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Contract is set for reservoir

Authority still lacks approval of Atlanta

POSTED: July 25, 2012 4:00 a.m.

The Etowah Water and Sewer Authority has officially entered into a 50-year contract to help build and operate a reservoir along Shoal Creek, although the property owner hasn't agreed to join in the project.

The proposed 2,000-acre reservoir would be built on the hilly, wooded landscape of Dawson Forest, a 10,000-acre tract the city of Atlanta has owned since the early 1970s.

As of this week, the city has not agreed to sell the land or take part in the proposal, which has involved nearly four years of negotiations.

Still, the authority's board of directors directed Chairman Jim King to sign the contract with partner American Water Corp. on July 10.

General Manager Brooke Anderson said the contract was the next necessary step.

"I think this is a good agreement for the authority," Anderson said. "It allows for the project to move forward without any risk to the authority or our customers."

The public-private agreement names the project the Dawson Forest Preserve, which centers around Shoal Creek Preserve, a newly formed limited liability company between the authority and American Water Corp.

The focus continues to be on developing a drinking water supply that would address the region's growing needs.

During a June meeting with the authority, Mark F. Strauss of American Water pointed to data gathered in the 2008 report from the Governor's Water Contingency Planning Task Force as reasons why the project is needed.

The report said the Atlanta region will experience a water deficit by 2025 even with Lake Lanier and conservation.

Project expectations

The Shoal Creek proposal is envisioned to provide a 20 billion gallon reservoir and water treatment facility capable of generating as much as 100 million gallons of water per day.

According to the contract, the reservoir seeks to "provide water and related services to north Georgia and the Atlanta metropolitan area."

The project would cost an estimated $650 million over an eight- to 12-year construction period.

Under the terms of the contract, American Water Corp. would be responsible for raising all the capital, overseeing the bidding process, building the physical facilities and securing and maintaining project insurance.

In a meeting last month, American Water officials said they had begun arranging private financial support.

Anderson said the authority would be responsible for purchasing and leasing the land from Atlanta, which could cost more than $30 million, and also working to obtain state loans and secure building permits.

"This contract is an organizational, framework document that lays out essentially how we are going to work together to bring this project to bear," Anderson said.

"It places the risk of the project with the developer, American Water. It allows us as a public entity to be involved in the process and to make sure it's done in the most effective way possible."

Anderson said the next step in the pre-development process is to determine the project's technical feasibility and economic viability.

This includes analyzing potential water allocation, designing the facilities and determining if the project can be self-supporting.

A five-person management board made up of two authority officials and three from American Water will make the major decisions, Anderson said.

Property owner's stance uncertain

For nearly four years, the city of Atlanta hasn't taken an official position on the proposal, though American Water officials have presented the city with agreements.

On June 5, two senior American Water officials told the authority's board of directors they had recently met with Michael Sterling, senior adviser to Atlanta Mayor Kasim Reed.

They reportedly presented Sterling updated project information and agreements to share with Reed.

A decision has not been announced on the property, which has been the center of controversy in the past.

Decades ago, residents grew concerned when Atlanta considered the tract as a possible second airport site.

Adding to the complexities, opponents of the reservoir project cite a number of environmental concerns.

The Georgia Conservancy, a statewide environmental group, contends a reservoir would threaten two federally protected species of fish, the Etowah and Cherokee darters.

Other concerns include: Problematic interbasin transfers between the Etowah and Chattahoochee rivers; stress on the Etowah by consuming almost all its volume during the dry season; and further complicating legal disputes between Georgia, Alabama and Florida.

"The last thing you want to do right now is to tell Alabama that you are planning to dam up 2,000 acres of water that now flows to their border and send it down the Chattahoochee," said Will Wingate, vice president of advocacy and land conservation for the conservancy.

One of the largest concerns is the safety of the water and soil supply.

According to the convervancy's Web site, "During the Cold War, Lockheed used Dawson Forest to test nuclear-powered aircraft and it's possible that some radiation could make its way into the new water supply."

In November, the project ranked fifth on the "Dirty Dozen" list released by the Georgia Water Coalition. The rankings included 12 projects or proposals believed to threaten the health of Georgia's water supply.

What's next

Despite the concerns, many residents and governmental officials say the project could benefit the region.

"I am very much in favor of Etowah partnering in some way with a major, proven water system because they are a small outfit," said Dawson County Commissioner Gary Pichon. "It will help them fund what they need in the future."

Anderson said the project could benefit the county because it would pay significant ad valorem taxes.

He also noted it has potential support from the Georgia Environmental Finance Authority. Greg Mason, chief operating officer for GEFA, accompanied American Water officials to the June 5 meeting with Sterling.

"I think that adds credibility to the project and to our team when you have a state agency recognizing the value of the project, the competence and abilities of the team," Anderson said.

According to an application summary published May 4, the authority is seeking a $3 million loan under the Governor's Water Supply Program from GEFA for reservoir "planning and permitting costs."

Anderson is confident the project will secure the loan. However, according to a June 8 letter Mason sent the authority, the loan request won't be heard unless Atlanta approves the proposal.

Still, Anderson says the project has the potential to nearly double the authority's revenue. Under the contract's fee schedule, it could take in up to $159 million over the course of 50 years.

"That's a boatload of money for us and the size that we are," he said. "With that we could build all of our capital projects, water tanks and water lines, and build an administration building and further support the community. We could even roll rates back.

"There is just a host of things we could do with this kind of annual revenue. It would be huge."

Anderson said the next step, for which there is no time frame, would be an intergovernmental agreement with Atlanta.

"Patience is key," he said.

 

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