Tuesday, August 21, 2012

Hard Labor Creek Board Accepts Schedule for Oconee County, Walton County Approval of State Loans

Loan Execution Can Be Delayed

The Hard Labor Creek Reservoir Management Board today accepted without comment a schedule that calls for the Oconee County Board of Commissioners to approve on Nov. 6 two loans for $32 million from the state of Georgia for construction of the dam that will create the reservoir in the very south of Walton County.

The issue will be approved by the Management Board itself on Oct. 16, according to the schedule, and come to the Oconee County BOC on Oct. 30 for first reading. The Walton County Board of Commissioners is scheduled to approve the loan on Nov.6, when the Oconee County BOC also takes final action. Jimmy Parker, vice president of Precision Planning Inc., with offices in Monroe, presented the schedule to the Management Board at its scheduled meeting in the Walton County government building in Monroe. Parker is serving as project manager for the reservoir.

Parker took a little more than two minutes to explain the schedule to the Management Board, indicating that the state is rewriting its documents to accommodate the 40-year terms of the loans. Loans in the past have been for a maximum of 20 years, he said.

The Georgia Environmental Finance Authority and the Georgia Department of Community Affairs announced on Aug. 1 that they had awarded two loans to Oconee and Walton counties for the reservoir as part of the Governor’s Water Supply Program.

The larger loan is for $20 million. The two counties will not be required to make any payments on this loan until it comes due in 40 years. No interest will be charged against the loan during construction of the reservoir, and the single balloon payment will be of principal and 1 percent interest.

The second loan of $12 million also will be due in 40 years, and the two counties will pay 0 percent interest for the first three years of construction, 1 percent for the remainder of construction, and 2 percent during the repayment period once construction is complete.

Neither loan will have any closing fees.

The allocation of funds to Oconee and Walton counties was the largest amount made by the state on Aug. 1, which awarded $90.5 million in loans and $9.1 million in direct investment for water projects. Oconee and Walton counties had asked for direct investment but were awarded the loans instead.

Parker told the Management Board that GEFA will allow the counties to delay execution of either or both of the loans until May 1, 2017. The loans will expire if they have not been executed by that date.

Loan Applications Stressed Atlanta’s Water Needs

In the application for the loans, the two counties made much of the availability of the water from the reservoir to metro-Atlanta, but nothing was said of that in the meeting today.

In he 1,758-page document filed by Oconee County and the 332-page separate document filed by Walton County in support of the application, the counties said the reservoir “would play a critical role in providing future water supply to both the metro Atlanta and Northeast Georgia regions.”

After the meeting, Parker gave me copies of the memos from GEFA regarding the loans, and those make no reference to how the water would be used by anyone other than Oconee and Walton counties.

The state loans would give the two counties money to build the dam to create the reservoir. The loans would not provide sufficient money to build a water treatment plant or the distribution system for any water such a plant would produce.

To be able to actually treat and distribute water from the reservoir, the two counties would have to spend an estimated $80 million in addition to the $91 million needed to get the dam built.

At present, neither county needs the water the reservoir will provide, and neither has the resources to borrow additional money in the market to finance the project.

Oconee County was represented at the meeting today of the seven-member Management Board by Jeff Benko, county finance director, and Commissioner Jim Luke. They flank Parker (with Benko on the left) in the video above.

Commissioner Chuck Horton, the third Oconee County representative on the Management Board, was not present at the meeting today, nor was his alternate, Utility Department Director Chris Thomas.

Following Parker’s presentation of the loans there was no discussion of the loan schedule. The Management Board asked only a few questions of Parker as he reviewed the other items on the agenda for the 45-minute-long meeting. The agenda included presentations by Parker on land acquisition, project financing, dam construction, project mitigation and road relocations.

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