Valdosta Daily Times

April 7, 2013

Loan info from GEFA contradicts City

$11 million awaits disbursement, loan amounts don’t match

Jason Schaefer
The Valdosta Daily Times

VALDOSTA — Current loan history for the City of Valdosta from the Georgia Environmental Finance Authority (GEFA) directly contradicts information recently presented to the public by the City, and shows an active GEFA loan of more than $11 million, which was not previously released.

According to Deputy City Manager of Administration Mark Barber, a loan coded 92003SW (SW indicating the loan is purposed for “solid waste” projects) was split into two parts, $1 million paid off earlier and a $250,000 portion of it paid off in March.

The Comprehensive Annual Financial Report (CAFR) for the 2012 fiscal year, which Barber developed and delivered to the City Council March 21 shows 92003SW maintaining a balance of $34,984 in June of 2012, and Barber removed the loan from the spreadsheet before giving it to the Times, which appeared in Monday’s edition as well as today, saying it had been paid off.

The CAFR also mentions on page 67 that the balance for a loan coded 2006-L53WJPHII was $2,823,855 in June 2012, and that “additional draws are pending,” but does not go into detail about how much remains to be disbursed. A chart on the same page shows loan totals and payment periods over which the loans are due.

Information on these loans from GEFA is not consistent with the CAFR in these cases.

The City of Valdosta has applied to draw loan money from the organization for 26 years, starting with a water quality (WQ) loan in the amount of $1 million, with an execution date (the date the official paperwork was signed) of January 1987. The interest rate for that loan was 6 percent, and the money was used for “sewer plant improvements,” according to GEFA.

A second loan was taken out in October 1991 in the amount of $2 million for a water supply (WS) issue, which was spent on a “water plant and water lines,” according to GEFA. The interest rate on this loan was 6.7 percent.

As of March 31, 2013, these two loans are the only loans out of 10 that have been paid off completely. The City still owes an outstanding principal balance of $22,193.95 on the 92003SW loan, which was not split into two parts.

However, a loan coded 2006L53WJ (for “water-joint,” indicating a joint water and wastewater project), shows an execution date of December 2007 for an award in the amount of $24,097,000. This loan was split into two parts, its counterpart named 2006L53WJB (as in “loan B” under the same code).

A portion in the amount of $7,410,611.20 was broken from the original award to allow the City to begin the repayment period, leaving the remaining WJB portion of $16,686,388.80 available for spending, according to GEFA.

Repayment periods normally do not begin until construction for the intended project has ended or the loan completely spent, said GEFA Public Affairs Director Shane Hix, but during this period, the loan will accrue construction interest.

There remains $11,316,776.41 to be disbursed to the City from the WJB loan, according to GEFA. Both the WJ and WJB loans are intended to fund nine rehabilitation projects, including a two-million-gallon water storage tank, water mains, service lines, lift stations and fire protection.

In addition to these inconsistencies between City and GEFA records, four loan amounts listed in the FY2012 CAFR do not match the loan amounts in GEFA documents.

The WS loan for $2 million is listed in the CAFR as $2,228,600; the WJ loan of more than $7.4 million is listed as $7,553,410; a loan coded DW97036P (DW for “drinking water” issues) in the amount of $4.8 million is listed as $4,288,164; and a fourth loan coded CW08003ARRA (CW short for “Clean Water State Revolving Fund”) in the amount of $6 million is listed as $6,142,659.

The CW loan (also coded ARRA for “American Recovery and Reinvestment Act”) was originally taken out in the amount of $10 million, but $4 million of that original amount was forgiven, according to GEFA.

The remaining five loan accounts printed in the City’s CAFR perfectly match repayment amounts and dates of maturity listed in GEFA records. However, the loan amount listed in the CAFR for the DW loan does not match the spreadsheet given to the Times, which lists the loan at $2,351.80 less.

Loan SW was drawn to construct a recovery facility and equipment for recyclable materials; the four CW loans, including CW08003ARRA, were intended to increase the capacity of the Mud Creek Wastewater Treatment Plant from 3.2 million gallons per day (MGD) to 5.7 MGD and to improve the sewer system; and the DW loan was intended for the replacement of 30 miles of undersized galvanized steel water mains with a minimum of six-inch diameter PVC lines.

Loans from GEFA are set up for automatic withdrawal during their repayment periods, Hix said. It is not possible for communities with GEFA debt not to reach complete payment.

Hix mentioned “nothing out of the ordinary” has happened in the City’s relationship with GEFA, that the City’s “financial audits are in good shape,” and that Valdosta is “one of our better customers.”

He could not answer as to why the City’s accounting of the loans and information provided to the public is inconsistent with the official records kept by GEFA.