissioners also voted to go forward with streambank mitigation at Heritage Park in the spring of 2011. Streams in that park drain to the Apalachee, as does Hard Labor Creek itself.

The delay at the Heritage Park site is the result of discussions about how restrictions on use of streams that are restored as part of the mitigation project will affect the use of the park for horse and bike trails. The county will be required to place covenants that preserve the streams once they are restored as part of the mitigation process.

A similar issue was raised at the June 29 meeting of the Board of Commissioners when Interim Parks and Recreation Department Director Lisa Davol discussed possible development of a disc golf course in Veterans Park.

Commissioner Luke questioned whether it would be possible to build such a facility around streams that will be set aside as part of the mitigation process. That issue remains unresolved.

Financing of the Oconee County contribution to the Hard Labor Creek Reservoir project has been an issue from the time the Board Voted 3-2 in 2007 to join with Walter County on the project.

Commissioner Luke and Chairman Melvin Davis joined then Commissioner Don Norris in favoring the project, while Commissioners Chuck Horton and Margaret Hale opposed it.

Proponents of the project initially justified it based on projections that the county would double in population by 2015, bringing the total number of people in the county to 67,065. The current population estimate for the county is 33,230.

When those figure were challenged, Finance Director Benko came forward with projections that the costs of the project could be covered by growth in water sales.

First the drought with the restrictions on water sales and then the collapse of the local housing market made the water sales projections unrealistic.

As a result, the county has increased water rates on existing customers three times since April 1, 2008, with the most recent increase taking place on July 1. At the time Utility Department Director Chris Thomas requested the increase, he told the BOC it was necessary in part because of the debt for Hard Labor Creek.

The budget for the Utility Department for fiscal year 2010-2011 lists $6.4 million in income and expenditures, with $3 million of the latter for debt payment, including $924,000 in interest for the Hard Labor Creek bond.

In an email message to me of June 14, Oconee Finance Director Benko listed four bonds that have been issued for the Utility Department since 1997 and which have not yet been retired. (See Chart.)

They are for the Bear Creek Reservoir in Jackson County (1997), for payment of debt and future construction (1998), for the acquisition of land for the Rocky Branch sewage treatment site (2003), and for Hard Labor Creek (2008).

The total initial debt for these four bonds was just less than $54 million. The current principal on the bonds is a little more than $44 million, but the county also is obligated to more than $27 million in interest payments on that debt.

If the Utility Department cannot retire these bonds through revenue from water sales, sewage fees or other fees, the county has to cover them through other tax sources, such as property and sales taxes.

In the budget request Thomas submitted to the Board back in April, he projected $5,905,000 in water and sewage fee income for the 2010-2011 fiscal year.

The County has not yet released detailed departmental budgets for the fiscal year that began on July 1. [I asked for release of those budgets at the BOC meeting last night, but no member of the board or county staff responded to or even acknowledged my request.]


Jimmy Parker’s PowerPoint presentation is on the county web site.

I have recorded and edited a video recording of his presentation of the PowerPoint and have put it on the Oconee County Observations Vimeo Channel .


Anonymous said...

Thanks for the informed follow up on this issue. This has been a boondoggle from the beginning with wildly inflated estimates of population growth and water sales. This project would not have been economically viable even without the economic downturn. That just gives Davis and Luke an excuse. Three people got us into this situation and 2 are still on the Board. The voters will have the opportunity to correct that in 2 more years.

John Huie said...

Just like buying anything on credit, county bond issues look great get the thing you want now, pay for it over time. But look at the interest costs of both reservoirs mentioned...the cost of each project is NEARLY DOUBLED (and these are not small projects).

Candidates for office are always talking about "cutting the fat" (but rarely say where). Here are tens of millions in financing costs that counties could save if 1. they'd make damn sure they really need the project before they build it 2. and if they do, they should build it by SAVING rather than borrowing (unless it genuinely pressing)...for example, spending SPLOST money only as it comes in, rather than borrowing against it.

EVEN IF a new reservoir is justified, what's the rush? Reservoirs appear to be the knee-jerk "solution" to the recent drought...even tho most every county survived the drought with minimal water restrictions.

If that proves anything, it would seem to prove that we DON't need more reservoirs. Reservoirs that may never be needed are a politically popular (but potentially expensive) way to assuage public fears that have little basis. They should be built only when they are CLEARLY needed.

Anonymous said...

My water/sewer bill in Watkinsville has gone from around $40 a month a couple years ago to over $70 and we have been using water less. At night, I even go #1 outside and the bill is still high. I asked OCUD how they meter the sewer and they could not give a straight answer. It doesn't seem right, we are conditioned to conserve water and our payment is ever increasing water rates.

Anonymous said...

This Project will break both counties while a few pockets get fatter off of tax payers, If they don't continue to hit our water rates, they then have provisions to raise our property taxes. Walton County is just trying to position themselves where they can be a power house and whole sale water to Gwinnett County due to they will not be able to withdraw any more water from Lanier than already permitted for future growth. When this project is finished it is estimated to be 350 million but by the time it is finished it will be more due to the rising cost of materials. Oconee is being sunk due to Walton knows they can't afford this project without us.

Anonymous said...

The county officials that started this boondogle in the first place should be run out of town on a rail. There has never been enough water running through Hard Labor Creek to fill and keep full any size reservoir. Now some genius has a plan for a 17 mile pipe line to pump water from Oconee. They must think money is growing on trees here in Waton County. I would put my name and address on this but I fear the consequences.