AVOC.info
Quick-Search:    

Advanced Search


2-6-07 Walton Oconee Hard Labor Creek Project raises many questions

... Oconee County is considering a $ 100 Million + debt for ultimate capacity of 12 mgpd. That just seems like a small amount of water considering the debt and the population figures that the proponents are using. The Jackson County Bear Creek project produced a lake with 50 mgpd capacity. The Bonds were under $ 69 Million for all four counties. That project was not dominated by developer interests.

AVOC

.

February 6, 2007

.

Walton – Oconee Hard Labor Creek Project raises questions

.

By Wendell Dawson, Editor, AVOC, Inc

.

Many informed citizens are concerned about the Oconee County Commissioners apparent rush to go in heavy debt on some water projects that have not been thoroughly reviewed by county citizens.

.

Some of the information from the Hard Labor Creek Project seems contradictory, and to some, contrived to suit the goal.The Walton Commission seems to be influenced by the development community in pushing the Hard Labor Creek project in the face of much local citizen and municipal opposition.

.

Oconee County is considering a $ 100 Million + debt for ultimate capacity of 12 mgpd.   That just seems like a small amount of water considering the debt and the population figures that the proponents are using.   The Jackson County Bear Creek project produced a reservoir with 50 mgpd capacity.   The Bonds were under $ 69 Million for all four counties.   That project was not dominated by developer interests.

.

Some of the financial information has been seen by some citizens.   The Hard Labor Creek presentation on January 17, 2007, is shown at the county’s website.Also, the Barnett Shoals Road Project- Precision Planning Presentation (Hard Labor Creek project)    and Jordan, Jones & Goulding Presentation (Barnett Shoals project)

.

Excerpts from the Hard Labor Creek presentation appear below.   An area CPA prepared a debt service analysis last summer for some folks in Walton and other counties wanting more information on the cost.That analysis appears below.

.

Citizens have an uphill challenge with such projects because of the Special Interests who benefit from such a large project.However, taxpayers are left with the debt and the “legacy”!

.

Liberal population projections to justify need

.

Oconee Water Needs Spirals Upward

.

Project Cost Estimates

.

Partnership Interests – Oconee Definite Minority Partner

.

Project Schedule

.

WHAT WILL HARD LABOR CREEK RESERVOIR COST?

 

Walton Tribune 7.26.06   “…..the county will reveal a less-costly version of the project during a public meeting Thursday.

“…. County Commission Chairman Kevin Little said the $42 million price tag of the reservoir, designed to provide water to the county in the future, has been scaled down $00 million after Walton lost Oconee County and the City of Winder as partners in the project…..”

--------------------------------------

Based on Information in the Walton Tribune and discussed at the 7.27.06 Walton Co Board of Commissioners meeting:

Bonds will be issued to pay for the Reservoir:

2006                                $ 88 million

2009                            $ 141 million

2014                            $ 14 million

Total              $ 243 million

This cost is for 9 million gallons per day (MGD) of water production

For simplicity, we used 10 MGD.This will make the cost less than actual costs. FACTS:

Ø       The more water produced, the less the cost per 1000 gallons

Ø       Water is bought and sold in 1000 gallon increments (per 1000 gallons)

Ø       Water users rarely pay for the cost of the reservoir.The high price would make the cost of the water prohibitive to the users.

Ø       Property owners/taxpayers usually pay for the cost of the reservoir through bond payments.

Ø      “Revenue” bonds are misnomers.Revenue bonds are borrowed money.The debt is usually paid back by property taxes levied as well as revenue generated from the users buying the water.

DEBT COST:

Example:$ 243,000,000 cost of reservoir.

20 year bonds at 5% interest.

Total interest paid over 20 years = $ 141,889,305

This burden will be shared by all Walton County property owners, if they use the water or not, as well as water users at a rate of $ 52,724 PER DAY FOR 20 YEARS.

(see amortization schedule)

COST OF WATER:

Water is sold in 1000 gallon units.

If Reservoir produces 10MGD, the cost is figured as follows:

$ 384,889,305Total cost including interest

=$ 38,488,930 per MGD for 20 years

=$ 1,924,447 per MGD per year

=$ 5,272.46 per MGD per day

=$ 5.272 per 1000 gallons per day

FINANCIAL PROJECTIONS BY ENGINEERING FIRM

(Precision Planning, Inc.)

