The Madison County Industrial Development Authority (IDA) agreed to a deal with the Georgia Renewable Power (GRP) in Colbert to forgive unpaid construction costs in exchange for $1 million in an escrow funds that the IDA can use to expand and improve the county water system. The monthly meeting was held last week via Zoom.
The authority voted to approve the amended MOU by a vote of 3 to 1 with authority member and treasurer Pat Mahoney providing the lone “No” vote. (See GRP statement on the matter at the end of the article).
Mahoney said she could not support the $346,887 that GRP owes in construction costs (not including $65,000 in late fees) being “passed off” to the citizens of Madison County.
“To forgive that amount of debt is unconscionable,” said Mahoney. “There is no reason that the company should not pay its construction funds just like any other customer.”
She said she could see forgiving the $65,000 in late fees, but not the entire amount.
But IDA chairman Josh Chandler questioned whether the MOU was really an ironclad document to begin with and if the $1 million in escrow money was really the IDA’s money.
“I feel like it’s better to get what we can when we can,” Chandler said, adding that it also allowed the IDA to avoid litigation.
IDA director Frank Ginn said Monday that the amended MOU was worked out between the IDA’s attorney, Mike Pruett, and the GRP attorney and that he thinks it is a good deal for the county.
Ginn said the original MOU, approved in 2018, was ambiguous at best and not written very well.
“It was a terrible document,” Ginn said.
He said the intent of the MOU was to protect the county and not leave it holding the bag if GRP did not go through with building its facility.
“It was like an insurance policy,” Ginn said, adding that the $1 million, put up by GRP and held in escrow by the IDA, was to make sure that GRP built the plant and met its start date to begin operations.
But GRP did not meet its start date and the IDA has questioned for some time whether or not the $1 million in escrow should be forfeited by the plant because of this and because of construction costs that had not been reimbursed to the authority.
GRP did not make vendor payments on over $300,000 in construction costs. The IDA covered those payments on the plant’s behalf. GRP accumulated $65,000 in late fees on that debt to the IDA. Ginn said Tuesday the actual amount GRP owed the IDA was closer to $240,000.
In the amended agreement approved by the IDA last week, Ginn said GRP agreed to let the IDA keep the $1 million in escrow and use it to expand and strengthen the county’s water system as it deems necessary, in exchange for the plant’s debt to the IDA being forgiven.
Ginn said he viewed this as win-win since their other choice was go to court and incur yet more costs.
He also noted that GRP installed a three-million-gallon water storage tank and a booster pump along with the line from Elbert County to supply water to the plant, all of which was deeded to the county.
“That ground storage tank is a big asset as it can be used by the county in the event of a fire while still leaving us enough water to provide water to GRP,” Ginn said.
GRP officials will now need to approve the amended document to make it official.
Drago Tesanovich head of the Madison County Clean Power Coalition, who was listening in on the Zoom meeting, said he did not appreciate the board forgiving GRP’s debt.
“GRP is not your friend, sooner or later you are going to realize they are in it for the money and I can’t say thank you for that vote,” Tesanovich told the board.
In other business, the authority discussed, but took no action on a county water line extension from Hwy. 29 North down Macedonia Church Road to service three homes under construction. The project would require boring a water line under Hwy. 29 North.
Ginn had proposed an option to share the cost of the project with the three homeowners.
Ultimately, the authority could not agree to engage in such a project until a policy is developed to make all such cost-share projects equitable.
Pruett pointed out that if the authority develops a cost-share policy for water line expansion it should be to benefit the IDA in order to get the kind of projects the authority is looking for to expand the water system.
Ginn told the authority that he felt it was a missed opportunity for the IDA to share the costs of future waterline construction down that road.
Georgia Renewable Power (GRP) executive vice president Carey Davis issued the following statement about the agreement with the IDA:
“GRP is happy to provide the county with additional funding to further boost their water system and continue to grow it to a larger system. Since arriving to Madison County, GRP has made a commitment to community leaders to help their water system. The agreement we are executing with the county IDA further solidifies this commitment. As Frank Ginn stated, the original MOU was not the best document due to the rushed nature of completing the project prior to the project deadlines. Unfortunately, the project was built during the two wettest years on record and impacted construction for both the county and GRP. The $346,887 that GRP “owed” was in construction overruns above and beyond the original estimates of the water line extension. This was mainly due to force majeure impacts to the contractor. GRP worked with Frank Ginn, Josh Chandler, and the IDA to donate the $1,000,000 escrow payment to the county IDA to further boost the county’s system and to offset the construction overruns. This increases GRP’s donation to the county water system to over $3,500,000 in assets and funds, which was an significant request by the local leaders of the county. We value our relationship with the county IDA and are committed to being a reliable water customer as well as continuing to help grow the infrastructure for the citizens of Madison County.”