Hancock Utility Authority on the hook for $10M pre-Katrina loan; every home in county could see significant rate increase
By Dwayne Bremer
Jul 18, 2014, 19:48
The Hancock County Utility Authority will soon find out if it has to repay a $10 million loan procured by one of its member organizations before the authority was formed in 2006.
Prior to Hurricane Katrina in 2005, the Southern Regional Wastewater District--which covered the cities of Bay St. Louis and Waveland, and Hancock County Water and Sewer-- secured $10.1 million in funding from the State Revolving Fund (SRF), a credit plan administered by the Department of Environmental Quality.
Under the SRF program, DEQ loans money to utility entities and the funds are paid back with little or no interest.
The money is then put back into the pot for other capital projects in the state.
Officials said DEQ has about $200 million in the revolving fund.
Utility Authority Director David Pitalo said Friday that Southern Regional borrowed $10.1 million from the SFR around 2002 or 2003. The loan was to be repaid on a 20-year schedule beginning in October 2005.
The funds were used for a variety of projects, including upgrades at the Gulfside treatment plant, he said.
In 2006, Southern Regional and several other local utility entities merged to form the Hancock County Utility Authority.
The merger allowed the separate entities to act as one, but the new entity also assumed Southern Regional's SRF debt.
Former Utility Authority Chairman Eddie Favre said Thursday that the first payment on the SRF loan was never made because the utility authority was strapped for cash after Katrina.
Instead, Favre said, the yearly loan payments were deferred in hopes that the loan would eventually be forgiven.
For the past eight years, the utility authority has been deferring payments.
Attorney J.P. Compretta, who represents the Hancock County Water and Sewer District, said Friday that the Mississippi legislature passed a special bill last year which forgave the interest on the SRF loan. The bill was co-authored by District 46 State Sen. Philip Moran, Compretta said.
However, getting the entire loan forgiven is a different story, he said.
Compretta said efforts are still ongoing to ask for the loan to be "forgiven" of the loan, but if it is not, then the authority may have to secure a "bridge loan" to pay it off.
Compretta said the authority is also seeking grant funding, possibly from BP, which could help pay off some of the balance.
If the utility authority is forced to repay the loan, it could result in significant rate increases for customers throughout the county, including those who were not Southern Regional customers prior to Katrina, officials said.
Officials at MDEQ were not available for comment by press time Friday.