Flowery Branch is looking at possibly hiking water and sewer rates as high as 16.5% per year to pay for the city’s sewer plant expansion.
The city is looking at different options to address a shortfall in funding for the project, budgeted at $23 million but with bids coming in between $52 million and $57 million.
The financing options, which will be discussed Thursday, Oct. 6, by Flowery Branch City Council, are requesting another $30 million in loans from the Georgia Environmental Finance Authority or the city selling the same amount in revenue bonds through the Gainesville and Hall County Development Authority.
Payback through the finance authority would result in the 16.5% increases while the revenue bonds route would mean annual rate increases of 8.5%, according to city documents.
Officials with Stifel, an investment banking firm, spoke to the Flowery Branch City Council in September about the options.
Through the state source, repayment of loans would come strictly from the city’s water/sewer system, meaning ratepayers and users.
“A bond scenario would shift (financing) away from a lien on your water and sewer revenues,” said Trey Monroe of Stifel. “You don’t necessarily have to come up with (repayments) from water and sewer.”
Other sources can be used, such as special purpose local option sales taxes or the general operating budget, and bonds can be refinanced as interest rates drop, officials said.
A third option would be to “rebid the project with a different scope,” city documents state.
In any case, putting off a decision could be costly, with inflation and rising interest rates, Monroe said.
“Unfortunately, it doesn’t look like things are going to get cheaper anytime soon,” he said.
The sewer plant was designed to handle 400,000 gallons per day, but with growth in population and commercial uses, the city is planning an expansion to 2.2 million gallons, according to the city.
Sewer plant expansion
What: Financial options being considered by Flowery Branch City Council
When: 6 p.m. Thursday, Oct. 6
Where: Flowery Branch City Hall, 5410 W. Pine St.