BRADENTON, Fla. — With severe restrictions pending on how Georgia obtains its drinking water, a state senator wants to give local governments the option of financing water-related infrastructure projects through public-private partnerships.

The use of P3s is the cornerstone of the Georgia Public-Private Water Supply Act in SB 122, which is sponsored by Sen. Ross Tolleson, R-Perry, chairman of the Natural Resources and the Environment Committee.

The bill allows bond financing to be used in conjunction with P3s.

Meanwhile, the 11th U.S. Circuit Court of Appeals Wednesday was scheduled to hear oral arguments in an appeal by Georgia. The state is seeking to overturn a 2009 federal ruling that said local governments around Atlanta were improperly withdrawing water from a federal reservoir known as Lake Lanier.

The federal case centers on a decades-long debate between Georgia, Florida, and Alabama over regional water-supply rights. It’s unknown when the appellate court will rule.

If the appeal fails, Georgia communities that rely on Lake Lanier will be required to reduce their withdrawals significantly by mid-2012 and find other sources for their drinking water.

The federal suit and the state’s success in using P3s for major transportation endeavors gave Tolleson the idea that public-private partnerships could be used to finance water-related infrastructure projects.

“Over the next 25 years, a lot of money will be invested in Georgia as far as water infrastructure goes,” he said. “What we’re trying to do is give every local government the opportunity to have different financing sources. This gives them a little more flexibility.”

If passed, the bill would allow a local government or several governments to enter contracts up to 50 years with a private developer or consortium to plan, finance, construct, acquire, operate, or maintain water infrastructure systems, including reservoirs that are a major part of Georgia’s drinking-water system.

Drinking-water reservoirs are usually man-made lakes that capture rainwater, stormwater, and sometimes flow from natural bodies of water. They are sometimes opposed by environmental groups concerned about the loss of habitat that can occur from siphoning water from natural areas.

Local governments that use P3s can finance contracts with grants, bond financing, and fees such as retail and wholesale user payments.

In an attempt to be “proactive” in understanding the depth of Georgia’s water infrastructure needs, Tolleson said he is also sponsoring a resolution to create the Joint Committee on Water Supply and have it do a comprehensive analysis of those needs, including the use of reservoirs, where facilities are needed, and additional creative financing options.

Infrastructure to serve growth, and aging systems that need to be replaced, could easily cost more than $1 billion over the next 25 years, he said.

The committee’s work would be complex because of the varying geography of the state, which can be flat, mountainous, and coastal. Some areas rely on surface bodies to obtain drinking water, while others uses groundwater sources.

The committee study would “bring people together to talk about resources, interconnectivity, and the best way to efficiently deal with water,” Tolleson said. “We need to understand the facts. It’s like drinking out of a fire hose — there’s so much information.”

A report on the committee’s findings and recommendations is due Dec. 31.

Tolleson said he began wading into the complex issue of water infrastructure five years ago as an ongoing debate between Georgia, Alabama and Florida began heating up. It moved to the federal court system in 2007.

“I tell people that I was a young man when I started this — now I’m aging rapidly,” he said.

In 2009, District Court Judge Paul Magnuson ruled that the U.S. Army Corps of Engineers should have obtained congressional approval before allowing local governments around fast-growing Atlanta to depend on withdrawals from Lake Lanier. The lake has become a primary source of drinking water for Atlanta and surrounding communities.

Magnuson gave local governments until mid-2012 to reduce their withdrawals to mid-1970s levels or seek congressional approval to continue taking water at current levels.

The suit is underscored by an ongoing dispute between Georgia, Florida and Alabama because Lake Lanier receives some of its water from an interconnected maze of rivers in Georgia. Those waters flow into tributaries in Alabama and Florida, providing resources for drinking water and marine habitat such as oysters.

Severe drought had become a complication in Georgia even before the tri-state dispute went to court in 2007.

Then-Gov. Sonny Perdue ordered a study of existing and proposed reservoirs, and the development of new reservoirs as a strategy to deal with the region’s dwindling supply of drinking water.

At least six reservoirs were proposed at the time Perdue’s study was done in 2008, including Hall County’s plan to build the 850-acre Glades Reservoir. Hall County is about 35 miles northeast of Atlanta and includes Gainesville, the county seat. .

The $345 million bond-financed Glades Reservoir was once proposed as a P3, but now is being undertaken solely by Hall County, though interim finance director Lisa Johnsa said all options remain open as the project proceeds.

An application for the final federal permit to build the system is expected to be submitted in June and could take a year to obtain. Under the current financing schedule, the first tranche of bonds for the construction of the system could be sold in mid-2012.

The Gainesville and Hall County Development Authority sold $7.6 million of revenue bonds for engineering and land acquisition in November.

Johnsa said it has not been determined if the Development Authority or a new entity will issue bonds for the reservoir. She and interim county administrator Jock Connell are recommending that Hall County seek competitive proposals for an independent financial adviser as well as other members of the bond financing team.

“There’s no question from what I’m being told that this is one of the premier candidates for a reservoir in the state,” Connell said. “It is a huge project. It certainly is a project of importance because of the issue of water supply, but this is also a huge economic development initiative not just in Hall County but probably the northeast Georgia ­region.”

The project’s importance has grown with the pending federal court ruling because portions of Hall County and Gainesville currently depend on withdrawals from Lake Lanier, according to Johnsa.

“Right now everyone sees that as free water,” she said. “Even if the [Magnuson] ruling is overturned, Lake Lanier withdrawals will have greater costs.”

Connell is the retired administrator and Johnsa is the retired finance director from Gwinnett County, which is part of the Atlanta metropolitan area. Both are serving in interim capacities in Hall County until permanent replacements are hired.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.