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Issue Brief: Glades, Hard Labor, Dawson

October 22, 2010

How will Hall County pay for the $300 million Glades Farm and Cedar Creek pump-storage regional reservoir projects?  Water utility revenue bonds.  And how will Hall County pay off those bonds without raising taxes?  Hall County will make money on retail water sales to the City of Gainesville, Forsyth County, and perhaps White County.  Hall County will also generate revenue from “tap fees” from new water connections.  Hall County’s Tom Oliver, according to a Gainesville Times report, has urged residents not to worry about the project’s costs or future water rates.  At a minimum, current Hall County and City of Gainesville customers would see an increase of “about $5 a month” to begin paying off Glades.  You can find that number in the Business Plan as well as a map and a slideshow presentation on the Hall County website.

The Gamble: If Hall County residents want to recoup Glades’ project costs, a few other things must happen.  First, Georgia (and Gainesville) would have to lose their appeal of the Magnuson decision.  Second, Congress would not reauthorize Lake Lanier for municipal water supply – thus requiring that nearly all current Lake Lanier users find alternative water supplies.  (Plenty of politicos and lawyers insist the Magnuson decision will never result in a full shut-down of Lake Lanier for water supply – so why the current hard-sell on Glades?)  Third, Georgia would have to iron out water-allocation negotiations with Florida and Alabama to end the tri-state water war because Alabama has said it will oppose any new ACF reservoirs until the water wars are resolved.  Most important and finally, the economy would need to rebound and make the ‘burbs bloom again to generate new customers.  Combined, perhaps, these four factors would produce enough customers who could actually pay off Glades’ water utility revenue bonds.

A word of caution: Those following Glades Reservoir should also take note of the financial troubles associated with the proposed Hard Labor Creek Regional Reservoir project.  Hard Labor may one day fill with water to serve Oconee and Walton Counties.  Oconee and Walton County issued bonds to pay for the initial land acquisition and planning with the goal of using new water customers to pay the bills.  But the economy has tanked; there are no new residents, no new meters (“tap fees”), and no new water customers.  Still the banker cometh.  The solution, according to this Athens Banner Herald story: In 2009, the Oconee County Utilities Department raised water rates 15% – the first rate increase in 10 years – for all residential customers.  Then in early 2010, the Department requested another 15% rate increase.  The Walton County Tribune has reported more of the same: residential customers there saw a 20% increase in their water bills.  Lee Becker gives us a fantastic run-down on the Hard Labor financial boondoggle here.  As of July 2010, all reservoir construction was on hold.  Land acquisition and environmental mitigation projects will continue, but the project is essentially frozen in “shovel-ready” mode.  It is also worth noting that the near simultaneous body-blows of drought (2007-09) and the Magnuson decision led to speculation that Gwinnett County or other metro-Atlanta communities would breathe new financial life into Hard Labor.  Those sugar daddies do not appear to have materialized.  Ratepayers in Hall County and the City of Gainesville had better hope that Forsyth’s expressed interest in Glades will turn into a “financial commitment” before the Glades project moves forward.

In the weeds: Glades consultants have revealed some information about the proposed Dawson Forest reservoir.  “In order for” the Dawson project “to fly,” according to Harold Reheis, “a lot of things…have to happen.”  Reheis, the former Georgia Environmental Protection Division director and now a VP with Joe Tanner & Associates, is apparently consulting on both the Glades and Dawson projects, according to the above mentioned Gainesville Times article.  Joe Tanner, CEO of the eponymous consulting outfit and the former Department of Natural Resources commissioner, said no entity is currently seeking permits for Dawson, and Glades is five to six years ahead of Dawson, according to this article.

-Chris Manganiello

For all Glades Reservoir related posts and updates, start here:

Issue Brief: Glades Reservoir & Hall County Water War

8 Comments leave one →
  1. October 23, 2010 1:05 pm

    For background on the Hard Labor Creek project, which is now on hold, see my report on my blog, Oconee County Observations, of July 28, 2010:

    The Banner-Herald story you cite is wrong. Oconee County has increased water rates three times since 2008. Here is an analysis, again from my blog, of the most recent rate increase and details on the earlier ones:

    One of the problems is that the media have done a very poor job of covering this issue. The assumptions behind Hard Labor Creek Reservoir were wrong from the beginning. I challenged the data being used, as did others, but the local newspapers never reported those challenges. Now it is clear that the figures the county used were wrong, and the citizens are paying for the error.

    Lee Becker

  2. garivernetwork permalink*
    October 26, 2010 8:17 am

    Lee – Thanks for the comment. You provide the most comprehensive coverage of the issue.

    I really encourage readers and journalists to visit Lee’s blog for full coverage on the Hard Labor financial boondoggle. Folks like Lee are incredibly important: they help cover the ins-and-outs of seemingly mundane community politics that shape local economies and environments.

    We agree on the bottom-line: The Hard Labor example should serve as a warning for Glades and other reservoirs for a number of reasons. How will Georgians pay for these water supply projects, and why might some schemes fall dramatically short?

    On the rate increases in Oconee County. Yes, there were three rate increases according to your reporting. The way I understood the combined coverage was as follows: Two treated water and sewage base rate increases (in 2009 and 2010), plus a water conservation pricing scheme only for customers who used in excess of 5,000 gallons per month (2008). I was more focused on the latter two increases that cut across the board while the 2008 increase struck me as a drought response measure and not inherently bad public policy for big water users.



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