LEESBURG, Ga. -- Sometimes when all the cards are laid out on the table and the viable options have been reduced to their essence, you do what you have to do.
That's where the Lee County Utilities Authority currently stands, the stubbornly lousy economy thwarting any efforts to reduce a $26 million mountain of debt it currently services.
That's why Authority Director Chris Boswell got together with Lee Administrator Alan Ours and the debt experts at Atlanta-based Merchant Capital Merchant and Investment Bankers to devise a plan of action.
"I started looking at the budget numbers for 2010-2011 and at our debt, and I looked at the reduced revenue numbers and knew we'd have to do something," Boswell said Wednesday. "We'd done some debt restructuring with Merchant Capital in 2005, but quite honestly I didn't know if we could, or if it was worth doing again.
"I contacted Trey (Monroe) at Merchant Capital and talked with Alan and (Utilities Authority) board members to see if it was something we should consider. I just knew we had to do something because our customers don't have the money for a rate increase."
Monroe, vice president of Merchant Capital Atlanta, spoke to the Lee County Commission at the group's April 13 work session and made a pitch for a short-term fix of the Utilities Authority's debt woes. He said Wednesday in a phone interview that such an approach would rely on an eventual economic turnaround.
"The final structure hasn't been determined yet, but we're looking at restructuring the Utilities Authority's debt to give them cash-flow relief over the next couple or three years," Monroe said. "The plan that looks most promising would cut their debt service by $700,000 to $1 million a year over the next three years or so.
"Under that plan, we wouldn't increase the timeframe of the debt service. The debt that the Authority is carrying now extends over the next 20 years. The plan we're considering would still be paid in 17 to 20 years."
Much of the $26 million in bond and loan debt the Authority is currently working under came with the purchase of several privately owned water systems operating in the county and upgrading them as part of a countywide system that was geared to meet the fast-growing county's needs.
A development boom that preceded the nationwide recession allowed the Utilities Authority to cut its annual county budget fund transfer from $806,000 in 2006 to $108,000 in 2007 and $295,000 in 2009. But then the revenue went south. In a hurry.
"If the economy was rocking and rolling along like it was even three years ago, we wouldn't have to think about restructuring," Boswell said. "But part of the process of maintaining this system is controlling costs. We're going to have to look at all avenues of revenue, and we're going to have to cut costs.
"Right now, the debt service makes up around 60 percent of the Utilities Authority budget. We're going to have to reduce that."
Fortunately for the county, recent work on Authority-managed infrastructure has it in good position to provide quality service over the next few years with few forseeable major costly issues to deal with.
"Our water system is in good shape for the next seven or eight years," Boswell said. "Our sewer system and wastewater treatment plant is good for at least the next four or five years before we have to make any major upgrades. Hopefully we'll be able to use SPLOST (special-purpose local-option sales tax) to meet some of those needs.
"The reality is, though, that the tap fees just aren't happening right now.
We're relying on customer usage of water and sewer to meet our budget responsibilities. It's going to take development at least at the level it was three years ago for us to get back where the revenue numbers need to be."