ANNUAL REPORT 2018 OUR MISSION To Conserve and Improve Georgia's Energy, Land, and Water Resources Founded in 1985, the Georgia Environmental Finance Authority (GEFA) directs programs that improve Georgia's environment, protect natural resources, and promote economic development. GEFA provides loans for water, wastewater, and solid waste infrastructure; manages energy efficiency and renewable energy programs; administers land conservation loans and tax credits; and monitors state-owned fuel storage tanks. To date, GEFA has provided more than $4.3 billion in low-interest loans to cities, counties, and infrastructure authorities for more than 1,600 projects that improve water, wastewater, stormwater, and solid waste systems. 1 | gefa.georgia.gov Executive Director's Report To the Governor, Members of the General Assembly, and Georgia Citizens: The second Monday of January 2019 marked the end of Governor Deal's administration. Throughout his two terms, Governor Deal has been an ardent supporter of the Georgia Environmental Finance Authority (GEFA) and water infrastructure throughout the state. One of his first initiatives was the Governor's Water Supply Program (GWSP), which was led by GEFA to secure and improve Georgia's water supply resources. In the last eight years, the GWSP has accomplished this mission in partnership with the Georgia Department of Community Affairs (DCA). With $198 million in low-interest loans through GEFA and $72.7 million in state direct investment (SDI) though DCA, GWSP financed a variety of water supply projects, including six reservoirs, five water supply well projects, three deep aquifer well research projects, and an agriculture irrigation metering program. The accomplishments of the GWSP have greatly impacted and contributed to the state. The reservoirs when complete will add nearly 27 billion gallons of storage in critical watersheds and more than 122 million gallons-per-day (MGD) of new water supply--the equivalent of the daily water demand for Gwinnett, Henry, and Rockdale Counties combined. The cities of Hahira and Vienna, the Lake Lanier Islands Development Authority, and Forsyth County constructed drinking water wells through the GWSP. The city of Tybee Island is exploring a deep well into the Cretaceous Aquifer, which is approximately 4,000 feet underground. This first-of-a-kind project in Georgia will help Tybee Island improve its capacity to meet future water demand, which is currently limited due to salt water intrusion in the Floridan aquifer along Georgia's coast. The GWSP is also helping the agriculture industry-- Georgia's number one industry--explore the use of deep aquifers as an irrigation source for the multitude of crops grown in Southwest Georgia. Claiborne Aquifer test wells have provided valuable data to assess the aquifer's use as an alternate source of water for agricultural irrigation. The GWSP is funding agriculture irrigation metering as well to help manage the state's water resources used for agriculture. In addition to the GWSP, GEFA's traditional loan programs awarded more than 450 loans for water, wastewater, solid waste, and land conservation projects totaling more than $1.2 billion during Governor Deal's administration. GEFA's Energy Resources Division also launched a new program-- Energy Performance Contracting. The program has awarded seven projects totaling $82 million that will help state agencies save water and energy and lower utility costs. In this report, you will see how GEFA contributes to the state's commitment to energy, land, and water conservation. Our work would not be possible without the support we receive from the governor and state and local leaders. Sincerely, Kevin Clark, Executive Director 404-584-1000 | 2 FY2018 ACCOMPLISHMENTS AT A GLANCE GEFA increases the capacity and quality of Georgia's water supply, coordinates the protection and preservation of Georgia's land resources, and promotes conservation and advancement of Georgia's energy resources. The authority continues to build on this success through its commitment to protecting Georgia's natural resources and supporting economic development. 