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Three Rounds Down: GWSP Roundup

August 29, 2014

On August 26, 2014, the Georgia Environmental Finance Authority announced another round of awards from the Governor’s Water Supply Program (GWSP): $26 million in low-interest loans for three expensive reservoirs including at least one that self-identified as ‘un-needed.’  While the GWSP continues to shovel hundreds of millions of dollars into reservoir projects, the state minimizes direct investment in the most cost effective and timely solution: water conservation and efficiency.  With all the money heaped on reservoirs, there is also another modest option on the table worth more study that the Governor’s office has avoided – raising Lake Lanier’s level by two-feet.

The GWSP: In January 2011, Governor Nathan Deal issued an executive order tasking the Georgia Environmental Finance Authority (GEFA) with the responsibility to develop the Governor’s Water Supply Program (GWSP).  The GWSP was launched in November 2011 with the intention to disburse $300 million over four years in the form of low interest loans and state direct investment (SDI) for water supply projects to provide “an adequate supply of clean and affordable water” to communities in need of water security. [PDF page 1]  GEFA was to administer the loans, and the Department of Community Affairs (DCA) was to budget for the SDI.  In 2011 and 2012, and in consultation with Georgia State Financing and Investment Commission (GSFIC), all the parties agreed that SDI had to result in state ownership of a physical “definable asset with an appropriate fair market value and useful life,” [25] like land, a well, a water tower, or other real property.  To date, the GWSP has committed over $250 million in loans and SDI to various projects.

Given the history and evolution of the GWSP detailed below, there is good reason to consider state investment in a long-talked about study to evaluate the prospect of raising Lake Lanier by two feet to add more than 25 billion gallons of supply to an existing reservoir.  Combined with investment in aggressive water efficiency and conservation, it’s possible a deeper Lake Lanier could provide metro Atlanta with a significant layer of water security and meet other downstream needs.

Round I Update: In 2012, Round I of the GWSP simultaneously awarded $99,550,000 in loans and SDI.  One awardee included an aquifer storage and recovery (ASR) project with a lot of baggage.  Despite scoring a “zero” for need, GEFA invested $5 million in an ASR well located on the El Model Wildlife Management Area (in Baker County and Flint River basin).  Now, GEFA and consultant CH2M Hill will begin drilling monitoring wells in order to extract core samples and assess geological and hydrological conditions in the Claiborne and Clayton aquifers.  The core sampling analysis and results should be available in spring 2015.

Round II Update: In 2013, GEFA re-wrote the scoring criteria for Round II of the GWSP.  Applicants no longer had to identify a “need;” they only had to indicate “the need is significant.”  With that criteria in hand, GEFA awarded four loans totaling $38,800,000 on August 27, 2013 as a part of the Round II cycle.  For the second part of the Round II cycle, GEFA decided to rewrite the scoring criteria again but only for SDI applications.  Now, state direct investment awards do not have to result in state ownership of a physical asset – they can meet a vaguely defined “need of state significance.”  The state now believes it can take ownership of water in the form of augmented flow or a “water supply yield” from a reservoir.

On November 6, 2013, GEFA announced an intention to award up to $40 million in SDI for three water supply reservoir projects (Carroll County/Indian Creek, Paulding County/Richland Creek and Hall County/Glades), and $5 million for a coastal water supply well and desalination demonstration project on Tybee Island.  In order to determine how to disburse the $40 million for reservoirs, GEFA hired a consultant – the global firm Arcadis – to provide “overall reservoir project support consulting, validation of existing data for the projects, analyses of watershed level data associated with the projects, entitlement share support, and project cost analyses.”  In other words, Arcadis will tell GEFA what type of asset the state would acquire with SDI in the Indian Creek, Richland Creek and Glades reservoirs.

Round III: In April 2014, four communities submitted applications seeking a combined $78,700,000 million from Round III of the GWSP to build new or expand old reservoirs.  The GWSP Round III final awards were announced at the GEFA board meeting on August 26: $26 million will go to the three following projects.

Expansion and Stream Flow Augmentation: The Etowah Water and Sewer Authority (EWSA) was awarded a $10M GWSP loan.  Beginning in 2008, EWSA started the process to obtain a U.S. Army Corps of Engineers Clean Water Act Section 404 permit for the Russell Creek Reservoir expansion project (Click here to read more about the 404 permit process and for a map including seven proposed reservoirs in Georgia).  The EWSA initially asked for a $25,500,000 loan from the GWSP to expand a seventy-plus year-old Soil Conservation Service (now known as the Natural Resources and Conservation Service) reservoir originally built for flood control purposes.  As described in the GWSP application, the existing eleven acre reservoir – located in the upper reaches of the Alabama-Coosa-Tallapoosa River Basin – would be expanded into a 137-acre pump-storage reservoir with an 11.5 MGD yield and the ability to “augment flow” downstream:

“The confluence of Russell Creek with the Etowah River is approximately 1.7-miles upstream of the Authority’s Hightower Water Treatment Facility [Etowah River intake].  The Russell Creek Reservoir will be used to augment flows in the Etowah River at times of low flow in the river to allow for increased withdrawal while maintain [sic] required minimum in-stream flows.” [14]

Unneeded Reservoir: The Carroll County Water Authority (CCWA) received a $10 million GSWP loan after returning to the trough for a third time to build a more than $110 million reservoir that even they admit is not needed.  According to the applicant: “The unmet water demand for Carroll County will not be fully realized for several years.” [25] Regardless of the admitted lack of need, Carroll County initially asked for an $18,240,000 loan for the 640-acre pump-storage project.  The Indian Creek Reservoir project will dramatically expand an old SCS/NRCS flood control reservoir.

