HOGANSVILLE – The Hogansville City Council voted unanimously to raise water, wastewater and a portion of electric utility rates for the upcoming fiscal year during Thursday’s meeting. The meeting was held with the intention to adopt the proposed 2018-19 budget, which is scheduled to take effect July 1. However, the proposed budget was not adopted Thursday. An additional meeting was scheduled for Wednesday, June 27 at 5 p.m. for that purpose. 

The city voted to raise water and wastewater rates, as well as electric rates tied specifically to security lights on Thursday. A motion to raise those same rates and others was denied during the city’s regularly-scheduled city council meeting on Monday. Natural gas rates were not raised during the Thursday meeting, nor were electric rates tied to uses other than security lights. 

“This was not an easy decision,” Hogansville mayor Bill Stankiewicz said. “It was courageous.”

“I’m floored,” city councilwoman Theresa Strickland said after the vote. “You think about our citizens, the state some of them are in financially, to increase these rates starting July 1 is really going to hurt our citizens. It’s frustrating. Our hands were tied.”

The rates that were adjusted based on adjustments provided to the city by Electric Cities of Georgia, a nonprofit organization out of Atlanta specializing in helping Georgia communities maximize their utility performances. ECG provided a plan for multiple rate increases spanning multiple years, however the council only approved Phase One increases, dealing only with the upcoming fiscal year. Total water rates were adjusted from $6.35/thousand gallons to $11.35, while total wastewater rates were adjusted from $9.93/thousand gallons to $21.96. 

The council has been vocal about its opposition to raising utility rates for the citizens of Hogansville during budget discussions and public meetings in the last two months but found itself with no other recourse on Thursday night thanks to a litany of circumstances. 

“You are boxed in from every line,” Hogansville city manager David Milliron said.

The city is currently carrying substantial debt obligations, which will soon be in excess of $14,500,000. The debt has been accumulated over multiple decades, but the first piece of this overall picture can be traced back to the 1990 decision from the then-city council to purchase 426 acres of land near Mobley Bridge Road and Hightower Road for the purpose of growing sod, with the hopes the land would turn into a revenue generator for the city. 

“Other than the fact it is rocky, hilly and clay, it’s perfect for growing sod,” Stankiewicz said.

The land has not been profitable to the city, and the payments on the original bond used to purchase the land quickly became challenging to meet. 

In early January 1994, Hogansville took an additional Series 1993 bond in the amount of $5,980,000, which was done at the time to gain needed leverage on interest rates of the original bond. However, an unusual agreement was reached during that renegotiation. 

“The 1993 bonds were insured bonds, bonds that carry insurance,” Stankiewicz said. “In that bond document, it gave the right to the insurer to approve all debt to the city, including subordinate debt, which was highly unusual and rarely seen.” 

The insurance company holding the bonds is Assured Guaranty. This company has complete control to approve or deny additional loan agreements the city attempts to take on until the payments on the original bonds are completed in 2023. 

Another part of the rate adjustment decision is the wastewater treatment plant the city is obligated to build. Approximately six years ago, the Environmental Protection Division gave the city of Hogansville a mandate to build a new wastewater treatment plant that must pump 1.5 million gallons per day and handle sewage from Meriweather County’s industrial area. The plant’s projected cost is approximately $8,688,000. 

Meriweather County is set to foot $1.6 million of the cost of the plant, and a USDA grant has been acquired in the amount of $2.5 million, leaving the city to pay approximately $4,588,000 of the total price tag. However, Assured Guaranty has the ability to approve or deny the city’s ability to take the USDA loan and subsequent grant, and has refused to do so unless the city raises utility rates, which will help ensure the city can meet the remaining bond payments tied to the Series 1993 bonds, the bonds Assured Guaranty holds.  

“This is the bind we find ourselves in,” Stankiewicz said. “If Assured does not approve the USDA loan, we lose the USDA financing. In that financing is the $2.5 million grant. We would not be able to finish the project on time, which means we would lose $1.6 million from Meriweather County. We would then have an $8 million plant and would have lost nearly half of the financing for it.”

“We are under a consent order to build this plant from the EPD,” Stankiewicz continued. “They are going to say, ‘Sorry that your USDA financing fell through, you still have to build the plant.’ That would be a fiscal impossibility for the city.”

After much discussion, the council unanimously voted to increase rates to the proposed utilities. Rate increases will take effect July 1 and will be represented on August invoices to Hogansville citizens. 

The 2018-19 budget was not adopted, as lingering questions related to a number of line items remained for members of the council. The council will meet Wednesday, June 27 at 5 p.m. with the intent to adopt a budget on that date.