3 | gefa.georgia.gov Improving Georgia's Water Resources Projects financed by GEFA in FY2018 provided reliable water, wastewater, and solid waste services to nearly 1.2 million Georgians. Local governments using GEFA financing in FY2018 saved an estimated $50.1 million in interest costs over the life of an average 20-year loan. The Clean Water State Revolving Fund awarded 33 loans totaling $163.1 million. The Drinking Water State Revolving Fund awarded 27 loans totaling $50 million. The Georgia Fund awarded 16 loans totaling $48.8 million. GEFA provided financing to 72 communities in FY2018. Protecting Georgia's Land Resources Since 2006, the Georgia Conservation Tax Credit Program facilitated 556 conservation easement donations protecting more than 246,000 acres of land. In FY2018, the Fuel Storage Tank Program provided oversight and monitoring services for 660 fuel storage tanks at 24 state agencies and departments. GEFA conducted underground storage tank operator and compliance trainings at 24 state facilities and passed 60 compliance inspections. Completed the annual registration for 330 state-owned underground fuel storage tanks. Conserving Georgia's Energy Resources Two state agencies were approved for guaranteed energy savings performance contracts totaling $20 million and are moving forward with procurement. During FY2018, three Georgia Solar contracts totaling $125,000 were executed with local governments and K-12 public schools to install small-scale solar photovoltaic systems and to increase renewable energy education. Solar for Schools provides technical college students with the hands-on learning opportunity of solar photovoltaic system design, installation, and maintenance. During FY2018, GEFA executed one contract for $58,000 with Southern Crescent Technical College Griffin campus. The Weatherization Assistance Program completed weatherization retrofits to 458 units--impacting 745 people--with estimated energy savings of 13,969 MBtu. 404-584-1000 | 4 Energy Resources The Energy Resources Division promotes energy efficiency, renewable energy, and energy assurance programs to improve environmental quality and stimulate sustainable economic development. The State Energy Program provides financial assistance and technical support for energy efficiency and renewable energy programs. Energy Performance Contracting allows the state to finance building improvements designed to lower energy and water consumption. The Georgia Energy Challenge helps state agencies reach the program's 15 percent energy conservation goal. The Weatherization Assistance Program provides energy conservation measures to income-eligible households. The Energy Assurance Program works closely with the Georgia Emergency Management Agency, other state agencies, and private sector stakeholders to develop energy emergency planning resources and to lead exercises designed to ensure better emergency coordination. 5 | gefa.georgia.gov Energy Performance Contracting continues to improve state agencies In November 2010, Georgia voters overwhelmingly approved a constitutional amendment to establish guaranteed energy savings performance contracting for use by state agencies. Since then, GEFA has actively developed the program. Seven projects are currently under contract. In an energy performance contract, the energy services company (ESCO) guarantees the state will save money with the installation of energy- and water- efficient equipment and systems. As of FY2018, six state entities have participated in the program: The Georgia Institute of Technology The University of Georgia Georgia World Congress Center Authority Georgia Department of Corrections (two contracts) North Georgia Mountains Authority Georgia Department of Transportation Phillips State Prison is a medium security facility that houses more than 900 adult males. In 2013, Johnson Controls conducted an Investment Grade Energy Audit and recommended