GEFA awarded a GWSP Round II loan of $9 million to buy 1,300 acres and plan for expansion of the Indian Creek Reservoir (Little Tallapoosa/Alabama-Coosa-Tallapoosa River Basin).  The applicant is also a finalist for an undetermined portion of $40 million earmarked for SDI in Round II.  CCWA’s portion remains undetermined until GEFA’s consultant, Arcadis, ‘fact checks’ the project applicants’ claims, 404 permits applications and other materials to determine what the state would obtain in return for SDI.  Perhaps the CCWA’s claim that the reservoir will augment flows at the state line during drought for the benefit of “interstate relations” is offered as a justification for SDI? [27]

A parting note of clarification for Indian Creek.  While the applicant’s cover letter implied that all downstream Alabama stakeholders approve of the Indian Creek reservoir proposal [21], the cover letter apparently neglected to note that Alabama’s state Office of Water Resources identified significant objections, questions and issues with Carroll County’s Section 404 permit application during the public comment process in March 2010.

Serial Applicant: Paulding County asked for a $25 million loan; they got $6 million.  As of 2014, the total projected cost – for the 305 acre pump-storage reservoir with an anticipated 35 MGD yield plus the 48-inch four-mile long raw water pipeline from Etowah River intake (located 8 miles downstream from Lake Allatoona) – hovers at $100 million.  The county does not have any permits to build this reservoir.  To date, Paulding County has received $60 million in GWSP monies, plus the Richland Creek Reservoir (Alabama-Coosa-Tallapoosa River Basin) is also a finalist for an undetermined portion of $40 million of Round II SDI monies.

Like every other proposed reservoir in Georgia that is in the Section 404 permit process, the Corps has asked Paulding County to revisit their population projections and reassess water need.  Presumably in light of this re-evaluation, Paulding County’s identified water supply shortfall by 2050 has dropped by thirty-seven percent.  In 2013 the county declared the 2050 shortfall would be 45 MGD, but only one year later the anticipated water supply shortfall is 28 MGD.  With fewer people expected to move into the area plus an across the board per-capita reduction in water demand, the projected shortfall will continue to fall while the project’s rising costs are passed on to a limited pool of existing rate payers.

Reinvention Equals Delay: The lack of a true purpose and need for some of these proposed reservoirs is one of the dominating story lines in the GWSP’s narrative.  For example, Indian Creek has been proposed as a tri-state water war mitigation tool.  It’s also pitched as un-needed locally, and thus available as a larger regional supply until it is needed locally.  However, selling itself now as a regional water provider with future plans to throttle back to local customers sounds like a recipe for sour intrastate relations.  Indian Creek is beginning to look like another Glades: a project that continually reinvents itself.

Hall County’s current 404 Permit application for the proposed Glades Reservoir is at least the fifth version of the project proposed to state and federal agencies since 2007.  During the summer of 2014, Hall County hit a speed bump when the Corps announced a delay in the release of a draft Environmental Impact Statement.  One of the reasons: despite seven years and millions of dollars paid to consultants, Hall County has been unable to supply the Corps with the data necessary to complete the draft EIS process.

The Bigger Lesson: Continued state investment in projects with incomplete section 404 permit applications, or projects that cannot clearly identify critical details and provide data is a waste of taxpayer money.  Furthermore, continued investment in money pits puts existing ratepayers and taxpayers on the hook for boondoggle projects.

What else might the state do with GWSP monies?  During the 2011 General Assembly session (in March), the state legislature supported a budget line-item to study expansion of water supplies including the feasibility of raising Lake Lanier’s level by two feet.  The study could answer the crucial question of what the cost-benefit analysis of gaining over 25 billion gallons of water storage might be.  The anticipated cost of the study: a paltry $2,000,000.  At the same time, the Governor’s Water Supply Program was begin designed as directed by the Governor’s January 2011 executive order.  Opponents of the study – including the Governor’s office and Joe Tanner, who is a consultant for many counties proposing new reservoirs like Glades – argued that there was no state money for such a study and state money couldn’t be used to study a Corps managed project.  After the session ended and less than eight months later, the Governor’s Water Supply Program was formally unveiled in November 2011.

Given GEFA’s ownership of multiple GWSP projects, the shifting definitions of what constitutes an asset, and the amount of money spent to date on non-existent reservoirs, it’s not inconceivable that the state could invest in a study of Lake Lanier’s capacity to meet the GWSP’s intention to provide “an adequate supply of clean and affordable water.”  Furthermore, the Governor previously asserted that Georgia would begin dredging the Savannah Harbor with or without the U.S. Army Corps of Engineers’ help.  Based on this line of thinking – and now that a state funding stream exists specifically for reservoir planning and expansion – the state should work with the Corps to initiate a Lake Lanier study to evaluate the risks and benefits of adding an additional 25 billion gallons to meet the needs of downstream communities, of lake users, and for municipal water supply.  It’s certainly worth the investment to study how that particular water supply solution could benefit Georgia and its neighbors.

-Chris Manganiello

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