HOSCHTON — The Hoschton City Council held a called meeting Tuesday to discuss ways to deal with the projected $77,000 in debt the city has incurred.
Councilman Tom Walden said most of the debt, which is in unpaid bills, is due to costs associated with ongoing litigation concerning the city’s wastewater treatment plant.
Some of the debt also comes from the general fund, where Walden said the city is not collecting enough revenue to offset its expenses. Right now, he said Hoschton is bringing in between $6,000 and $8,000 less per month than what it is spending.
Within the next month or so, Walden said the unpaid bills must be paid, but he does not know how much of the $77,000 will be covered within that time period by incoming revenue.
Councilman Richard Green said he thought a substantial portion of the debt would be covered, however.
Walden, chairman of the fiscal resources committee, said he called Tuesday’s meeting to discuss enacting measures that will help prevent future deviation between city revenues and expenses.
"We’ve kind of let it get out of hand as far as what we’ve done and how we’ve gotten here," he said. "Now it’s time to bite the bullet and figure out what we’re going to do as far as getting it back."
One major discussion point concerned the city’s wastewater treatment plant.
Hoschton has two loans, totaling about $6.1 million, with the Georgia Environmental Facilities Authority, and both concern its wastewater treatment plant. The city has also requested an additional $300,000 to repair the plant’s phase separator. If this is approved, the city will have $6.4 million in GEFA loans.
Walden is proposing the city repay these loans by issuing general obligation bonds. He plans to ask council at its Sept. 14 meeting to approve holding a referendum on the issue during the Nov. 3 city election.
Since the city does not have bond issuing authority, it must get a letter of credit from a local bank or hold a referendum to issue the bonds.
If approved, Hoschton will request a bonding amount of between $6.5 and $7 million to cover the debt, attorneys fees and interest, Walden said.
If it doesn’t receive the bonds, Walden said the city would then have to enact either a property tax or water and sewer rate increase.
Hoschton resident Erma Denney suggested that the city should turn over its wastewater treatment plant to Jackson County. If this were done, she said the county would also repay the debt.
Green, chairman of the water, waste and environmental services committee, said the council had previously looked at the option and would revisit it again.
Councilman Jim Jester suggested another option that would include the city allowing other entities to lease or purchase a portion of the plant’s capacity.
When it is completed, he said, the plant will be able to pump 500,000 gallons per day compared to the 50,000 gallons per day it now pumps. This, he said, leaves a substantial amount of capacity that Hoschton could lease.
Also, the city may enact some personnel cuts to help reduce costs.
Following an executive session, Green announced the council would be discussing possible personnel cutbacks with employees and the issue will then be discussed at the council’s Sept. 10 work session.
The council met in a second executive session to discuss litigation, but reached no conclusions.
Other cost-cutting methods discussed at the meeting included selling the vacant city-owned property adjacent to city hall, which Jester estimated was worth between $75,000 and $100,000; moving the police department back to city hall; reducing the amount of water the city purchases from Jackson County and relying more on city well water to meet residents’ needs; readjusting the rates for renting the Hoschton Depot; and selling city surplus inventory and vehicles.
The council plans to discuss the 2010 proposed budget at its Sept. 10 work session and Sept. 14 meeting. Both meetings will be at 7 p.m. at City Hall.