electronic controls to reduce energy and water consumption and to monitor use. After three annual performance periods, the total energy, water, and cost savings exceeded expectations. The most notable to mention is water conservation. By replacing water fixtures with low-flow devices, Phillip's State Prison has seen impressive savings in water and sewer expenses. PERFORMANCE YEARS Year 1: FY2015 Year 2: FY2016 Year 3: FY2017 Cumulative Total GUARANTEED SAVINGS $445,579 $452,262 $459,046 $1,356,887 ACTUAL SAVINGS $566,273 $549,443 $603,219 $1,718,935 SURPLUS SAVINGS $120,694 $97,282 $144,172 $362,148 GEFA helped facilitate the first state agency energy performance contract in FY2013 with the Georgia Department of Corrections (GDC). GDC partnered with Johnson Controls to implement energy and water conservation measures at Phillips State Prison in Buford, Georgia. GEFA will continue to work with state agencies to implement energy performance contracts as an important method for saving energy and money while improving facilities. 404-584-1000 | 6 Land Resources The Georgia Land Conservation Program (GLCP) offers grants and low-interest loans for fee title or conservation easement purchases from the Georgia Land Conservation Trust Fund and Revolving Loan Fund. It also manages the Georgia Conservation Tax Credit Program, which is designed to increase the financial incentives for landowners to donate land or place a conservation easement on their property. The GLCP is administered under the guidance of the Land Conservation Council. The Fuel Storage Tank Program (FSTP) is responsible for upgrading, replacing, or closing state-owned fuel storage tanks. The FSTP serves as the centralized management and monitoring office for fuel storage tanks owned by state agencies and institutions throughout Georgia. The FSTP also: Conducts environmental cleanup Facilitates fuel storage tank preventative maintenance and repair Manages annual maintenance inspections 7 | gefa.georgia.gov 404-584-1000 | 8 Water Resources Water, wastewater, and solid waste infrastructure protects the environment, facilitates economic development, accommodates population growth, and safeguards public health. GEFA partners with local governments by providing loans for water, wastewater, stormwater, and solid waste infrastructure. The Water Resources Division also assists local governments with the development of reservoir and water supply projects. The Georgia Fund is a state loan program for water, wastewater, and solid waste infrastructure. The Georgia Reservoir Fund is a state loan program for reservoir and water supply infrastructure. The Clean Water State Revolving Fund is a federal loan program for water quality and wastewater treatment infrastructure. The Drinking Water State Revolving Fund is a federal loan program for drinking water infrastructure. 9 | gefa.georgia.gov Lake Peachtree piano key weir spillway is the first of its kind in North America Human-made dams are a pivotal part of communities all over the world. Dams store water in reservoirs, which is used for many purposes such as irrigation, hydropower, water supply, flood control, navigation, fishing, and recreation. The oldest known dam is the Jawa Dam located in modern day Jordan. It was built around 3000 B.C. The second known working dam was built in 2700 B.C., but it was washed away due to the lack of a spillway. The spillway controls the release of water from a reservoir into a downstream area. With daily use, the infrastructure of dams and other water systems need to be replaced over time. Designed in 2001, and first built in 2006 in France, the piano key weir is a cost effective and safe design option for many communities to fix dam issues that they might be facing. The dam for Lake Peachtree, which is a water supply reservoir for Peachtree City, was reclassified as a Category I dam by the Georgia Environmental Protection Division's (EPD) Safe Dams Program. This means there is a potential for loss of life in the event of a dam failure. In 2014, exploratory