A tiny Georgia agency’s big role in climate, infrastructure spending

The long-overlooked Georgia Environmental Finance Authority will determine how billions of climate and infrastructure dollars are spent
Executive Director of the Georgia Environmental Finance Authority (GEFA) Hunter Hill answers questions from an Atlanta-Journal Constitution reporter on a sit-down interview on Wednesday, October 11, 2023.
Miguel Martinez /miguel.martinezjimenez@ajc.com

Credit: Miguel Martinez

Credit: Miguel Martinez

Executive Director of the Georgia Environmental Finance Authority (GEFA) Hunter Hill answers questions from an Atlanta-Journal Constitution reporter on a sit-down interview on Wednesday, October 11, 2023. Miguel Martinez /miguel.martinezjimenez@ajc.com

It’s a Georgia state agency few people know about. But it’s poised to play a huge role in unprecedented state and federal taxpayer investments in systems to manage water, energy and waste in a changing climate.

The Georgia Environmental Finance Authority, or GEFA, as it’s known, operates as a bank, a development authority and an aid agency rolled into one. It was created by state lawmakers in 1986 to fund public “environmental infrastructure” — mostly water and sewer systems for rural counties that lacked access to credit from traditional lenders. Its purview has expanded over the years to include land conservation, energy and solid waste as well.

In addition to funding things like water treatment plants, GEFA also manages federal programs aimed at weatherization and energy efficiency for low-income households.

GEFA’s mission is about to get bigger.

The federal government under President Joe Biden has expanded those programs and issued new mandates backed by at least $1.5 trillion in additional spending since 2021.

At least $1 billion of that is expected to flow to Georgia through GEFA over the next five years for water and energy infrastructure — everything from improving the power grid to removing lead from drinking water. State lawmakers and the governor, meanwhile, are pouring money into GEFA to support their own economic development goals, such as electric vehicle manufacturing, with a recent infusion of $250 million — a one-time boost that passed with the budget in March.

A spokesman for Gov. Brian Kemp said the money is intended to “help our local leaders prepare for that influx of jobs and investment in addition to performing necessary upgrades and maintenance on aging systems.”

All states have designated offices for energy and water that, at minimum, distribute federal funds. Most of the time, those offices are part of another agency, though which one varies widely from state the state.

While GEFA is far from the only entity in Georgia eligible for federal climate and infrastructure dollars, experts say the influx of funds into a single agency could position the state well to tackle overlapping social, environmental and economic challenges associated with such projects. But the dramatic increase in funds coupled with new deadlines also presents challenges.

Hunter Hill, a former Republican lawmaker chosen by Kemp to lead GEFA, said he’s confident in the agency’s ability to handle the growth.

“We’re going to get it done,” said Hill.

GEFA currently has 39 employees. The agency has also hired some outside consultants.

Some environmental justice advocates skeptical

As evidence of the agency’s success, Hill pointed to the fact that GEFA was early to submit its applications for more than $200 million in federal rebate funding to help Georgians make their homes more energy efficient. Hill said he expects those rebates, which were included in the federal climate and health law known as the Inflation Reduction Act, to be available to consumers by the end of the year.

Forest Bradley-Wright, the state and utility program director for the American Council for an Energy-Efficient Economy, a national advocacy nonprofit, said Georgia did appear to be ahead of its peers in the region when it comes to planning for the energy rebates.

“There has never been more investment flowing into energy efficiency and clean energy in Georgia,” he said. “This is a once-in-a-generation, once-in-a-lifetime, investment.”

Experts said it’s still early to evaluate how well states are managing new and expanded programs, many of which are either awaiting federal guidelines or in the application phase. In the meantime, GEFA has held a series of listening sessions with grassroots environmental advocates and others over the past year soliciting their input and support.

That support could be key to winning federal funds since Biden issued an executive order mandating that at least 40% of the “benefits” of climate, energy and housing investments flow to “disadvantaged communities.”

Adrienne Rice, the founder of Sustainable Georgia Futures, an environmental justice nonprofit that focuses on economic opportunities for Black communities, said she provided a letter of support for one of GEFA’s applications despite her skepticism. She said in general, she was wary of being used by state agencies to get federal money without being given meaningful influence over how it is spent.

“What are we going to do with this funding?” she said. “Is it going to be business as usual like it is in Georgia and front line communities like ours are just locked out? ... That is a concern.”

Hill said GEFA prioritizes communities in need “at the highest level.” He said the agency scores applicants on their financial need and has in some cases provided principal forgiveness on loans.

Georgia focuses on economic development

GEFA is constrained by federal rules in how it spends federal money, which accounts for most of its funding.

It has considerably more leeway in how it spends state money. With a broad mandate to fund environmental infrastructure, it has historically been used as a tool for advancing the priorities of the governor, who directly appoints eight of the 11 members on the board.

Recently, that has meant stepping in to build infrastructure in support of some of the state’s biggest economic development projects — projects that may be ineligible for federal funds and impossible for local communities to build given the limitations of existing customer and taxpayer bases.

ELLABELL, GA  - FEBRUARY 21, 2024: A water tower under construction, center, at the edge of the Hyundai Metaplant site that will be used to hold groundwater pumped from Bulloch County, Wednesday, Feb. 21, 2024, Ellabell, Ga. (AJC Photo/Stephen B. Morton)

Credit: Stephen B. Morton for The Atlanta Journal Constitution

icon to expand image

Credit: Stephen B. Morton for The Atlanta Journal Constitution

When rural Bryan County needed an estimated $360 million in water and sewer upgrades to serve Hyundai Motor Group’s $7.6 billion electric vehicle factory near the coast, officials there did what local governments across the state have done for decades: They turned to GEFA. The agency has approved $37 million in loans to Bryan County for water and sewer from its main state loan fund for infrastructure expansion tied to the factory known as the Metaplant.

That is significantly more than the $3 million per-project limit that was in place for the state fund when the loan was approved.

Hill said GEFA’s lending limits were intended as “placeholders” that could be overridden by the board.

“Economic development has always been and will always be a priority in the state of Georgia,” Hill said. “Because the Bryan County loan was tied to economic development, we waived our limit.”

Bryan County officials said it was also approved for a $60 million loan from a separate federal water fund administered by GEFA, as well as a $246 million grant from pandemic relief funds.

Chris Manganiello, the water policy director for the Chattahoochee Riverkeeper, said the loans to Bryan County and others for economic development appear to be in response to legitimate water needs, albeit needs driven by taxpayer-backed incentives for large new projects.

“The reality is that where the state would like to build large industrial and commercial facilities, the chances are, there’s no water infrastructure there,” Manganiello said. “It becomes another cost to build these facilities that probably was not included in that original tab.”

Editor’s note: This story has been updated to clarify the federal programs GEFA administers.

GEFA by the numbers

As of June 30, 2023, GEFA financial records show the following as total cash and investments:

$197 million in the Georgia Fund, its main state-funded loan program

$8 million in the Georgia Reservoir Fund, another state-funded loan program

$665 million in the Clean Water fund, a federal program funded by the Clean Water Act

$161 million in the Drinking Water fund, a federal program funded by the Clean Water Act

*These amounts do not reflect debt owed to GEFA, which the agency includes in its calculation of net position. The agency does not publish committed v. uncommitted funds and declined to make its financial officer available to answer questions.

A note of disclosure

This coverage is supported by a partnership with Green South Foundation and Journalism Funding Partners. You can learn more and support our climate reporting by donating at ajc.com/donate/climate/