The proposed Bear Creek Reservoir in southern Newton County is still waiting on its federal construction permit, but the Board of Commissioners reaffirmed its support to build the reservoir as soon as possible.
The board voted Tuesday — for the second time — to accept the state’s $21 million low-interest loan, which will pay for part of the construction of the reservoir and dam, but at least one resident questioned whether the project will be needed within the next 40 years and whether water rates will have to be raised to pay for the project.
What was approved Tuesday?
The board previously voted in November to approve the loan, but the Georgia Environmental Finance Authority — the group offering the loan — requires two separate steps, according to attorney Andrea Gray, who works in County Attorney Tommy Craig’s office.
“The November resolution expressed Newton County’s commitment to meet its debt service obligations for the $21 million GEFA loan.
“Following passage of the November resolution, GEFA prepared the loan documents for Newton County’s review,” Gray said in a Wednesday email.
“The resolution passed last night memorializes Newton County’s acceptance of the terms of the Loan Agreement and Promissory Note for the $21 million GEFA loan. Both resolutions were required by GEFA as a part of its customary loan documentation process.”
Is it time?
Former Department of Natural Resources employee Larry McSwain, who has researched the topic personally and lobbied the board to study the project more before incurring costs prematurely, spoke Tuesday and again said he doesn’t believe water usage by residents and commercial and industrial businesses would be high enough to justify building Bear Creek for another couple of decades.
If nothing else, he wants to see hard numbers about how the construction costs will be paid for down the line once loan payments kick in.
During public comments, McSwain asked if higher water rates or higher property taxes would be used to pay for the costs. Later in the meeting during the board’s discussion, County Manager John Middleton said property tax revenue is not used to pay bonds for water projects, but said all costs related to water production and delivery would be paid through water sales.
McSwain said prior statements from officials about water usage by local industries was vastly overstated, as the top 22 industries used a combined 781,961 gallons per day, an average of 35,543 gallons per day. The numbers were provided by the city of Covington, which provides water to those industries — the city first purchases its water from the county.
Even if Baxter International uses 1 million gallons per days as planned, the county’s major industries would still use less than 2 million gallons per day.
Average daily water use in 2011 was around 12.5 million gallons per day (MGD), and the latest estimate of water availability at Lake Varner from County Attorney Tommy Craig — based on an analysis he had Schnabel Engineering do — was either 20 million or 21 million gallons per day. The reservoir could produce more water in any given day, but if more than 21 MGD were pumped out of the reservoir day after day, the long-term viability of the reservoir would be threatened, based on Craig’s analysis.
The 21 MGD number is significantly less than originally expected from Lake Varner and reflects growing concerns over worsening drought conditions reducing water availability at existing reservoirs and new reservoirs. The 21 MGD number had not been discussed until last fall, when Craig brought up the reduced number at a special work session.
Water use estimates per person are all over the map, but water use levels in metro Atlanta during the drought were just more than 100 gallons per person per day (102 gallons in 2009). At that level, the county needs to add 73,529 residents to reach its peak; however, that doesn’t include businesses or industries.
At 118 gallons per person per day, the county would have to add 63,559 people to max out its sustainable daily limit. At a 130-gallon level, the county would have to add 57,692 residents.
If we assume that the amount of industry doubles (over some period of time) and uses 4 MGD, then at 118 gallons per person per day, the population would only have to increase by 46,610 to max out that daily limit.
All those numbers are hypothetical, but the question is how fast will the county grow in terms of population and business and when will we need more water.
The picture is even more complicated because Walton County owns a 25 percent share of Lake Varner and its water production, but it’s building its own reservoir at Hard Labor Creek. How much water will it need in the future?
In addition, Newton County also still uses water from City Pond and can produce up to 4 MGD.
There has been no publicly-discussed study combining at all of these most recent factors.
McSwain said the 2050 Plan originally called for 350,000 to 400,000 people by 2050, but he said the latest population projections have revised those numbers down significantly to 250,000-300,000 residents.
“We have plenty of water use for industry even if Baxter uses 1 million gallons per day. Building this is like building a rental house for which we have no tenant for the next 20 to 30 years,” McSwain said.
However, Craig said population projections are notoriously unreliable for individual counties.
He said a retired professional demographer for the Atlanta Regional Commission told him projections for states are accurate, but not for counties, especially in Georgia when there are 159 of them. The governor’s office frequently changes its projections, Craig said.
In a follow-up email, McSwain said, “We use (population) projections when we want to justify Bear Creek, but discard them when the data doesn’t support the project.”
Whenever construction starts, Craig and county water resources director Jason Nord have both said previously it will take 10 years before water begins to be produced; the dam must be built, followed by the water treatment plant and piping infrastructure. Nord said the reservoir could probably produce water in seven years if the project was rushed.
The $21 million state loan will cover about two-thirds of the construction cost of the actual reservoir (clearing of the land) and dam, which is expected to conservatively cost a total of $32.5 million, Craig said, noting it could be significantly lower.
Newton’s 40-year loan calls for 0 percent interest for the first three years of construction and 1 percent interest for any construction time after that, which doesn’t have to be paid at the time but can be added to the loan amount.
Then for the remainder of the 40 years, the interest rate will be 1.82 percent, with the first seven years consisting of interest-only payments and the remaining years of principal and interest payments. There are also no loan closing fees.
Commissioner Nancy Schulz asked Middleton for an amortization schedule Tuesday, and Middleton presented one on short notice.
Assuming that construction only takes 36 months, then for the first seven years at a 1.82 percent interest rate, the county would have to pay $382,200 per year. For years eight and on, the county would have to $852,083 per year, Middleton said.
As for the total project, Craig said he expected it cost between $64 million and $67 million.
Craig said the project will likely require higher water rates, but he said it’s prudent to secure future water for resident’s children and grandchildren.
The 404 permit
When asked by Schulz, Craig said he hoped to have the long-awaited 404 permit (refers to Section 404 of the federal Clean Water Act) by June or July.
He said he met with U.S. Army Corps of Engineers last week and the county had everything it needed to get a permit besides two things: the Army Corps project manager needs to finish a case document and a study of the archaeology and history of the land has to be completed as part of the Natural Historic Preservation Act.
Once the case document is finished, the U.S. Environmental Protection Agency will have 10 days to recommend denial.
If they don’t, which Craig said has only happened once on the several projects he’s worked on, the Corps will issue the permit.
He said that the mitigation plan — which is when a county repairs other wetlands or environments to make up for disrupting a current environment by turning it into a man-made lake — has been completed and approved. That was one of the other long awaited steps.
Commissioner John Douglas asked if it would kill the project if the board didn’t approve the loan now. Craig said no, but he didn’t want the project to be set back. He said part of his desire to see the project move forward as soon as possible is because the county has had such a delay getting its 404 permit. Once it’s built, the government can’t take it away from you, Craig said.
In addition, Craig said there were numerous instances when the county purchased property from homeowners where an agreement was made that the homeowners could buy back their land if the project wasn’t completed.
Craig said the county wouldn’t have agreed to those terms if they weren’t sure of completing the project.
“I’m not interested in selling anything back to anybody,” Craig said.
Douglas said that in spite of the many questions about the project and the fact the county is dealing with the unknown, he knew enough to approve the loan and move forward.
“We don’t want to go back now. We have to move forward and look to the future,” Douglas said.