Habersham may not have enough money to complete promised SPLOST projects; eyes PFA as alternative

Habersham County Attorney Donnie Hunt explains to commissioners how a Public Facilities Authority would operate during their Oct. 17, 2022, work session. County Manager Alicia Vaughn is asking commissioners to consider establishing a PFA to incur debt to pay for buildings promised to taxpayers which the county now says SPLOST funds may not fully cover. The Authority could also be used to pursue other future construction projects without voter approval, including a new landfill and jail. (livestream image)

Concerns over rising costs are causing Habersham County leaders to look for alternatives to build several new facilities they promised county taxpayers.

Donnie Hunt, Habersham County Attorney, addressed the county commission during their work session Monday night about creating a Public Facilities Authority as a measure to address the current needs for public facilities in the county. The discussion was spurred by the discovery that SPLOST may not cover the construction costs of three of the major projects that were approved by voters in the SPLOST 2021 referendum. Those three projects are the Animal Shelter, Central Fire Station, and the 911/Radio Center. All three projects are being affected by supply chain issues and inflation, officials say. Since all three projects are facilities, a Public Facilities Authority could take on debt to finish one or more of those projects should SPLOST funding run out.

SPLOST was approved by voters in November 2020 and was approved by voters 3-1.

SPLOST is projected to raise about $48 million over the 6-year period. However, county management is in fear that all projects will not be completed with SPLOST funding due to cost overruns. Should the projects go unfinished due to cost overruns, then the General Fund (property taxes) will be forced to pay for the completion of those projects. SPLOST collections for the last 18 months are higher than expected but the cost overruns are much higher, officials say.

Donnie Hunt explained that the process to set up the Authority by the County Commission for this year is under a tight schedule. They would have to set up the makeup of the authority. One main question was would the authority be made up of the commissioners themselves or by appointees or both. Once the commission has the authority set up, then it must go to the state legislature for their approval. In order to make the state legislature timeline for consideration, the commission must submit all documentation no later than mid-December.

Hunt and county staff said they would like to see this done by the November commission meeting, if possible, should the commission decide to move forward with the authority.

WATCH: Habersham County Commission Oct. 17 work session

Hunt explained to the commission that an authority is an independent body. He used the analogy of a corporation with a sole stockholder where the sole stockholder is one person, and the corporation is a separate person. He explained in the case of the county commission and an authority, they are separate and there will always be issues of control and oversight.

He also went into the history of one authority in Habersham County. He outlined where the Airport Authority was held liable and heavily fined for not responding to open record requests and the county was on the hook for those fines. The Airport Authority was ultimately dissolved through local legislation and re-created as an Airport Commission.

One alternative the county commission has is to bring back to the voters a SPLOST “undo” where the commission brings forward a referendum stating that a project or projects cannot be feasibly completed at this time. This could backfire should the “undo” referendum fail. The county commission must move forward with the SPLOST projects and all cost overruns must be paid out of the General Fund should SPLOST funding not cover those projects.

The commission discussed hypothetically of moving forward with bringing to the voters a referendum to remove or “undo” one or more of the projects from the approved SPLOST list. Commissioner Mealor stated that he felt that the community would possibly support removing the Animal Shelter from the SPLOST project list to construct the other two projects and not raise taxes. He also explained that such a move would require the Animal Shelter be built in the next SPLOST due to the poor conditions at the facility. He was adamant that he would not vote for another millage rate increase.

By law, the projects must be completed unless a new referendum is brought forward and approved by voters to remove a project or projects from the current SPLOST list.

Another issue explained by Habersham County Manager Alicia Vaughn was that in the SPLOST referendum, the voters approved general obligation debt. The county has taken out general obligation debt in advance to move these large projects forward to the tune of $12 million. This money is sitting in an account and at some point soon it has to be spent.

Should the commission elect to do a SPLOST “undo”, the county could have complications with the bond company on the advanced $12 million. Tim Sims, Finance Director, confirmed that the $12 million advance was only for the construction of the Central Fire Station and the E-911/ Radio Center and not the Animal Control Shelter.

It was also discussed that a PFA could address a new jail and other facilities needed in the county, but the immediate concern is to address those facilities already approved by voters. If a PFA is established, it would not require voter approval to move forward with future projects.

County commissioners made no recommendations and did not give any indication during the work session as to how they plan to proceed.

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