CHARGES (what the Authority charges for water):

Ø      Charges for water in 2004 were $ 4.65 /1000 gal (Kg)

Ø      Charges will increase to $ 4.93 Kg in 2006

Ø      Average gallons per day water demand for 2007 projected to be 5,457,000

Ø      Average rate (fee) charged $.08 Kg in 2007

.

COSTS (what the Authority pays for water):

Ø      Average price per 1000 gallons in 2004 = $ 1.11

Ø      Average price per 1000 gallons in 2013 = $ 1.45

Ø      In 2013 Reservoir will come on line and costs are projected to

decrease to $ .75 Kg

.

CONCLUSIONS BASED ON ENGINEERING ESTIMATES:

.

The engineering report leads us to estimate the cost is approximately $.20 Kg now and the average charge is $ 5.08 Kg now.

.

This means that WCWSA charges 4 times cost to the customer.This is called

their profit margin.

If the profit margin stays constant at 4x cost, and the cost of the reservoir alone is

$ 5.27 Kg, customers would have to be charged $ 21.08 Kg.

.

If the average use were 2000 gallons per person, a household of 3 would be charged

approximately $ 126 per month for 6000 gallons of water used.($ 21.08 x 6 )

.

OTHER COSTS BESIDES THE RESERVOIR:

Reservoir has been figured at $ 5.27 Kg

Filtration Plant and Pump Station

            Estimates show the “plant” would cost $ 2 million per MGD.

           

Using 10MGD, the plant would cost another $ 20 million

            $ 2 million per MGD = $ 2.00 per 1000 gallons (Kg)

Cost of water lines

            Depends on distance and size of line.We can not determine cost.Grants

            and subsidies are usually used to pay for water lines.

Cost of Maintenance and Operation of Plant and lines

            We can not determine this cost.

.

ESTIMATED COST PER MONTH TO CUSTOMER:

.

Customer would be charged at least $ 7.27 Kg for water

plus cost of lines, maintenance, and operation.This figure would be multiplied

by the profit margin—estimated to be 4x cost.

.

We estimate this to $ 8.00 Kg x 4 = $ 32 Kg x 6 (6000 gallons used per month) =

$ 192 per month for water.

.

This high fee is why property owners, through property taxes, pay for much of the actual costs of reservoirs.The average water user could not afford such a high monthly bill.

WHO MAKES MONEY FROM THE RESERVOIR PROJECT?

From Citigroup Proposed Bond Issuance information:

.

Cost of issuing bonds:

2006                                $ 1,041,120

      2009                $  1,798,690

      2014                $   212,026

Total               $ 3,051,835

Attorneys and financial institutions charge a percentage of bonds (debt) issued.
Who will these fees be paid to and how much to each party involved?
How much will the engineers charge for services on this project?

==============================================================

FINANCIAL PROJECTIONS

by Precision Planning, Inc. July 2006

Projected

ACTUAL

Projected

2005

2006

2006

2009

2014

Revenues

5,000,000

9,600,000

6,800,000

15,200,000

23,000,000

 

Expenses

5,100,000

7,200,000

5,000,000

14,100,000

22,800,000

 

Profit/(Loss)

(100,000)

2,400,000

1,800,000

1,100,000

200,000

Revenue Projections for 2006 are 30% less than actual.(see WCWSA financials)

Revenues are projected to increase 92% from 2005 to 2006.

                                                        58% from 2006 to 2009.

                                                        51% from 2009 to 2014.

.

How much of these revenues are borrowed money?

Expenses are projected to increase 41% from 2005 to 2006.

                                                        96% from 2006 to 2009.

                                                        62% from 2009 to 2014.

.

These expenses include repayment of borrowed money (bond debt incurred).

Expense projections are outpacing revenue projections, yet the cost of water is projected to be half (½) of what it is now.

WHAT WILL HARD LABOR CREEK RESERVOIR COST?

SUMMARY:

.