borings were performed to evaluate the condition of the existing spillway. During the exploration, it was determined that the dam would not last another 50 years. The city needed to find a solution. Seven potential spillway designs were considered prior to recommending the piano key weir by city consultants-- Integrated Science and Engineering Inc. and Schnabel Engineering. City Manager Jon Rorie said the model selected was the most cost-effective way to fit in the existing spillway channel. This was the first piano key weir designed and constructed in North America. On September 15, 2016, the city council approved the new spillway for Lake Peachtree. The three stages of the piano key weir pertain to the water levels to be managed by the new spillway. The lowest "key" is positioned at the level of the current spillway. The middle "key" is 2 feet higher to manage larger volumes of water. The third "key," which is significantly larger in width, is 4 feet higher in elevation than the lowest key to accommodate extreme rain events. GEFA awarded Peachtree City a $3,155,000 Clear Water State Revolving Fund loan for this project. This loan financed the new spillway, which meets EPD's Safe Dam Program guidelines to be classified as a Category II. A Category II dam will not result in a probable loss of life downstream in the event of a dam failure. In addition to safeguarding the lives of downstream residents, this project is going to help Lake Peachtree control flood releases during storm events and help with stormwater management. 404-584-1000 | 10 Financial Highlights The narrative overview and analysis of the agency's financial activities for the fiscal year ended June 30, 2018, provides additional detail on GEFA's financial performance. Total assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources at the close of the fiscal year by $2.3 billion (net position). Of this amount, $41.6 million was from governmental activities and $2.3 billion was from business-type activities. Total long-term liabilities experienced a net decrease of $2.4 million during 2018, all within governmental activities. The decrease was mostly attributable to the changes in GEFA's proportionate shares of Net OPEB and Net Pension Liabilities. GEFA's total net position increased by $85.7 million. The net position in governmental activities increased by $3.6 million and the net position of business-type activities increased by $82.1 million, resulting in an overall $12.2 million increase over FY2017. Total governmental revenues decreased by $2.1 million from FY2017. The decreased revenue is mostly attributable to a decrease in operating grants and contributions because of depletion of administrative revenues for grant programs and a change in funding methodologies for grant programs. Charges for services within business-type activities continued to experience a decline, albeit not as substantial as previous years, declining only by $523,400. The change is due partly to a slight interest rate increase implemented mid-year. However, the most significant impact is that the cost of capital in the open market has also increased, which typically prohibits many borrowers from making early payoffs through the issuance of revenue bonds. 11 | gefa.georgia.gov CURRENT AND OTHER ASSETS CAPITAL ASSETS FY2018 NET POSITION PRIMARY GOVERNMENT GOVERNMENTAL ACTIVITIES 2018 2017 BUSINESS-TYPE ACTIVITIES 2018 2017 TOTAL 2018 2017 INCREASE (DECREASE) % $51,790,435 287,852 48,801,246 145,931 2,287,106,493 -- 2,203,608,994 -- 2,338,896,928 287,852 2,252,410,240 145,931 3.8% 97.3% TOTAL ASSETS 52,078,287 48,947,177 2,287,106,493 2,203,608,994 2,339,184,780 2,252,556,171 3.8% DEFERRED OUTFLOWS OF RESOURCES LONG-TERM LIABILITIES OUTSTANDING OTHER LIABILITIES 1,199,341 1,863,552 8,782,591 1,857,141 10,907,086 1,811,248 -- -- 1,915,669 -- -- 568,814 1,199,341 8,782,591 3,772,810 1,863,552 10,907,086 2,380,062 (35.6%) (19.5%) 58.5% TOTAL LIABILITIES 10,639,732 12,718,334 1,915,669 568,814 12,555,401 13,287,148 (5.5%) DEFERRED INFLOWS OF