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SPLOST could help pay off county's sewer loans

Ballot doesn’t list need to settle up on old projects

POSTED: March 8, 2009 12:02 a.m.

It is often said that sewer is the engine for economic development. But sewer doesn't come cheap.

More than $53 million is allocated in SPLOST VI for sewer projects. Some of the funds will go toward new construction, some toward paying off part of the $21.2 million debt Hall County has incurred establishing sewer services.

But why doesn't it say so on the ballot?

Hall County Attorney Bill Blalock said it is not necessary to list past sewer expenses on the ballot because it isn't really debt.
According to state law, Hall County can use SPLOST funds to repay Georgia Environmental Facilities Authority loans, which were used for to purchase sewer facilities.

Money borrowed on a GEFA loan is differentiated from debt by an amendment to the state constitution, Blalock said.

"A GEFA loan is not a general obligation debt," Blalock said. "The GEFA program was set up as a constitutional amendment to provide a way and an access for cities and counties to borrow money for infrastructure without violating the debt limitations which are put in and found in the constitution."

"And those limitations are, No. 1, you can't enter into any long term debt without a referendum approval, a vote, in other words, by the voters. You can't exceed a certain percentage of your annual budget of debt, and there's some other things."

Though it is still money owed, by law it is not considered debt, Blalock said.

"Now you're saying isn't a rose a rose? It still smells like a rose, yes, you're still borrowing money, you're just doing it another way," Blalock said.

Assistant Hall County Administrator Phil Sutton said GEFA loans are a lot like a lease-purchase contract, so each payment goes toward owning the facility.

"We're basically buying it from GEFA over a period of time," Sutton said. "So once SPLOST is approved, we could pay the interest and principal payments as they come up."

The Spout Springs Water Reclamation Center is paid for using installment payments which, like GEFA loans, do not fall under the category of general obligation debt.

Sutton said money from SPLOST VI could go toward paying off loans if the board of commissioners chooses to do so.

Hall County Financial Director Michaela Thompson said the county's sewer services are so new that many decisions haven't been made about how to pay for them.

The county purchased the Spout Springs Sewage Treatment Facility from John Wieland Homes, a private developer, in December 2007.

"We're in the build-up phase of the big portion of that GEFA loan, so we're not even in the payment phase of it yet, because we're still in progress of building it," Thompson said.

Ideally, connection fees would be used to pay off loans and user fees would take care of operation costs. But there are few customers, and the economic downturn has slowed new businesses from connecting to the system.

"We don't have a big user base," Thompson said. "This model may not even work in full reality because what's happened is this financial crisis has come in and all these things have happened. We started committing to the sewer in 2005. ... The growth isn't where it was projected."

Thompson said the county will likely conduct a new study to better understand the changing factors in the future.

"We are in the embryo phase. We are just a startup sewer," Thompson said. "It is increasingly changing because of what's happening in our economic times."



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