On December 28, 2011, Governor Deal approved the recommendations of the Water Supply Task Force (WSTF) headed by the Georgia Environmental Finance Authority (GEFA).  The purpose of the Governor’s Water Supply Program is to assist local governments in developing new sources of water supply adequate to meet future water needs.  Governor Deal announced the commitment of $300 million over four years for reservoir and water supply development.  Including nearly $46 million authorized in this year’s budget and the $28.5 million currently held by GEFA and the Georgia Reservoir and Water Supply Fund.

            The WSTF’s recommendations allow GEFA, which by its terms is only permitted to loan money to local governments, to modify its loan program to (1) lengthen the amortization period from the current twenty years up to forty years; (2) defer repayment through capitalized and construction interest up to the time when all loan funds have been drawn or the project inspection team issues final closing documents for the project; and (3) modify the interest rate from the current 3.13% to some lower number.

            This year’s budget authorization directed $25 million to the Department of Community Affairs to fund reservoir projects via direct state investment.  The WSTF recommends two types of direct state investment through the Department of Community Affairs: (1) fee ownership by the state of an asset that is part of a water supply project, including land, and (2) partial ownership of a water supply project with a local government.

Finally, the WSTF, in particular the finance subcommittee, carefully examined the role that public-private partnerships can play in leveraging project financing; either directly as a participant in the water supply project or as an advisor to a local government.  This is where the proposed funds can have the biggest impact.  A significant portion of the funds should be used for the planning, permitting and design of water supply projects.

As discussed at length by local government officials to the members of the WSTF, this is the most challenging part of a water supply project because neither the cost nor the outcome are certain.  Due to this uncertainty, both local governments and private financing are reluctant to move forward.  But, once a project has been identified, permitted and the revenue stream developed, both traditional local government financing and private investment will swarm to the project.