Effingham County is approaching the Georgia Environmental Finance Authority with a proposal to reconfigure its existing loans.
Commissioners also have approved making permanent a transfer of nearly $11 million from its general fund to the water-sewer fund and also gave the go-ahead for a letter to GEFA asking for debt forgiveness for a portion of the outstanding loan principal. The county currently has five loans with GEFA for its water and sewer infrastructure.
Effingham County has $3.5 million in a debt service reserve account for the GEFA loans, and the county will take nearly $550,000 of that total to pay off a GEFA loan currently in construction.
“GEFA’s indicated a willingness to reduce that debt service reserve account to $2.5 million if we can provide a letter of credit for that amount,” said County Administrator David Crawley.
In its counteroffer to GEFA’s proposal, the county would use $2.5 million toward principal reduction, taking that money from special purpose local option sales tax proceeds. There is approximately $2.4 million available in the current SPLOST, Crawley said.
“I would love to apply it to our highest interest loans,” he said. “A lot of those projects were started under this current SPLOST referendum.”
But commissioners also worried about the effect on the penny tax receipts.
“We’re leaning more and more on SPLOST,” said Commissioner Bob Brantley. “I don’t want us to do to SPLOST what our federal government has done to Social Security.”
GEFA has asked the county to set up a debt service reserve account of $2.5 million, either in cash, bond or letter of credit but county staff does not recommend the county provide a debt service reserve or guarantee and proposed asking GEFA to remove all other financial stipulations or conditions on the remaining loans, to include removing the letter-of-credit requirement.
“We’re also recommending we proceed with GEFA and say we do not intend to set up a debt service reserve account or a letter of credit and see what their position is,” Crawley said. “For the most part, we concur with what (GEFA) proposes. The debt service reserve account and the debt service forgiveness are issues I’m sure GEFA will want to talk with us about.”
Under the plan, the county also will transfer more than $3 million to the special service districts, established under the service delivery strategy, to help with future debt service there.
Commissioners also approved a resolution, calling for the transfer of $5 million from the general fund to the special service district account, along with the transfer of money taken in from the payments in lieu of taxes and the cable franchise fees.
“It’s a lengthy resolution,” Crawley said, “but it encompasses all the transfer of funds that were approved with service delivery strategy. It establishes special service categories and sources of their funding based on service delivery strategies.”
The transfer of funds would put $8 million into the special service district account.
“As we have said in the past, it is not a fix all,” county finance director Joanna Wright said. “It’s simply giving us an extension to be able to fund those areas that are now within special tax district funds.”
That infusion of money into the special service district account could last up to three or four years, “if we watch what we’re doing,” Wright said.