RESOURCES NET POSITIONS INVESTMENT IN CAPITAL ASSETS RESTRICTED UNRESTRICTED TOTAL NET POSITION 1,040,092 61,435 -- -- 1,040,092 61,435 1,593.0% 287,852 37,160,595 4,149,357 145,931 38,555,789 (670,760) -- 1,717,827,489 567,363,335 -- 1,638,492,840 564,547,340 287,852 1,754,988,084 571,512,692 145,931 1,677,048,629 563,876,580 $41,597,804 38,030,960 2,285,190,824 2,203,040,180 2,326,788,628 2,241,071,140 97.3% 4.6% 1.4% 3.8% Copies of the complete audited financial statements are available at gefa.georgia.gov. 404-584-1000 | 12 13 | gefa.georgia.gov ASSETS CASH CASH WITH FISCAL AGENT INVESTMENTS INVESTMENTS WITH FISCAL AGENT DUE FROM OTHER GOVERNMENTS INTERNAL BALANCES ACCRUED INTEREST RECEIVABLE LOANS RECEIVABLE OTHER ASSETS NET OPEB ASSET CAPITAL ASSETS, NET OF ACCUMULATED DEPRECIATION TOTAL ASSETS DEFERRED OUTFLOWS OF RESOURCES RELATED TO OTHER POSTEMPLOYMENT BENEFITS RELATED TO PENSIONS TOTAL DEFERRED OUTFLOW OF RESOURCES LIABILITIES ACCOUNTS PAYABLE AND ACCRUED LIABILITIES DUE TO OTHER GOVERNMENTS ACCRUED INTEREST PAYABLE RETAINAGE PAYABLE LONG-TERM LIABILITIES: DUE WITHIN ONE YEAR COMPENSATED ABSENCES SECURITIZATION BONDS PAYABLE DUE IN MORE THAN ONE YEAR COMPENSATED ABSENCES NET OPEB LIABILITY NET PENSION LIABILITY SECURITIZATION BONDS PAYABLE, NET OF CURRENT PORTION AND UNAMORTIZED BOND DISCOUNT TOTAL LIABILITIES DEFERRED INFLOW OF RESOURCES RELATED TO OTHER POSTEMPLOYMENT BENEFITS RELATED TO PENSIONS TOTAL DEFERRED INFLOW OF RESOURCES NET POSITION NET INVESTMENT IN CAPITAL ASSETS RESTRICTED FOR: DEBT SERVICE GRANT PROGRAMS LOAN PROGRAMS UNRESTRICTED TOTAL NET POSITION SEE ACCOMPANYING NOTES TO BASIC FINANCIAL STATEMENTS. PRIMARY GOVERNMENT GOVERNMENTAL ACTIVITIES BUSINESS - TYPE ACTIVITIES TOTAL COMPONENT UNIT GA. ENVIRON. LOAN ACQ. CORP. $1,861,237 -- 40,716,758 -- 3,199,350 5,661,964 -- -- 12,636 338,490 287,852 $52,078,287 2,836,883 -- 902,713,144 -- 1,814,834 (5,661,964) 2,828,006 1,382,575,590 -- -- -- 2,287,106,493 4,698,120 -- 943,429,902 -- 5,014,184 -- 2,828,006 1,382,575,590 12,636 338,490 287,852 2,339,184,780 88,293 2,606,019 65,897,811 4,811,623 -- -- 204,742 44,958,430 -- -- -- 118,566,918 $454,515 744,826 $1,199,341 -- 454,515 -- -- 744,826 -- -- 1,199,341 -- $1,757,805 99,336 -- -- 1,167,984 2,632 -- 745,053 2,925,789 101,968 -- 745,053 10,352 -- 80,202 -- 125,025 -- 375,075 3,640,710 4,641,781 -- 10,639,732 -- -- -- -- -- -- 1,915,669 125,025 -- 375,075 3,640,710 4,641,781 -- 12,555,401 -- 2,580,000 -- -- -- 36,067,293 38,737,847 $694,354 345,738 $1,040,092 -- 694,354 -- 345,738 -- 1,040,092 $287,852 -- 287,852 -- 4,624,447 32,536,148 4,149,357 $41,597,804 -- -- 1,717,827,489 567,363,335 2,285,190,824 -- 4,624,447 1,750,363,637 571,512,692 2,326,788,628 -- -- -- -- 79,829,071 -- -- -- 79,829,071 GOVERNMENTAL ACTIVITIES GENERAL GOVERNMENT WATER AND WASTEWATER LAND CONSERVATION ENERGY AND ENVIRONMENT TOTAL GOVERNMENTAL ACTIVITIES BUSINESS-TYPE ACTIVITIES WATER AND WASTEWATER STORAGE TANK MAINTENANCE GENERAL AND ADMINISTRATIVE TOTAL BUSINESS-TYPE ACTIVITIES TOTAL PRIMARY GOVERNMENT COMPONENT UNIT GEORGIA ENVIRONMENTAL LOAN ACQUISITION CORPORATION TOTAL COMPONENT UNITS GENERAL REVENUES UNRESTRICTED INVESTMENT EARNINGS MISCELLANEOUS TRANSFERS TOTAL GENERAL REVENUES AND TANSFERS CHANGE IN NET POSITION NET POSITION - JULY 1 PRIOR PERIOD ADJUSTMENT NET POSITION - JULY 1 RESTATED NET POSITION - JUNE 30 FY2018 STATEMENT OF NET ACTIVITIES PROGRAM REVENUES NET (EXPENSE) REVENUE AND CHANGES IN NET POSITION EXPENSES CHARGES FOR SERVICES OPERATING GRANTS AND CONTRIBUTIONS CAPITAL GRANTS AND CONTRIBUTIONS GOVERNMENTAL ACTIVITIES BUSINESS TYPE ACTIVITIES $6,394,339 -- 10,687,318 -- 4,292,979 -- 8,587,806 2,364,541 5,886,937 -- (336,328) -- 763 -- 23,009 -- 22,246 -- 5,681,449 -- 5,653,636 -- (28,813) -- TOTAL COMPONENT UNIT 4,292,979 -- (336,328) -- 22,246 -- (28,813) -- $20,664,357 2,364,541 22,249,900 -- 3,950,084 -- 3,950,084 -- $12,186,247 -- 12,186,247 -- 581,179 1,114,550 15,464 -- 232,937 29,175,282 51,640,289 -- $13,091,363 30,289,832 63,842,000 -- -- -- -- -- -- 