Water rates to rise as judgment is awarded to water authority

Opinion

By Cherie Faircloth, Executive Editor, rcontherecord.com

A declaratory judgment was filed of the Rabun County Water Sewer Authority (RCWSA) in the Rabun County Courthouse on Thursday, Jan. 26, by Superior Court Judge Chan Caudell. His decision to grant full rights to the RCWSA for control of the Boggs Mountain water and sewer infrastructure followed a public trial Dec. 12, 2016, between Plaintiff RCWSA and the City of Clayton over providing water and customer billing rights for the Boggs Mountain Area Water System Extension in unincorporated south Rabun County.

Video courtesy of Nadia Tisdale, AboutForsyth.com

The RCWSA held a special called meeting in June 2016 to review the Authority’s water and  sewer assets in the Boggs Mountain service area which included the Rabun County School’s water/sewer system, worth an estimated $97,000 in revenue annually.

Improvements to the Boggs Mountain water system in 2006 included new water lines and other pipes funded by Rabun County and the Board of Education (BOE). The improved infrastructure was then turned over to RCWSA predecessor, the Clayton-Rabun County Water Sewer Authority.

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RCWSA held a special meeting June 2016 to review water and sewer assets in the Boggs Mountain service area. Photo by Cherie Faircloth

In May 2016 the BOE deeded its system, 0.18 acre of land that held a water tank servicing the school and related easements to the RCWSA. The Rabun County Board of Commissioners also entered into an intergovernmental agreement in May 2016 with the RCWSA which would allow the RCWSA to provide water services to all unincorporated areas of Rabun County.

Also at issue has been the lack of a service delivery strategy agreement since October 2015 due to a stalemate between the City and County over water service delivery. Without a service delivery strategy, there are no binding contracts or agreements that direct who has the right to the Boggs Mountain customers. A lack of a service delivery strategy also places Rabun County out of government compliance and prevents towns and municipalities from seeking thousands of dollars in grants and loans which generate revenue to maintain municipality services.

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Debbie Chisholm, City Councilwoman, Clayton, Georgia

Clayton City Councilwoman Debbie Chisholm said both the City and the RCWSA have been responsible for maintaining the infrastructure through the years for all retail customers located in the Boggs Mountain area. The City owns, meters and resells the water that serves the Bogg Mountain areas since the City purchases the water from the point where it leaves the Lake Rabun Water Treatment Plant and resells it to customers.

Clayton has historically been the water provider and has billed Boggs Mountain customers accordingly for usage, but the RCWSA claims they should be billing an collecting revenue, since they now own the infrastructure.

The RCWSA’s lawsuit against the City of Clayton in July 2016 asked for a declaratory judgment and full control of the Authority’s declared assets in the South Tiger Boggs Mountain area, an unincorporated portion of Rabun County.

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Judge Chan Caudell, Georgia Superior Court Chief Judge, Mountain Judicial Circuit

According to Judge Caudell‘s brief, the City of Clayton maintains that it has the exclusive right to continue to bill Boggs Mountain customers because it has been the only water service provider to the area.

Plaintiff RCWSA stated in its initial filing that it sought an injunction against Clayton to stop the City from billing Boggs Mountain customers, claiming ownership of the system. The RCWSA has five representatives for the County while only two represent the City of Clayton’s interest.

Historically, the City of Clayton has been the sole water provider in Rabun County, billing customers and maintaining infrastructure in the cities of Clayton, Tiger, Mountain City, Dillard and unincorporated Rabun Gap.

Councilwoman Chisholm said the RCWSA bought back its own North Loop infrastructure in 2015 for $500,000 (Dillard and unincorporated Rabun Gap) which it leased to the City of Clayton. The North Loop provided annual estimated revenue of $120,000 to the City, according to City Manager Cissy Henry.

 

Judge Caudell’s decision to award RCWSA the Boggs Mountain area customers, valued at an annual revenue of approximately $150,000, will further erode the city’s water revenues by over 10 percent, according to Councilwoman Chisholm.

“The County has never been in the water business and the RCWSA (formerly Clayton-Rabun County Water and Sewer Authority) was never set up to be in the water business,” said Chisholm.

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Water and Sewer building in Lakemont, Georgia. Photo by Cherie Faircloth

“When the original Clayton-Rabun County Water Sewer Authority was created over 17 years ago (the predecessor Authority to the RCWSA) it was only for the purpose of borrowing money and to build the water plant in Lakemont,” she said.

