Charles Baugh's analysis of Water Contract with Walton County
Go to the meeting Tuesday night at the Oconee County Board of Commissioners chamber at the Oconee County Courthouse on Main Street in Watkinsville and put in your two cents worth on this multi-million dollar mortgage of our water drinking future.
Citizens for Oconee's Future, Inc.
P. O. Box 1301
Watkinsville, GA 30677
Citizens
Following is my review notes on the latest version of the intergovernmental contract the Oconee County Board of Commissioners is, I am afraid, about to enter into with Walton County. The draft is posted to the Oconee County web site. I encourage all to read the contract and would appreciate any feedback, particularly if you do not agree with my assessment of the contract. I know that many did read the first version which was approved by the Walton County Commission and I heard from some of you. The contract is on the BOC agenda for discussion at the Tuesday 8/28 meeting. The Board may take citizen comments on the contract. It would be good if citizens came to the meeting and made comments. Alternatively it would help if you would call or e mail the Board members with your comments.
If the first version of this contract could be described as a wolf, the current draft could be described as a wolf in sheep's clothing. As I have written previously, I have reviewed many contracts as part of my 30 year career in a financial field and I have never read a contract that is as one sided as this one. My comments follow with the notations for each comment being the article or section number of the contract which is being commented on.
1. Art. 3 describes a Management Board which replaces the Advisory Board. This board would have 7 members, 4 appointed by Walton County and 3 by Oconee County. The Walton members would be 3 county commissioners and the Chair of the Walton County Water and Sewer Authority. The Oconee County members would be 3 county commissioners or other County employees. A quorum would require 4 members. Think about it, no matter what authority is granted the Board all business can still be conducted by the 4 Walton County members. The three Oconee members make no difference.
2. The agreement term is 50 years. (S 101) This Board of Commissioners will obligate the next 12 Boards to pay in unlimited amounts.
3. Walton County Water and Sewer Authority holds title to the project. S 201 (a) With cost overruns and interest we will send over $100,000,000 to Walton County and will not own anything but an undivided interest in water amounting to a little over 3M gallons per day.
4. S 202 (a) specifically requires the levy of an annual ad valorem tax (property tax) "unlimited as to amount". Note all amounts are unlimited as the contract does not place an upper limit on what is to be spent, only requires that whatever is spent be paid back with no recourse.
5. S 210 requires that obligations under the agreement are general obligations with a pledge of full faith and credit of the participant. Read that, must be paid with taxes if enough water cannot be sold to pay the bonds.
6. S 702 provides for direct levy of tax on all taxable property in the county.
7. Article 6 provides for issuance of bonds in unlimited amounts.
8. S 202 (a) provides that Walton Water and Sewer Authority makes all determinations of bond series, terms, and all other details for issuance of bonds.
9. S 205(b)(1)(B) makes Oconee responsible for paying off the entire amount of bonds issued if other participants default. S 206 refers to the fact that other participants pay deficient amounts for bond payments for defaulting participants.
10. S 102 requires Oconee to pay a share of the costs already incurred by Walton County but does not state what costs are to be paid. This payment will come from the proceeds of the bond issue and will result in payment of interest over the life of the bonds.
11. S 208 requires participants to make payments with no recourse for nonperformance by any participant. No matter how poorly run or how poorly managed the county just keeps paying with no recourse.
12. S 704 provides that default by the Operator shall not relieve any participant of liability for payment of amounts specified by the contract. The county must pay even if no water is ever produced.
13. S 706 provides for arbitration of disputes except for disputed payments "...the obligation for which shall be absolute and unconditional...".
14. S 801 requires participants to pay for the Operators liability if it is not covered by insurance. You can be sure the Operator will be the Walton County Water and Sewer Authority.
15. S 408 requires the cost of stream bank mitigation to be paid by the Authority and Oconee. No requirement for Walton to pay.
16. There are several references in the draft to the Management Board as if that makes a difference. Considering the make up of the Board and the quorum requirement, when reading the contract just substitute Walton County wherever Management Board is used.
I hope you find this analysis useful. Please e mail me if you have questions or comments. I know that asking you to read a 50 page contract is a bit much but I hope this summary will convince you that it would be a serious mistake for the County to sign it. It could be a financial drag on the county for half a century or would require the county to promote development even more than it has in the last 8 years just to pay the bonds.
