AJC report: MIllions in tax dollars wasted on risky reservoirs

Millions in tax dollars wasted on risky reservoirs

By Chris Joyner – The Atlanta Journal-Constitution

Posted: 6:00 a.m. Thursday, December 08, 2016


If you like horror stories, I recommend you cozy up with a forensic audit released last week in Newton County.

The document, prepared by an independent auditor, found the county “recklessly wasted” more than $25 million in taxpayer money on the failed Bear Creek Reservoir project. The auditor laid the blame for the debacle mostly at the feet of Tommy Craig, the county’s longtime attorney who advised county officials to listen to their high-priced reservoir consultant — Tommy Craig — and sink millions into a project that crept along for years before crashing into a regulatory wall.

In spite of Craig’s denials, the Bear Creek disaster should serve as a warning to local officials considering whether to spend millions of dollars and a decade or more of work on a reservoir project. These projects are guaranteed to do one thing: Make consultants rich. Everything else is a bit of a gamble.

Jenny Hoffner of the conservation group American Rivers said the audit is bitter confirmation of its 2012 report on reservoir development in the Southeast, aptly titled “Money Pit.” That report warned that reservoir construction threatened to put local governments deep in debt, raising water rates and hamstringing investment in other essential services.

“Newton County taxpayers were put on the hook for $25 million,” she said. “They were sold a bill of goods. It was not going to generate water, but it did generate fees for consultants.”

Like similar projects around the metro area, Bear Creek was built on excessively rosy projections on how fast Newton County was supposed to grow. Population forecasts based on data from the state predicted Newton County to quadruple in size by 2050, growing to more than 400,000 souls.

Craig and other water consultants made a lot of money in the last 15 years on such projections. They told local elected officials that if they didn’t start spending the millions it takes to build a new reservoir on land, engineering studies and attorneys fees, they would be unprepared for the growth that definitely, no doubt about it, was coming their way.

While explosive population growth was the story every local politician told, environmentalists and some local tax watchdogs cast a suspicious eye on the projects they suspected were geared toward “amenity” lakes for fishing, boating and expensive housing developments.

Last year, the state released post-recession growth projections that are much more realistic. Newton County, for example, would grow to less than 200,000 by mid-century. In addition, projections released about the same time by the Metropolitan North Georgia Water Planning District estimated conservation efforts would deliver a 25 percent drop in water use by metro Atlanta residents by 2050.

With lower growth and consumption projections, federal regulators with the U.S. Army Corps of Engineers, who issue the permits for dams that makes reservoirs possible, took a dim view of Bear Creek and other similar projects. Rather than sink many more millions into the project, Newton County swallowed hard and shelved their planned reservoir.

It could be revived one day, but right now its a big, fat debit on the county ledger, including a $21 million loan from the state that Craig told the Newton County press indicated the project was a slam dunk. Ratepayers will be paying down that debt for 40 years.

“The state will not offer you a loan unless they have assurances that you are going to cross the finish line,” Newton County Attorney Tommy Craig told The Covington News in August 2012.

Others have also shelved reservoir plans

While the audit focuses on Newton County’s financial woes, proposed reservoirs are expensive millstones hanging around the necks of other county politicians.

Hall County officials withdrew their application for a federal permit earlier this year for the long-sought and controversial Glades Reservoir. County officials say they haven’t abandoned the project, but instead are taking a breather from paying consultants and are reevaluating the need for the project.

Hall County has invested $16 million on the project but they appear no further along than Newton in making their dream lake a reality.

Likewise, the small cities of Union City, Fairburn and Palmetto have pressed pause on their reservoir project (also named Bear Creek) for the same reasons.

Craig was a paid consultant for Glades and the other Bear Creek project. Like Newton, Hall County and the three south Fulton County cities have cut ties with him.

Not all reservoir projects end with disaster. Richland Creek in Paulding County is up and running, in part because the state has a direct investment in that project, which state officials see as providing relief for Lake Allatoona.

Cheaper options less sexy

Others are a mixed bag, like Hard Labor Creek Reservoir, jointly owned by Walton and Oconee counties.

That reservoir is built and is slowly filling up, but slower than expected growth has local officials in both counties are taking a wait-and-see approach to funding a water treatment plant and transmission lines needed to provide drinking water for the counties. As a result, Hard Labor is mostly an $84 million fishing hole.

Walton and Oconee financed a portion of that cost with $32 million in state loans. The counties were expected to begin paying that debt this coming summer but asked for an additional two years (interest free) to start paying it back.

State taxpayers have skin in this game too. In 2011, Gov. Nathan Deal pushed for $300 million in state bond debt to fund reservoir projects. Along with Hard Labor, Newton County received $21 million in loans and South Fulton’s proposed reservoir has received $10.5 million in loans from the state.

Reservoir opponents have long urged local politicians to take the cheaper, but less sexy, route and invest in their aging water infrastructure. Recapturing water from leaking pipes is way less expensive and can provide additional water for growth. Others have suggested “smart” water grids that would save millions of gallons of water by more expertly delivering water and reduce waste.

“We could be getting that water through efficiencies,” said Hoffner, who describes re-capturing wasted water as a “hidden reservoir.”

That’s not the reservoir consultants want, however. And politicians don’t like to spend money on capital projects they can’t see.

A page-turner like the Newton County audit could change some minds.

As AJC Watchdog, I’ll be writing about public officials, good governance and the way your tax dollars are spent. Help me out.What needs exposing in your community? Contact me at cjoyner@ajc.com.

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