548,835 548,835 -- -- 80,491,634 80,491,634 -- -- 81,040,469 81,040,469 -- $33,755,720 32,654,373 86,091,900 -- 3,950,084 81,040,469 84,990,553 -- $2,278,531 1,867,323 829,009 -- $2,278,531 1,867,323 829,009 -- -- -- -- -- -- 417,801 -- -- -- -- -- -- 608,836 -- 608,836 -- -- -- -- -- 114,624 3,475 118,099 4,176 -- -- -- -- (1,106,700) 1,106,700 -- -- -- -- -- -- (383,240) 1,110,175 726,935 421,977 -- -- -- -- -- -- -- -- -- -- -- -- 3,566,844 82,150,644 85,717,488 421,977 -- -- 41,999,452 2,203,040,180 2,245,039,632 79,407,094 -- -- (3,968,492) -- (3,968,492) -- -- -- 38,030,960 2,203,040,180 2,241,071,140 79,407,094 -- -- 41,597,804 2,285,190,824 2,326,788,628 79,829,071 404-584-1000 | 14 27.4% 0.05% 72.1% 2018 Revenues Charges for Services and Other Revenue* Investment Earnings, Unrestricted Operating Grants and Contributions AMOUNT PERCENT $32,768,997 $608,836 $86,091,900 27.4% 0.5% 72.1% TOTAL REVENUES * Includes restricted investment earnings $119,469,733 100.0% 15 | gefa.georgia.gov 16.8% 1.7% 1.0% 61.5% 2018 18.9% Expenses General Government Water and Wastewater Land Conservation Energy and Environment Storage Tank Maintenance General and Administrative TOTAL EXPENSES AMOUNT PERCENT $6,394,339 $20,774,053 $763 $5,681,449 $581,179 $323,937 18.9% 61.5% 0.0% 16.8% 1.7% 1.0% $33,755,720 100.0% 404-584-1000 | 16 Fiscal Services The Fiscal Services Division provides accounting, underwriting, and loan servicing for GEFA programs. It ensures compliance with agency, state, and federal fiscal policies and procedures, and it reviews and recommends loan awards for the Water Resources Division. The division performs credit analyses; provides reimbursements for loan project expenses; processes loan payments; calculates loan repayment figures and accrued construction-period loan interest; monitors borrowers for debt service coverage; and reviews compliance limits for GEFA customers. Team members provide consultations to communities on underwriting; prepare and submit financial reports to state and federal authorities; process invoices; monitor division accounts; and manage the authority's budget. Human Resources Human Resources facilitates the general administration of the agency through developing, maintaining, and communicating office policy. Key responsibilities include developing and implementing hiring and recruiting policies, compensation and salary administration, conducting employee relations, developing official documentation on workplace ethics/code of conduct, employee handbooks, employee training programs, and award programs. Public Affairs The Public Affairs Division educates internal and external stakeholders about GEFA's infrastructure and financing programs, and state energy, land, and water conservation initiatives and policies. Information Technology The Information Technology Division develops GEFA's internal and external technical architecture; facilitates electronic access to agency information and services; and protects GEFA's information systems and data. 17 | gefa.georgia.gov Board of Directors Commissioner Travis Turner Chairman White County Board of Commissioners George McIntosh Vice Chairman At-Large Member Greg Griffin Secretary State Auditor Mayor Jimmy Andrews City of Sandersville Stephen Gray At-Large Member Commissioner Christopher Nunn Georgia Department of Community Affairs Commissioner Grady Thompson Tift County Board of Commissioners Commissioner Pat Wilson Georgia Department of Economic Development Mayor Boyd L. Austin City of Dallas Commissioner Jason Winters Chattooga County Sole Commissioner Senior Staff Kevin Clark Executive Director Martha Douglas Director of Water Resources David Gipson Director of Energy Resources Jammie Harden Director of Fiscal Services Shane Hix Director of Public Affairs Glendale Jones Director of Human Resources Susan Lucki Senior Executive Assistant *As of October 2018 404-584-1000 | 18 Georgia Environmental Finance Authority 233 Peachtree St NE Ste 900 Atlanta, GA 30303 MAIN 404-584-1000 FAX 404-584-1069 gefa.georgia.gov