In eight years as governor, Sonny Perdue couldn’t resolve Georgia’s bitter water war with Alabama and Florida.
But in the end, he may have found a way to profit from it.
As a severe drought taught us a few years ago, metro Atlanta’s water supply is barely adequate. Legal setbacks since then have made the situation even more precarious. The region had long assumed it could tap the bounties of Lake Lanier to serve its water needs, but a ruling by a federal judge in 2009 called that into doubt. Unless Georgia settles with Alabama and Florida by July 2012, it could lose almost all access to Lanier as a water source.
In response to that ruling, Perdue and other state officials have advocated construction and expansion of reservoirs in North Georgia to “drought-proof” metro Atlanta. Gov.-elect Nathan Deal reiterated the reservoir-building policy in a speech this week to legislators in Athens, suggesting that the state might float bonds to finance reservoir construction.
The biggest obstacle to implementing that plan is getting the necessary federal permits.
For example, building a reservoir is destructive, flooding acres of wetlands and streambeds. Federal law requires that if wetlands and stream beds are harmed, the damage must be offset by construction of replacement wetlands and the repair of damaged streams in the same watershed.
That’s where wetlands mitigation banks come in. Mitigation bankers buy agricultural property that includes drained, nonfunctional wetlands and damaged stream beds. They restore the wetlands, plant native vegetation and repair the streams’ natural functions.
In return, the federal government grants the mitigation bank what are known as wetland or stream mitigation credits. If a developer needs to destroy wetlands, he can turn to a mitigation bank and purchase credits to offset the damage. For example, a mitigation bank that restores a one-acre wetland in North Georgia can generate wetlands credits worth $100,000 to a developer.
On July 9, 2009, Perdue and a partner, Aaron McWhorter, bought a 157-acre parcel of agricultural property in Habersham County along the Soque River for $3.7 million, according to the Habersham County Tax Assessors Office.
On Oct. 20, 2010, the U.S. Army Corps of Engineers issued a request for public comment on a proposal by the McWhorter/Perdue partnership to convert the Soque River property into a wetlands mitigation bank. Based on conservative estimates by industry experts, the bank could eventually generate more than $6 million in credits.
However, the market for mitigation credits, like the market for land, has slowed considerably with the collapse of the real estate market. One mitigation banker active in North Georgia said that the market is so glutted with credits right now that he wouldn’t invest in a new project without a guaranteed buyer for credits in hand.
However, a boom in reservoir construction could change that dramatically.
For example, the 850-acre, $345-million Glades Reservoir proposed by Hall County and the City of Gainesville would flood more than 27 acres of wetlands and more than 17 miles of streambeds, according to a permit application filed in 2009 with the U.S. Army Corps of Engineers. (That application has been temporarily withdrawn and is being revised.)
The Glades Reservoir is also in the upper Chattahoochee watershed, the same watershed as Perdue’s proposed mitigation bank. That’s important, because under federal regulation, mitigation credits must be generated in the same watershed in which they are used.
In an interview Thursday, Perdue spokesman Bert Brantley said it was “ridiculous” to link Perdue’s investment to proposed reservoir construction. Progress on the Glades Reservoir, Brantley noted, has been temporarily halted by a disagreement between Hall County and Gainesville.
However, Brantley acknowledged that the Glades and other reservoir projects would probably move forward eventually.
The governor’s spokesman also acknowledged that his assessment was based solely on his own very limited personal knowledge of Perdue’s project. He had not asked the governor about the project, he said, and would not do so because “the governor doesn’t run his personal business through me.”
When Brantley was asked to make the governor available for questions directly, he declined to do so.
– Jay Bookman