By Jennifer July Mitchell

 

The Georgia Environmental Facilities Authority (GEFA) has told the Effingham County Board of Commissioners that it will not loan the County $21 million for the second phase of its water and sewer system unless the County raises its sewer impact fee from $2,500 to $3,700.

The bad news came in an eleventh-hour letter from GEFA that interim county administrator Michael Moore got just before a special called meeting Feb. 9th. Another surprise in the letter was the new amount in letters of credit the County would have to provide to secure the loans. GEFA virtually doubled the amount from $8.2 million to $15.7 million, enough to secure 75 percent of the loan amount.

In a phone call the previous day, Moore had been told that GEFA would only require 50 percent security. GEFA is also requiring the County to raise its water and sewer connection fees to $500 each, and is recommending that the County raise its water impact fees as well. The amount of the loan changed, too. The County was set to borrow $25 million. GEFA has now reduced that amount to $20,911,255.

The news comes on the heels of the County borrowing another $1 million from its undesignated General Fund to put into the water and sewer enterprise fund to cover engineering costs for the system in anticipation of getting the GEFA loans. This brings to just over $3 million the amount the County now owes the General Fund.

The loan was scheduled to already be approved by now, but the contract expired when the County could not provide the $8.2 million in letters of credit, which was one of the loan conditions, because several developments the County had counted on to help repay the loans did not happen. “They were alarmed that we were not doing what we needed to do to complete the loan,” Moore told commissioners.

This is the second loan Effingham County is scheduled to take from GEFA. The County already took a $19 million loan for the first phase of its water and sewer system, which included building the sewer treatment plant. Several developments expected as repayment sources for that first round of loans also did not happen.

Most notable among these is a 6,000-home development that had been planned for about 2,700 acres of International Paper land just outside Rincon. The Effingham Economic Development Authority used its eminent domain authority to seize the property from IP in December for use as an industrial park.

The County gets a combined water and sewer impact fee of $4,500 per unit. The County’s contract with GEFA included impact fees from this and other developments as repayment sources for the loans.

Several other developments the County was counting on also now appear in jeopardy, including Grandview, which may wind up being served with water and sewer by the city of Rincon. Also at issue now is the Heritage Tract, which was annexed into Rincon, then de-annexed back into the county when Rincon could not provide water and sewer service because the Georgia Environmental Protection Division (EPD) had frozen any new taps from the city’s groundwater withdrawal allowance during a battle to force the city to tie into the County’s line to the City of Savannah’s treated surface water supply. That dispute has now been resolved and the EPD has released Rincon’s taps, and Heritage is now asking to be annexed back into Rincon because it can now serve the development more quickly than the County.

County commissioners will now have to decide whether to comply with GEFA’s demands and raise the impact fee. The GEFA letter states that it will not loan the money until its conditions are met and all letters of credit are in place.