Coweta, Griffin altering their new water agreement
By SARAH FAY CAMPBELLsarah@newnan.com
A new contract between the Coweta County Water and Sewerage Authority and the city of Griffin greatly reduces the minimum amount of water the authority will be required to purchase under the terms of a 50-year agreement.
As part of the new contract, the authority will pay Griffin $9 million for “regional water supply system improvements.”
The Griffin City Board of Commissioners was set to approve the new contract and agreement Tuesday evening.
Both the Coweta County Commissioners and the Water and Sewerage Authority voted on the agreement after discussing it in closed executive session, which is allowed under Georgia open records laws for matters regarding litigation.
The Griffin City Commission was expected to discuss the matter in open session, said Griffin City Attorney Drew Whalen on Tuesday.
“We have nothing to hide,” said Whalen.
The original 50-year water supply contract was executed in 1999, when Coweta was facing rapid residential growth and the need for an additional water supply. Griffin was planning to build the Still Branch Reservoir in Pike County.
The agreement was between Coweta County and Griffin. When the Coweta County Water and Sewerage Authority became a separately operating entity, the obligations under the contract were transferred to the authority.
Under the original agreement, Coweta was required to purchase a minimum amount of water that increased each year.
The required minimum was to peak at 7.5 million gallons per day in 2025. The amount was to ramp down in 2034, and reach 5 million gallons per day by 2041 until the expiration of the agreement in 2049.
Now, with slowed residential growth and the opening of the B.T. Brown Water Treatment Plant, Coweta has more water than it needs, and the water plant is operating at minimal levels.
Under the proposed new agreement, the most Coweta will ever have to buy will be 5 million gallons per day (gpd).
The required purchase will be 3 million gpd, as of July 1, 2012, through July 1, 2022.
Under the existing contract, the authority was required to purchase 3,040,000 per day, on average, in 2012. The required “take or pay” amount would then increase by 340,000 gallons each year.
The required amount would have topped 5 million gpd in 2018.
Under the proposed new agreement, Coweta will have to start purchasing 5 million gpd in 2022. The required purchase will remain 5 million gpd through the end of the agreement in 2049.
The new contract doesn’t change the rate Coweta will pay for the water — it remains at Griffin’s cost to produce the water plus a 20 percent markup.
Under both the old and new agreements, Coweta has the ability to get out of the contract 10 years early. Coweta must give notice that it intends to terminate the agreement by 2034, with the agreement to terminate in 2039.
One key component of the old agreement that is not in the new one is the section that allows Coweta to “acquire an equity position in the ownership” of the regional water supply facilities.
It was that provision that led to a protracted legal battle starting in late 2009.
In December 2009, representatives from the authority and Coweta County showed up at a bond validation hearing to contest Griffin’s validation of bonds for a sewer expansion and some water projects. At the hearing, the Coweta representatives offered a check for nearly $7 million to become a partial owner or “equity partner” in the Griffin system. The current contract mentions the ability to become an equity partner but doesn’t define what that means. The attorneys for Coweta and the authority argued that becoming a partial owner would relieve Coweta of its “take or pay” obligations, and also would allow the authority to purchase water at cost, without the markup.
Coweta contested the bond issuance, saying that, one, Griffin wouldn’t need to issue as much bond debt because of Coweta’s $7 million and, two, Griffin might not be able to pay off its bonds because it wouldn’t be making as much money off Coweta.
Spalding County Superior Court Judge Christopher Edwards ruled in favor of Griffin in February 2010.
The authority appealed and was rejected by the Georgia Court of Appeals on Feb. 9, 2011. The three-judge appeals court panel unanimously upheld Edwards’ ruling, but did not offer a written opinion.
The authority then appealed to the Georgia Supreme Court. That final appeal was unanimously rejected on May 31, 2011.
The modification agreement addresses the Series 2010 bonds, stating “Griffin has validated Series 2010 bonds containing regional water supply projects; Griffin agrees to finance said projects from the payment received from Cowetaâ ¦ and use its Series 2010 bonds, when issued, for sewer or non-regional water supply system projects.”
The agreement also states Griffin “will take immediate steps to refund its Series 2002 Combined Public Utilities Revenue bonds, having an approximate outstanding balance of $58,330,000 prior to Jan. 1, 2012.”
The agreement says that the $9 million from Coweta will first be used to expand the capacity of the Still Branch Water Treatment Plant from 8 million gallons to per day to 12 million, to add a booster pump, and to reallocate and construct a new Flint River pumping station. The agreement states the parties acknowledge that both projects “are for the benefit of the regional water supply system. Financing of these projects from these funds will alleviate passing these costs on to wholesale water customers through additional revenue bond obligations.”
Any money left over after those projects are completed will be put into an interest-bearing account “to be used for future infrastructure needs of the regional water supply system.”