Meanwhile, the City of Clayton has outstanding infrastructure debt of more than $300,000 to the United States Department of Agriculture (USDA), and more than $3 million in infrastructure debt/revenue bonds to Georgia Environmental Finance Authority, or GEFA.

New debt of $2.75 million in loans and grants for maintenance has also been awarded.

“That’s a total of almost $6 million in loans based on our revenue and the ability to pay back the loans,” said Chisholm.

“The City has also incurred more than $11,000 in attorney fees for defense in the December water hearing and, if the case is appealed, will incur more. If the Boggs Mountain decision stands, that could cost us over 10 percent of our current revenue.

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Cissy Henry, City Manager, Clayton, Georgia

“We will have no choice but to raise the rates on our remaining water customers in Clayton, Mountain City, Tiger and south of Tiger,” she said.

Clayton City Manager Cissy Henry said she was surprised at the judgment against the City.

“The City of Clayton was and still is the only provider of water service. There is no current water delivery strategy and until a service agreement is in place, the City should remain the provider,” said Henry.

“Rates will have to up to compensate for our losses in revenue in order to pay for our debts and obligations,” she said.

In its pleadings, the City legal counsel presented the court with multiple cases illustrating the use of a federal anti-curtailment settlement clause designed to protect water providers from takeover where federal loans were still outstanding.

Judge Caudell ruled the anti-curtailment settlement did not apply in this case. Under the Georgia Constitution, the City does not have the legal right to provide water services outside of its boundaries of municipality, in unincorporated areas of Rabun County without an existing contract with the County.

“Even though the City of Clayton has been doing so with the County’s blessing for over 80 years …” said Councilwoman Chisholm.

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Brendan Thompson, RCWSA Executive Director

“The RCWSA was set up to go for full consolidation of water/sewer services. That’s my understanding,” said Brendan Thompson, executive director of the RCWSA. Thompson was hired Sept. 2, 2014, to direct the activity of the RCWSA.

Talk of  the potential to consolidate water/sewer services with the county remains hearsay according to Councilwoman Chisholm. She said there was never a public discussion with the County, the water authority and the City regarding consolidation.

“During the 2012 SPLOST, council members were taken two at a time into closed door meetings and told by then County Commission Chairman Butch Darnell to ‘hand over all of your water and sewer  or you won’t be included in the upcoming SPLOST funds,” said Councilwoman Chisholm.

During the 2012 SPLOST, council members were taken two at a time into closed door meetings and told by then County Commission Chairman Butch Darnell to ‘hand over all of your water and sewer or you won’t be included in the upcoming SLOST funds” – Councilwoman Chisholm.”

SPLOST is A special-purpose local-option sales tax financing method for funding capital outlay projects in the U.S. state of Georgia. It is an optional 1 percent sales tax levied by any county for the purpose of funding the building of parks, schools, roads, and other public facilities.

“The word consolidation was never mentioned,” said Councilwoman Chisholm.

“Two council members could not legally make that decision in a closed door meeting, and furthermore, the infrastructure belongs to the taxpayers of the City of Clayton”

In the Oct. 25, 2012, edition of The Clayton Tribune, Councilwoman Chisholm’s statement is confirmed in a front page article indicating that the County directed an ultimatum to the City to either consolidate water and sewer or lose SPLOST funding.

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Allyn Stockton Rabun County Attorney

Rabun County Attorney Allyn Stockton told then Clayton Mayor David Phillips and Councilwoman Chisholm that if the City didn’t “deal with us (County), y’all won’t be getting any SPLOST money.”

Due to a change in the Georgia state law regarding how counties could handle how SPLOST funding were distributed, the County had the power to limit who received SPLOST funding. The City of Clayton was not awarded SPLOST funding in the last SPLOST cycle, an estimated $3 million the city would never have been able to spend on road repair, infrastructure and other projects to improve city services.

Thompson said it would be the “City’s decision if they were to choose to consolidate.”

He stated that the Authority was prepared to assume the City’s water/related debt if they chose to consolidate services.

Thompson also said that he was pleased with Judge Caudell’s decision but would not comment further on the case until he had an opportunity to meet with the RCWSA board.

In addition, Thompson said that there would not be a special meeting to discuss the court’s decision with RCWSA board members and the matter would be discussed at the next regular RCWSA meeting on Feb. 14.

cherie-faircloth

Cherie Faircloth, Executive Editor, RCOntherecord.com

The editorial written by Cherie Faircloth does not reflect the opinion of Rabun County On The Record, its employees, sponsors or advertisers. Faircloth is the executive editor of Rabun County On the Record RCOntheRecord.com. She is also a freelance writer producing content in Florida and Georgia. 

 

 

 

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