Reservoirs are normally financed and paid for by bond issues and are not “figured in” with the cost of the finished water production, but are handled with a separate financial agreement.

.

The cost of the finished water production does not include the cost of the reservoir. In the example, to pay back a $ 243 million dollar reservoir in 20 years, with 5% interest on the debt, at the filtration rate of 10 MGD, would require a payment of $ 52,724.00 daily for 20 years.

.

This would add $ 5.27 per 1,000 gallons to the customer’s water bill making the cost of the delivered finished water $ 5.27 (reservoir) plus $ 2.00 (delivered, finished water) equaling $ 7.27 per 1,000 gallons.

.

In conclusion, as the production (usage) goes down the cost of the finished water goes up, but the daily reservoir debt of $ 52,724.00 remains constant.These cost figures do not include the margin that the distributor/water authority/county would add for their purposes. These margins have been estimated to be four (4) times cost based on figures given by Precision Planning, Inc.

.

The “profit margin” added by the distributor could raise the cost of the reservoir water to near $ 9.00 per 1,000 gallons to the consumer ($ 7.27 x 4). A consumer currently paying $0.00 per month for water would then be paying $ 180.00 per month for water. This equates to an unreasonable amount and many on fixed incomes could not afford to pay their water bills.

This is the reason that the Georgia General Assembly got out of the reservoir business. You cannot pay back the investment necessary to build a reservoir with water revenues alone.

           


2-6-07 Oconee Citizens urge BOC to slow down on $ 100 Million + Water Commitment

.

The Athens Banner-Herald

http://www.onlineathens.com/stories/020607/news_20070206043.shtml

.

February 6, 2007

.

Water decision on Oconee agenda

.

By Lee Shearer

.

Some people in Oconee County want the county's Board of Commissioners to slow down as they consider whether to commit to a water reservoir that will cost more than $ 100 million.

The reservoir, or actually a choice between two reservoir projects that would cost Oconee County more than $00 million, is on the commission's agenda for the board's regular monthly meeting Thursday.

Paying for a reservoir not only would saddle the county with debt that would take decades to pay off, but would force county officials to speed up population growth in order to keep up debt payments, according to some citizens, including Charles Baugh, president of a civic group called Citizens for Oconee's Future.

The current county commission usually approaches issues "with more thoughtful discussion" than past county commissions, Baugh said. But there hasn't been enough public discussion of the water reservoir issue and its implications for the county's future, he said.

Ask anyone in Oconee County what they treasure most about the county, and they say it's the rural character and small-town atmosphere, he said.

"But what this board is doing will completely change all that, and doing it in such a way that you can't control the development," he said.

Baugh is skeptical that Oconee County's population will grow as fast as consultants estimate.

But debt payments will pressure the county government to allow more development to generate more water sales, he said.

Oconee leaders studied for years how to increase the county's water supply, but have narrowed their choices to either join with Walton County in a $ 353 million reservoir and water treatment plant on Hard Labor Creek or build the county's own reservoir and treatment plant near the Oconee River on Barnett Shoals Road.

Either would cost Oconee Countians more than $ 100 million. That's about six times the county's general budget of $ 17 million.

Consultants also considered other water supply options, such as piping water north from Lake Oconee, but said those alternatives are not viable.

Walton officials have said they will go ahead with the Hard Labor Creek project with or without Oconee's participation and are poised to issue bonds in March to finance construction.

Commission Chairman Melvin Davis said in mid-January that he hoped the commission could decide within a month or two whether to partner with Walton County.

But some, like retired history teacher Harold Liberman, wish county leaders would wait to commit to either reservoir project and take a harder look at some of the previously rejected options.

County commissioners should reconsider a proposal to enlarge an existing reservoir and dam on the Apalachee River, said Liberman, who lives near the Apalachee.

If commissioners overestimate the county's future population growth and plan for too large a water supply, that will leave the county with debt.

But if they don't plan for enough water, that will create another set of problems, said Mary Mellein, president of a decade-old group called Oconee Citizens for Responsible Growth.

Either reservoir project would be built in two phases, which means the commission would not have to come up with the entire $00 million up front.

But either one also would commit the county to a future direction that would require faster growth, Baugh said.


Quick-Search: