Water Board Doesn't Give Away Sewer (Yet); Quadruples Canyon Ridge Fees Instead

July 26, 2019

Concerned citizen Rex Harrison congratulates the new Dade water board on its fresh new approach--minutes after members returned from a lengthy closed-door executive session at which the important business of the meeting was conducted. Executive sessions were the distinguishing feature of the old board last year (as it decided to pay $400,000 for a controversial reservoir). Now, as the new board discusses an eyebrow-raising deal with developer Scenic Land, the tradition returns.


Amid promises of a new transparency, and amid public expressions of gratitude for its new direction, the Dade Water Authority’s freshly-reshuffled board of directors at its first regular meeting on Tuesday skittered back to the safety of executive, or closed-door, session to conduct its important business, later stonewalling any questions about same.


But it does appear that the water board will not, in any case—at least until next month, or the next called meeting--gift a wastewater treatment plant to a luxury golf resort developer in Walker County outright, as it had seemed  determined to do earlier, but will instead raise fees on its users enough to break even.


After electing officers at an organizational meeting on July 2 following its formation by local legislation earlier this year, the body had called a special meeting on July 8 for "Discussion and possible action on Sale of Property,” according to its agenda. But at that meeting, it quickly became clear that what new Dade Water general manager Jeff Pendergrass and assistant manager Sherri Walker were urging on the board was not a sale but a giveaway of the wastewater treatment plant the water company had never meant to own in the first place, at the McLemore—formerly Canyon Ridge, formerly Tauqueta Falls--golf course and luxury home development located atop Lookout, and mostly in neighboring Walker County.


The sewage facility was losing Dade’s nonprofit water company money every year, the managers told the board. Now the developer, Scenic Land Company, had consented to take it off their hands, and Walker County to be the government entity needed for the permit. Furthermore, EPD had given the authority a deadline to reroute wastewater, and to comply the authority needed an acre of land near the plant, but the developer wasn’t willing to part with one. Therefore, they explained, the best solution was to give the developer the sewage plant.


To a man, board members seemed ready, even eager, to snatch at this bargain; but they agreed--after gasps of incredulity from the scant public present--to explore their options further before signing on the dotted line.


That situation remains unchanged after this latest meeting, but the board did—during the public part of the meeting—vote to up the monthly fee the 81 users of the golf community pay for sewer service in order to meet expenses on the operation. “I don’t like the water company having to subsidize those people,” said board member H.A. McKaig.


The 81 users have been paying a flat fee of $30 per month. Now the fee will quadruple to $120. They will receive a letter informing them of this shortly, decided the board, before being billed for the new fee beginning next month.


“They’re getting their water now cheaper than anybody else in Walker County,” said McKaig. He discussed basing sewage rates on water usage, but the matter was tabled for this month pending further research.


Dade Water has operated the Canyon Ridge sewer since 2011. It was built in 2003, and though only a tiny fraction of the luxury home development lay in Dade, the then-Dade-water board agreed to partner with Tauqueta Falls developer Randy Banker for permitting with the Environmental Protection Division. When the development went bust in the housing market crash, the sewer plant fell in Dade’s lap.


Through the ensuing years, company management did not discuss at board meetings how much the sewage plant was costing the authority, but at the July 8 meeting, making their case for dumping the plant gratis, Pendergrass and Ms. Walker said it was bleeding money and had cost them a loss of $49,878.38 in 2019 so far.


After the July 8 meeting, The Planet had submitted to manager Pendergrass basic questions about the McLemore sewage plant, including where precisely it was located, what value it was assigned as an asset, who was operating it—Pendergrass had said at the July 8 meeting the water authority had no employee who knew a thing about a sewer plant—and of what it consisted—was it just one treatment plant or were there pumping stations?


Those questions remaining unanswered at the July 23 meeting, The Planet asked again and learned from board member H.A. McKaig that manager Pendergrass would not be parting with any information--“He’s got job duties and answering questions isn’t one of them"—and that any inquiries should be made in writing to the board. Accordingly, The Planet submitted the same questions to water board chairman Eddie Cantrell and in due time received, amid unsolicited assurances of Pendergrass’s fitness for his job, the answer: “We are working on a valuation and we are working to get the best deal possible, on that more info coming soon I hope.”


Scenic Land is the company of the selfsame developer, Duane Horton, who eight or nine years ago enlisted the Walker County government to help finance a luxury hotel at Canyon Ridge with taxpayer money. The hotel was not built then, but Horton revived the project in 2017 with the support of the current Walker County government, whose economic development board discussed issuing a "revenue bond" to help pay for the project. Revenue bonds are typically issued on projects such as tollbridges and are meant to be repaid by the income the project is expected to generate. It was not discussed at a public meeting on the hotel how the revenue bond would be repaid should the hotel not generate income--and in any case construction has not yet begun on the hotel.


In other water board business, the board voted to raise its tap fee—the cost of connection to the Dade water system to new installations—from $1200 to $2000. That will not, of course, impact existing ratepayers though Ms. Walker had mentioned earlier that the authority would need increased revenue to bring its debt ratio up enough to satisfy its loan covenant.


The board also discussed water loss and its cost in chemicals—the authority pays about $5000 a month in treatment chemicals, and loses 40 percent of its water to unknowns. Lately there has been an effort to track water loss through better cooperation with the county’s volunteer departments, to whose hydrant testing and such operations the authority chalks up some of the loss. Online reporting by the departments was mentioned as a solution. “I think they’re willing to do it if we can just give them a way to do it,” said McKaig.


Pendergrass, who said he’d been inventorying Dade’s water treatment plant for three months, presented the board a lengthy spreadsheet of improvements, repairs and renovations it needed, everything from modern turbidimeters and pH monitors to a new roof, heating pump and air conditioning unit. He said the plant needed basic maintenance such as painting to avoid corrosion, and intimated the place had been badly neglected for decades. “This is a living, breathing document that grows as time elapses and I have more time to look at it,” he warned of his list.


Board members agreed the improvements he requested were “needs not wants”: but, Chairman Eddie Cantrell asked Pendergrass: “How do you propose to pay for this?”


Which brought the board to its next agenda item: whether or not to cash in an insurance policy that (the board had discovered earlier in the year to its surprise) had been bought to finance former authority manager Doug Anderton’s retirement. When mature, it was said at an earlier meeting, the policy would finance $400,000 in retirement disbursements to Anderton as well as repay the $400,000 it had cost the board to buy it.  


Still later, it emerged that an additional policy or policies existed to Anderton’s benefit and his $400,000 retirement benefit was reduced to $323,723 to accommodate this new reality. Now, said Ms. Walker, the original policy still had 10 years left to mature; it would be worth $800,000 then but had a surrender value $608,087 today, so: “Do we wait 10 years or do we use it now?” she asked.


“If you cash it in, you could pay for everything on the list and have no debt,” said Pendergrass.


He said the alternatives were to do nothing or to take out a GEFA (Georgia Environmental Facilities Agency) loan to pay for the needed improvements. But Miss Walker had presented earlier in the meeting an asset-to-debt ratio for this month’s financial report of .98, already lower than the required ratio of 1.05 required for the authority’s current GEFA loan.


 “If we’re going for a loan, we may as well go for the loan amount to do it all,” said McKaig. “If we’re going to cash out that insurance policy, then I think we should put some of it back for reserve revenue, do a good chunk of it but not spend the whole thing.”


But speaking of “the whole thing,” what about Anderton’s $323,723? “We funded that with a CD already,” assured Ms. Walker.


After some discussion, board members decided they needed to think about it a little longer, and tabled the matter of cashing in the insurance policy until the next meeting.


A final item of business was a longstanding fire hydrant problem in West Brow: residents have repeatedly offered to pay the cost of laying a new water line to make the fire hydrant usable, but the practical difficulties of getting a pipe under the road there have stretched the matter out from year to year. Now, reported McKaig, the water company was engaged in “exploratory digging” and seemed nearer to completing the fix.


The water board meets at 6:30 p.m. on the fourth Tuesday of the month in the Dade Administrative Building. The next regularly scheduled meeting is Aug. 27.

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