COVINGTON -- County commissioners unanimously voted Tuesday to accept the terms of a $21 million Georgia Environmental Finance Authority loan to finance a portion of the construction of Bear Creek Reservoir.
Commissioners passed a resolution in November expressing the county's commitment to meet debt service obligations for the GEFA loan. Following that approval, GEFA prepared the loan documents for the county's review.
"The resolution passed last night memorializes Newton County's acceptance of the terms of the Loan Agreement and Promissory Note for the $21,000,000 GEFA loan. Both resolutions were required by GEFA as a part of its customary loan documentation process," said Andrea Gray with the County Attorney's Office via email on Wednesday.
According to documentation provided to county commissioners, construction, engineering, design, administration and inspection costs will total $32.56 million, with $21 million of that funded by the loan and $11.56 million termed the "local" portion funded through water revenues from sales to municipalities, the Water and Sewerage Authority and other counties.
Craig said that total number represents the estimated cost to construct the dam, with a contingency built in, and reservoir but does not include the cost to construct the water treatment facilities or pumps and pipes needed to pump water from the Alcovy River. He said that should be delayed until needed, and initially the reservoir will be filled with runoff from the watershed. He estimated the total cost of the project would be between $64 million and $67 million.
A project schedule shows that construction is estimated to begin in May 2015 and be completed in January 2019 .
One citizen, Larry McSwain, has been vocal in recent months about his doubt regarding the need for the project at this time, saying that the demand is not there. Initial population estimates for Newton County in 2050 have decreased, McSwain said. He said the 22 largest industries only use 800,000 gallons per day, and the county has plenty of water available even with Baxter International's projected demand of 1 million gallons per day. McSwain likened the county's moving forward at this time to borrowing money on a rental house that won't have a tenant for 20 years.
But Craig said it's foolish to rely on data from the Governor's Office of Planning and Budget, which McSwain was using, because they have released about three different estimates for counties in the last six years, and, while projections for the state are more accurate, they aren't able to accurately predict how that population will be spread among the 159 counties.
"Right now nobody with any precision can tell you what the population is going to be in this community in 50 years," he said.
If the BOC did not approve the terms of the loan Tuesday, it might not kill the project, but Craig said that agreements have been made with some property owners that they could repurchase their property if the county decided not to pursue the permit or construct the reservoir.
"I'm not interested in selling anything back to anybody that's already sold to us,"
The GEFA loan carries zero interest for the first three years of construction, 1 percent for the remainder of construction, accrued and capitalized, and 1.82 percent during the repayment period once construction is complete. The county will make interest-only payments the first seven years of the 40-year loan and will pay principal and interest afterward.
Interest only payments will total $382,200 per year, for a total of nearly $2.68 million in interest payments for years one through seven.
Debt service payments beginning in year eight would total more than $852,083.26 a year.
County Manager John Middleton stressed that the funding will not come from property taxes but from the water enterprise fund.
Craig said he met with the Army Corps of Engineers last week and expects the 404 permit to be issued in June or July. He said Cornish Creek took six months to permit and Bear Creek has taken 10 years.
"The level of process you have to go through, the regulatory hurdles, have increased geometrically year by year. The rules are constantly changing. The challenge is to get the project out before they change the rules again ... That explains at least in part my eagerness to get it built. I know if we get it built, they can't take it away from you," Craig said.