What happens when government officials take loans based on the promise of future growth?
In Guyton, the jury is still out as a loan has been approved and their plans for a 500,000 gallons-per-day wastewater treatment plant are in the hands of Georgia’s Environmental Protection Division awaiting approval.
According to the design development report that the city’s engineer firm, Hofstadter and Associates, submitted on June 10, there are currently six planned subdivisions with a total of 569 lots requiring sewer service in the near future.
However, that’s 15 subdivisions and 768 lots less than what the city told EPD in a meeting on Aug. 31, 2005.
The consent order stated that there were 21 subdivisions with about 1,337 connections “under construction, ready to start construction, or requesting water.”
“We’re going by projection; we don’t know for sure,” said city councilman Phillip King. “It’s a guessing game.”
So what happened to the 2005 numbers that were reported to EPD? If it’s a “guessing game,” then it is one that could prove costly according to Craig Barrow, who owns property adjacent to the proposed wastewater site on Riverside Drive.
“We’re in an economic crisis that is out of control that nobody knows how to handle right yet, so this is going to have a huge impact on Effingham County because a person can walk away from their house and come to Savannah to be near their jobs,” Barrow said. “It used to be that you wanted to be in the county so you can get away, but you can’t afford to anymore. They aren’t going to have anybody to hook up to that plant.”
Barrow has over 43 years experience in the banking and investment industry.
“I know enough from my business and what is going on all over the United States, and it’s ugly,” he said.
National housing statistics versus Effingham County
The National Association of Realtors reported that the existing home sales for the first quarter of 2008 had dropped 17.5 percent compared to last year with the southern region dropping 18.6 percent.
Susan Kornegay, director of Savannah’s Multi-List Corporation, said the current state of the housing market was really inevitable. She compared the previous high period as a fast moving train.
“There was no way it could continue. When that fast moving train stopped, it stopped,” she said. “It didn’t slow down, pick up more people and start again; it stopped.”
Yet, she’s not worried and believes that things will be leveling out within a year’s time.
“Real estate is moving,” she said. “It’s just at a different pace than what is was.”
Although specific sales information was not available for Guyton, she did say that there were 53 houses sold in Effingham County in May, compared to 82 sold in May 2007 and 134 sold in May 2006. However, she pointed out that her numbers were based on the MLS records, which “are only as good as the information put in the MLS system.”
The flipside of the housing market is the current rate of foreclosures.
County foreclosures compared to national numbers
“The rising foreclosures on a national level will continue at least through the end of this year and probably carry over into at least part of 2009,” said Daren Blomquist, marketing communications manager of RealtyTrac, a company that collects and aggregates foreclosure data from about 2,500 counties in the U.S.
The number of foreclosures reported nationwide for May was 261,255, compared to 73,701 reported in May 2005. Yet, so far Effingham County has been fairly lucky.
“It looks like the foreclosure rate in this area is actually quite a bit below the national average and the average in the state of Georgia,” Blomquist said.
Although, he did point out that Effingham County’s smaller population “fits with the fact that it does not have a high foreclosure rate.”
Population as an indicator
The U.S. Census Bureau ranked Effingham as the 51st-fastest growing county in the nation in July 2006. The last decennial census put the county’s population at 37,535 and the July 2006 estimate put it at 48,954.
Because of the more rapid and unique growth of the area, the Coastal Georgia Regional Development Center contracted Georgia Tech’s Center for Quality Growth and Regional Development in 2006 in order to create more realistic population projections for its region.
The result of their study was published in the “Georgia Coast 2030: Population projections for the 10-county Coastal Region.”
The group projected that by the year 2030 the county population will reach 79,935, and Guyton’s population will grow from 917 to 2,901.
So the question remains: Will the rate of growth in Guyton bring enough development in the area to be substantial enough to repay the $13.35 million loan borrowed from the Georgia Environmental Facilities Authority?
“Guyton is poising themselves to capture some phenomenal growth in that county, and it’s a great town in a good location — far enough out but close enough in,” said Tricia Reynolds, planning director for the CGRDC. “Although, with gas prices rising, Guyton should also look at opportunities to create jobs.”
Industrial growth spurs development
And if Guyton isn’t able to bring in more jobs, Effingham and Chatham County may bring in enough with proposed industrial development.
The Portuguese company EFACEC is expected to break ground on their property in the Effingham Industrial Park soon.
EFACEC manufactures power substations and the new plant will bring about 200 high-paying jobs the first year and at capacity bring 600 openings.
In addition, Effingham County Zoning Administrator George Shaw said that the zoning board recently approved the rezoning of 6 million square feet of warehousing and over 200,000 square feet of commercial development for the Exley tract. The planning board recommendation has not come before the county commission for approval.
Chatham County also has development plans in process: a proposed 874,000 square foot warehouse (North Godley Developers) and a 1 million square foot industrial project (First Port Wentworth Development LLC).
Most Effingham residents work in Chatham County. If that continues, the new growth may very well provide needed growth for Guyton, despite high costs related to water and sewer connection fees and the city’s plans to require prepayment.
Taking into consideration the increased connection fee rates for new development, projected population growth and the city’s decision to purchase 562 acres more than the needed 95 acres — 10-acre facility and a 85-acre spray field — the citizens’ overall confidence in Guyton’s financial actions and planning of the treatment facility appears to be waning.
“They’re so under funded, and they don’t have the money to do the project correctly,” said Barrow.
But King isn’t worried.
“We negotiated a good price for the land. We met with Mr. Barrow and agreed to do preservation, agreed to do everything we could do,” he said.
“All I’ve done is tried to the best of my ability to get it started, and if I’m going to take some flack for it, then I’ll take some flack for it. I believe we’re doing what’s right for the city.”