Charles Baugh
Citizens for Oconee's Future, Inc.
P. O. Box 1301
Watkinsville, GA 30677
Citizens
Following is my review notes on the latest version of the intergovernmental contract the Oconee County Board of Commissioners is, I am afraid, about to enter into with Walton County. The draft is posted to the Oconee County web site. I encourage all to read the contract and would appreciate any feedback, particularly if you do not agree with my assessment of the contract. I know that many did read the first version which was approved by the Walton County Commission and I heard from some of you. The contract is on the BOC agenda for discussion at the Tuesday 8/28 meeting. The Board may take citizen comments on the contract. It would be good if citizens came to the meeting and made comments. Alternatively it would help if you would call or e mail the Board members with your comments.
If the first version of this contract could be described as a wolf, the current draft could be described as a wolf in sheep's clothing. As I have written previously, I have reviewed many contracts as part of my 30 year career in a financial field and I have never read a contract that is as one sided as this one. My comments follow with the notations for each comment being the article or section number of the contract which is being commented on.
1. Art. 3 describes a Management Board which replaces the Advisory Board. This board would have 7 members, 4 appointed by Walton County and 3 by Oconee County. The Walton members would be 3 county commissioners and the Chair of the Walton County Water and Sewer Authority. The Oconee County members would be 3 county commissioners or other County employees. A quorum would require 4 members. Think about it, no matter what authority is granted the Board all business can still be conducted by the 4 Walton County members. The three Oconee members make no difference.
2. The agreement term is 50 years. (S 101) This Board of Commissioners will obligate the next 12 Boards to pay in unlimited amounts.
3. Walton County Water and Sewer Authority holds title to the project. S 201 (a) With cost overruns and interest we will send over $100,000,000 to Walton County and will not own anything but an undivided interest in water amounting to a little over 3M gallons per day.
4. S 202 (a) specifically requires the levy of an annual ad valorem tax (property tax) "unlimited as to amount". Note all amounts are unlimited as the contract does not place an upper limit on what is to be spent, only requires that whatever is spent be paid back with no recourse.
5. S 210 requires that obligations under the agreement are general obligations with a pledge of full faith and credit of the participant. Read that, must be paid with taxes if enough water cannot be sold to pay the bonds.
6. S 702 provides for direct levy of tax on all taxable property in the county.
7. Article 6 provides for issuance of bonds in unlimited amounts.
8. S 202 (a) provides that Walton Water and Sewer Authority makes all determinations of bond series, terms, and all other details for issuance of bonds.
9. S 205(b)(1)(B) makes Oconee responsible for paying off the entire amount of bonds issued if other participants default. S 206 refers to the fact that other participants pay deficient amounts for bond payments for defaulting participants.
10. S 102 requires Oconee to pay a share of the costs already incurred by Walton County but does not state what costs are to be paid. This payment will come from the proceeds of the bond issue and will result in payment of interest over the life of the bonds.
11. S 208 requires participants to make payments with no recourse for nonperformance by any participant. No matter how poorly run or how poorly managed the county just keeps paying with no recourse.
12. S 704 provides that default by the Operator shall not relieve any participant of liability for payment of amounts specified by the contract. The county must pay even if no water is ever produced.
13. S 706 provides for arbitration of disputes except for disputed payments "...the obligation for which shall be absolute and unconditional...".
14. S 801 requires participants to pay for the Operators liability if it is not covered by insurance. You can be sure the Operator will be the Walton County Water and Sewer Authority.
15. S 408 requires the cost of stream bank mitigation to be paid by the Authority and Oconee. No requirement for Walton to pay.
16. There are several references in the draft to the Management Board as if that makes a difference. Considering the make up of the Board and the quorum requirement, when reading the contract just substitute Walton County wherever Management Board is used.
I hope you find this analysis useful. Please e mail me if you have questions or comments. I know that asking you to read a 50 page contract is a bit much but I hope this summary will convince you that it would be a serious mistake for the County to sign it. It could be a financial drag on the county for half a century or would require the county to promote development even more than it has in the last 8 years just to pay the bonds.
Charles Baugh
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