Carly Farrell
ELLAVILLE — The Georgia Rural Community Assistance Program (GRCAP) filed a report recently suggesting that Schley County request a moratorium on any and all payments that are and will become due during the period of the moratorium, and suggested the moratorium be for at least a year, and possibly two. During the moratorium, the GRCAP suggested the County form a task force consisting of local officials and concerned citizens to further delve into and study the problem. GRCAP suggested monthly or quarterly reports be published.
The Schley County government requested the GRCAP look into the issue because the water system was initially built to support 960 water taps, but only 363 taps are now being used. The County expects 25 more taps to be connected once construction’s finished on Schley County’s roads. But currently, the County isn’t receiving as much revenue as it had anticipated.
At a January meeting with Jim Caldwell, director of GRCAP, representatives from two of Georgia’s U.S. Congressmen’s offices, Schley County Board of Commissioners and citizens, it was reported that the monthly bill the County is expected to pay in the phase two water system is $25,582, and the County has defaulted, as of January, on the loan for three months, making their debt $76,746.
The County’s only bringing in between $14,000 and $15,000 per month from water bills, which has been going to pay a loan that was doled out for Phase One of the water system, which covers Ellaville. The County’s never gotten behind on Phase One’s bill.
The rural development department of the United States Department of Agriculture made the loan to Schley County. This type of loan from the USDA/RD, according to the report filed, is often referred to as a lender of last resort, meaning Schley County couldn’t obtain a reasonable rate on a commercial loan; federally-funded agencies don’t compete with commercial lenders, but federally-funded agencies will step in if the project would fall to the wayside and not be finished.
The County initially built the large system because a survey taken in the ’90s by the County’s chamber of commerce showed 960 households were interested in tapping into the system. But, only 38 percent of those who showed initial interest are tapped into the system.
At January’s meeting, Greg Barineau, chairman of the Schley County Board of Commissioners, explained that most of the residents initially responded they would like to have a tap just in case their well stopped working.
“It’s insurance,” Barineau said. “A lot of us did it, including me.”
Some households haven’t requested to be tapped into Schley County’s water system yet, even though the County was offering customers $150 tap fee, which would save residents $600 off the regular tap fee. The initial tap fee wouldn’t require a household to receive the County’s water — it would just be there when or if the customer ever wanted to receive the County’s water.
At January’s meeting, several suggestions were made to remedy the issue, which included:
• Charge each of the 363 Schley County water customers $110 per month.
With this, the County would break even, and wouldn’t be in debt. But, GRCAP worried that if this were to happen, the high bills would scare off some of the water customers already tapped into the system, thereby leaving a higher water bill for the remaining ones. If all 960 residents were hooked up to the system, the water bill would be $40 per month, which Barineau said would still be high to some residents who already have water from wells — for free except for well maintenance.
• Begin a well-organized public relations effort to promote the water system. (The County’s water system has a filter that wells don’t provide, thereby making the County’s water cleaner than well water.)
By doing this, the water bills may go up a bit initially, but would, in all, eventually go down because more people would be tapped into the system. But, the GRCAP concluded this wouldn’t guarantee the number of users go up as much as the County needed.
• Check into grant programs that may be able to help.
The GRCAP found no stand-alone grant aid programs from the federal or state levels that will consider grant aid to liquidate existing debt. But, in its report, the GRCAP said, “However, there is a remote, albeit fragile chance, that the Disadvantaged Community Program under the (U.S. Environmental Protection Agency) Safe Drinking Water Act Amendments of 1996, as administered in Georgia by Georgia Environmental Facilities Authority, could offer up to a 50 percent grant aid, (which) must be matched locally, minimally dollar-for-dollar, and with a grant limit of $500,000, if this county, with state legislative approval, created an authority and that authority negotiated a disadvantaged community loan/grant with GEFA.” That way, the County could search for more customers, and assumes the households already tapped in would be at a reduced fee. Funding may come from new grants.
The GRCAP also recommended Schley County check into the Immediate Threat and Danger program administered by the Georgia Department of Community Affairs, which could give the County $50,000, but has a dollar-for-dollar local match requirement.
The GRCAP worries these may exacerbate the problem more because of the dollar-for-dollar matching fees.
• Combine Phase I and Phase II water systems. (Phase One has never been in default; Phase Two is the problem)
GRCAP worries people in Phase One may drop out of Phase One because of an increase in their bills, and it wouldn’t be fair to Phase One residents because the City of Ellaville, where Phase One was built, still has its own debt service considerations.
• Look into modifying the terms of the existing loan.
“Modifying terms of a bond issue may be rare to none,” the report says.
• Refinancing the loan.
In part, the report reads, “Even if the interest rate were refinanced at zero percent, the payment due would only drop by $2,000. The existing shortfall is nearer to $12,000. Another consideration is the fact that the loan is young; less than two years into a maturity of 40 years.”
• Prepare a Community Development Block Grant (CDBG), which has a maximum of $500,000.
The report, in part, reads, “... the plan to use such funding for the work needed to tie on additional customers might be a valid justification. Still, the number of customers needed is close to 600 if user charges are to be kept at or near the present level.”
Moreover, the report says the money is only offered once a year and the application is typically due around April 1. Moreover, if the CDBG gives $300,000 or more, there’s a community match that’s required at five percent, and there’s usually a $3,000 administration fee. The net gain, the report said, if Schley County was granted the entire $500,000, would be $465,000. So, the report concludes, “The overriding consideration is, will the justification of paying off existing debt have enough merit to warrant consideration for approval of the highly competitive CDBG program?”
• Create a special water district for those who initially showed interest in becoming a part of the County’s water system, then opted out; let these people tap into the water system at no cost, then charge those customers a $7.50 surcharge fee every month for their tap. It typically costs $750 to tap into the County’s system, but Schley County has been offering taps for $150 for the past few months to try to get people on the water system.
The report said that additional revenue would help, but those customers’ additional revenue wouldn’t be enough to make this option conceivable.
• County officials could add a debt service fee onto current County water customers and should be considered for those who have tapped into the system, but aren’t using the County’s water.
The report didn’t say anything for or against this option; it said, “Impact fees are common and well known and understood, but the debt service fee is a mechanism for achieving essentially the same thing, that is returning to all other citizens any costs associated with a special or specialized service.”
The report referred its readers to a page on the City of Nashville’s (Ga.) Web site, which explains, in part, to Nashville’s citizens that the City will be implementing a sewer debt fee of $7 per each residential equivalent unit, and the water debt service fee will be $1.95 per each equivalent unit each month.
The report also asks its readers to Google Middletown Debt Service Fee Policy Resolution 99-04 for a similar example.
Besides recommending Schley County request a moratorium on any and all payments that are and will become due during the period of the moratorium, and suggesting the moratorium be for at least a year, and possibly two years, the GRCAP said the River Valley Regional Commission tried obtaining a list of households that still showed interest in becoming water customers, but determined that fewer than 50 may consider doing so in a relatively short amount of time.
GRCAP is an organization, which works within seven states, that provides cost-free service to small units of local government.
