Union City, Palmetto and Fairburn earlier this week gave approval to refinance the $41.7 million 2003 bond for South Fulton Municipal Regional Water and Sewer Authority through an interest rate-swap that would provide an additional $13 million to construct a reservoir and install water lines to serve the two cities and Palmetto. But for Fairburn there was more to the story.

The unanimous approval of the refinancing by the Union City Council came Tuesday after a presentation by Banc of America Securities Managing Director Bill Johnston. Cited as Alternative 4, the plan calls for refinancing and increasing the bond funds and applying both the savings and the new funds to capital expenses. The new interest rate, representing a .8 percent reduction from the current 4.896 percent, would generate approximately $13 million. During the brief discussion, Councilwoman Helen Turner asked what phase of the process the project was currently in. Mayor Ralph Moore responded, saying the project was in the property acquisition and permit phases.

The approval of Alternative 4 by the Fairburn City Council one day earlier came after a much more lengthy discussion and with a caveat that would require the approval of all three mayors before funds could be spent on items not specifically tied to acquiring the needed state and federal permits. Without that caveat in place, Fairburn voted to accept Alternative 1, which supports the refinancing and applies those savings to reduce the monthly principal and interest costs to be paid by the three cities beginning this summer. For Fairburn, those savings would be approximately $10,000 per month, said City Administrator Jim Williams.

Palmetto City Council also approved the rate swap at a Thursday called meeting. Citing his opposition by casting the only opposing vote was Councilman John Miller. Taking essentially the same position as the Fairburn City Council, Miller said he would like to have more assurances about the efficiency with which the bond money will be spent. In response to the concern expressed by Miller and the Fairburn council, Mayor Clark Boddie said he hoped all parties would look at the total issue and avoid obstructing and micromanaging the business of the water and sewer authority.

“Everybody needs to understand that the actions are controlled by an authority,” Boddie said. “You can’t arbitrarily change the way the authority operates. As long as four of the seven members vote, the authority will move forward.”

Authority attorney Dennis Davenport, also present at the Palmetto meeting, said he had not seen the Fairburn resolution. He added in general terms that the current proposed rate-swap refinance was contingent on all three cities being in accord, reiterating that he had not seen the Fairburn document.

During the discussion in Fairburn Monday, the council was in agreement that the project should go forward. Williams said, however, that Fairburn wants to be an equal partner, noting that the authority has not kept its commitment regarding all expenditures. Citing an example of the existing inequality, Williams said the authority’s previous purchase of Palmetto’s antiquated water system was “in my opinion in direct opposition to the spirit of the agreement of 2003.” Other examples included the purchase of properties prior to obtaining the numerous required permits from Georgia Environmental Protection Division and U.S. Army corps of Engineers. Fairburn maintains that the authority has already spent more than $9 million, or 22 percent, of the $42 million bond without securing any of the permits that would lead to construction of the reservoir, development of a water treatment plant and installation of water lines to the three cities.

Though hopeful that the initial $42 million and the additional millions gained from refinancing would be sufficient to complete the project, none of the authority’s consultants May 8 could give that assurance. Citing additional uncertainties, Williams said a similar project planned for Peachtree City, where he served for years as city administrator, is still lacking permits after 30 years. Other hurdles the project must jump include opposition by the city of Atlanta, desiring to be the drinking water supplier for the area, and, potentially, the states of Florida and Alabama, over water issues relating to the Chattahoochee River.

The proposed reservoir comprising approximately 600 acres would be located in the Chattahoochee Hill Country Overlay District. To date, the authority has spent $862,500 for the purchase of 27.74 acres. Authority members May 8 discussed the potential for obtaining the balance of the several hundred acres needed for the project from south Fulton property owner Carl Bouckaert.

Meanwhile, the three cities starting in July will begin paying on the principal and interest from the 2003 bond. Based on water usage and recalculated every six months, Union City’s current share will be $95,000 per month, while Fairburn will pay $67,000 and Palmetto will pay $21,000.

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