Believing in “if you build it, they will come” may have worked in the movie “Field of Dreams,” but some concerned citizens believe it may prove costly for Guyton residents if the city council moves forward with their plans to build a 500,000-gallon per day capacity wastewater treatment facility.
“If they crunch the numbers, they will find that there is no way they can ever — in the short or long-term future — have enough people to pay (the loan) off,” said Effingham County resident Ruth Lee.
Yet Guyton officials believe future development will pay off the $13.35 million Georgia Environmental Facilities Authority low-interest rate loan, which will cost approximately $1 million a year for the next 20 years.
“Growth is going to come, whether we want it to or not,” said Alderman Phillip King. “GEFA wouldn’t loan us the money if we couldn’t pay it back.”
Since its inception in 1985, GEFA’s success rate with its customers has been exemplary.
“We’ve never had a customer default on a loan since our inception,” said GEFA public affairs director Shane Hix.
According to GEFA, the authority “must ensure that the community has the ability to repay the debt — not only at the time the loan is approved, but also throughout the duration of the loan” before approving loans. They do this by conducting reviews of each customer and calculating what they call debt service coverage.
“GEFA just takes a purely financial look at the city’s ability to pay it back, and if we feel special conditions are needed, we’ll require them,” Hix said.
Once an application is submitted, the financial division of GEFA — a state organization that provides financing and other support services for infrastructure improvements, land conservation, energy programs and fuel storage systems — calculates the applicant’s debt service coverage to determine if they meet the state’s minimum requirements of 105.
In Guyton’s case, their debt service coverage rating was 110. In addition, GEFA determined that the city would have to meet two conditions in order to obtain the loan — they had to increase their water and sewer rates so that they could generate an additional $395,000 a year in revenue, and they had to do this by June 2009; and they also had to open a separate bank account with a minimum of $1 million as a reserve fund.
The city council has already taken care of both conditions.
GEFA also requires local governments to get an environmental acceptability letter from EPD, which Guyton obtained and submitted.
One thing GEFA doesn’t do, however, is get involved with what infrastructure improvement may be more feasible for a given area. For example, they don’t determine whether or not there is a “need” for the particular project for which the community is requesting funds.
“It’s not GEFA’s role to tell local government what project to do or not to do,” Hix said.
He said it was “the local government’s decision on which project” to request funds for and to implement.
If Guyton, for example, had chosen to tie into Effingham County’s WWTP, a GEFA loan would have also been available. So the question remains — if GEFA approved the loan on the basis that they feel secure in Guyton being able to repay it, then how will the city that has a little over 400 current sewer customers and only a projected 569 new lots requesting sewer service pay for the loan?
Will future development be enough? In the next segment, the Herald will address the housing conditions in Effingham County, looking at projected population data for both the county and Guyton and current development.