First $43 million, then $48, now $66 million? When will we say "ENOUGH!!??!!"
Citizens for Oconee's Future, Inc.
P. O. Box 1301
Watkinsville, GA 30677
Just when you think you have heard all the bad news about the Walton County reservoir, comes this. Some will remember that Oconee's cost share for the first phase of the project was originally estimated to be $43,000,000. Sometime later the number being used was $48,000,000. The number used during the very short discussion of the bond issue last night was $49,800,000. Not only that, the Citigroup bond salesman who did part of the presentation recommended the Board approve a bond issue of $66,000,000 at up to 15% interest which the BOC approved with little discussion. The vote was 3-1 with Hale, Luke and Norris voting for the issue. (Hale voted against the original motion, go figure) It now appears that Oconee will have to validate the bonds and the stated reason for the $66,000,000 issue at up to 15% interest was to avoid going back to court to validate each issue of bonds plus a significant amount of the issue will be for capitalized interest. That means the county will borrow funds to pay interest on the bonds until enough development can be driven into the county to sell enough water to make the payments. That way the current Board avoids writing checks to pay the interest and thus avoids the consequence of this awful decision. By validating $66,000,000 the opportunity for citizens to intervene in the likely event of escalating costs is eliminated. By the time the project costs escalate to $66,000,000 at which point another bond validation would be necessary so much would have been spent, the county would have no other choice but to keep spending and just validate another bond issue. With capitalized interest and the inevitable cost overruns this bond issue is very likely to be insufficient to cover the first phase. Remember, this phase will produce only 3.5 million gallons per day 6 or 7 years from now.
During the short discussion the Citigroup bond salesman stated the 15% maximum interest rate is just in case interest rates rise in the future and future boards might want to issue variable rate bonds. He also stated they had recently sold a bond issue at 4.4% interest. Anyone who would like to see what that translates into in total payback over 30 years (although the contract allows bonds to be issued for 50 years) should pull up an interest calculation program on any of the mortgage company Internet sites. I used Bankrate.com and efunda.com. The total payback on $66,000,000 at 4.4% for 30 years is $118,980,792.26. The monthly payment will be $303,520.20 once all the bonds are issued. The water from this reservoir will be used by future residents, the thousands that Mr. Davis expects to lure into the county. A significant portion of the cost will be paid by current residents, either through utility bills or through taxes.
The bond validation process requires the county to file in Superior Court to have a judge review the proposal and issue an opinion validating the issuance of the bonds. That will be the last chance for Oconee county residents to stop this project. A notice will appear in the legal section of the Oconee Enterprise announcing the validation hearing. At that time citizens of the county can intervene by filing an objection with the court. Citizens who wish to intervene should be alert for the legal advertisement. A citizen from another county filed an objection to the Walton County proposal and it is pending. That has temporary delayed the Walton County bond issue.
In summary, your Board of Commissioners voted to mortgage the county in excess of $100M for the promise of 3.5mgd of water sometime in the future (at least 6 or 7 years.) Don't confuse this project with the current drought. If this project was in place today with the thousands of additional water users that go with it, the reservoir would be in the same poor condition as the Bear Creek reservoir. We have simply been mortgaged to pay for more roof tops and we have less opportunity to manage that growth effectively because we must meet the mortgage payments by selling water.
Charles Baugh
P. O. Box 1301
Watkinsville, GA 30677
Just when you think you have heard all the bad news about the Walton County reservoir, comes this. Some will remember that Oconee's cost share for the first phase of the project was originally estimated to be $43,000,000. Sometime later the number being used was $48,000,000. The number used during the very short discussion of the bond issue last night was $49,800,000. Not only that, the Citigroup bond salesman who did part of the presentation recommended the Board approve a bond issue of $66,000,000 at up to 15% interest which the BOC approved with little discussion. The vote was 3-1 with Hale, Luke and Norris voting for the issue. (Hale voted against the original motion, go figure) It now appears that Oconee will have to validate the bonds and the stated reason for the $66,000,000 issue at up to 15% interest was to avoid going back to court to validate each issue of bonds plus a significant amount of the issue will be for capitalized interest. That means the county will borrow funds to pay interest on the bonds until enough development can be driven into the county to sell enough water to make the payments. That way the current Board avoids writing checks to pay the interest and thus avoids the consequence of this awful decision. By validating $66,000,000 the opportunity for citizens to intervene in the likely event of escalating costs is eliminated. By the time the project costs escalate to $66,000,000 at which point another bond validation would be necessary so much would have been spent, the county would have no other choice but to keep spending and just validate another bond issue. With capitalized interest and the inevitable cost overruns this bond issue is very likely to be insufficient to cover the first phase. Remember, this phase will produce only 3.5 million gallons per day 6 or 7 years from now.
During the short discussion the Citigroup bond salesman stated the 15% maximum interest rate is just in case interest rates rise in the future and future boards might want to issue variable rate bonds. He also stated they had recently sold a bond issue at 4.4% interest. Anyone who would like to see what that translates into in total payback over 30 years (although the contract allows bonds to be issued for 50 years) should pull up an interest calculation program on any of the mortgage company Internet sites. I used Bankrate.com and efunda.com. The total payback on $66,000,000 at 4.4% for 30 years is $118,980,792.26. The monthly payment will be $303,520.20 once all the bonds are issued. The water from this reservoir will be used by future residents, the thousands that Mr. Davis expects to lure into the county. A significant portion of the cost will be paid by current residents, either through utility bills or through taxes.
The bond validation process requires the county to file in Superior Court to have a judge review the proposal and issue an opinion validating the issuance of the bonds. That will be the last chance for Oconee county residents to stop this project. A notice will appear in the legal section of the Oconee Enterprise announcing the validation hearing. At that time citizens of the county can intervene by filing an objection with the court. Citizens who wish to intervene should be alert for the legal advertisement. A citizen from another county filed an objection to the Walton County proposal and it is pending. That has temporary delayed the Walton County bond issue.
In summary, your Board of Commissioners voted to mortgage the county in excess of $100M for the promise of 3.5mgd of water sometime in the future (at least 6 or 7 years.) Don't confuse this project with the current drought. If this project was in place today with the thousands of additional water users that go with it, the reservoir would be in the same poor condition as the Bear Creek reservoir. We have simply been mortgaged to pay for more roof tops and we have less opportunity to manage that growth effectively because we must meet the mortgage payments by selling water.
Charles Baugh
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