More than a million dollars in recent allocations of Jackson one-percent revenues will pay for projects on the Northside.
Recently, the city’s one-percent oversight commission approved giving Jackson nearly $7 million to cover emergency water repairs dating back to 2016.
Projects covered by the allocation on the northside include emergency sewer repairs made at Woodland Hills Place, Winchester Street and Meadow Heights Drive last year, as well emergency water main repairs made during the January water crisis.
The Woodland Hills work cost approximately $335,000, while the Winchester Street and Meadow Heights projects ran $150,000 and $583,000 respectively.
The water crisis included repairing some 300 water mains across the city, at a cost expected to be around $2 million.
The decision cut the city’s remaining one-percent revenues by more than half. Prior to the vote, Jackson had nearly $13.5 million in one-percent dollars on hand.
Public Works Director Robert Miller said the funds were needed, because the city didn’t have enough cash on hand to make the repairs.
The city’s water/sewer cash reserves have dropped to $3.2 million, less than half of what is required to meet bond covenants.
Without the money, Miller told the commission the city couldn’t pay for completed repairs and would be in danger of defaulting on its water and sewer bonds.
Jackson currently has $215 million in water and sewer debt. According to bond agreements, the city must maintain at least $7.7 million, or two months of cash on hand to cover operating costs and bond payments.
“The water and sewer system is facing a significant and immediate liquidity crisis,” he said.
He credits the problem, in part, to the recent water crisis, as well as the city’s inability to collect on outstanding water bills.
In January, days of sub-freezing temperatures ripped across the capital city, causing more than 300 water main breaks. The repair costs for those breaks is expected to run around $2 million, he said.
Jackson also still has major bugs in its water billing department. In 2012, the city entered into a contract with Siemens to update its water system.
The agreement included installing some 65,000 new water meters and upgrading its billing system.
As of last week, though, approximately 15,000 customers were not receiving regular statements.
Because of that, cash revenues for the department have dropped. In fiscal years 2015 and 2016, Jackson brought in $66 million and $59.1 million in billed collections. On average, that was around $5.5 million and $4.9 million a month respectively.
Since October, the start of fiscal year 2018, the department has only been collecting on average around $3.96 million, according to figures provided by Director of Administration Charles Hatcher.
Miller was in talks with Siemens last week, and hopes to have problems with the billing system worked out in the next 12 weeks.
The commission approved the request on a 7-0 vote, after about 30 minutes of discussion.
Commissioner Pete Perry made the motion, seconded by Commission Vice-Chair Duane O’Neill. Perry’s motion was contingent on the city getting its financial house in order.
“Give me assurance that we don’t have this problem again. When I came on this commission there was a bunch of money … in the enterprise fund and now we’re down to $3 million,” he said. “Because it has dropped down to three and all these bad things are fixing to happen to us, we’re putting $6 million or $7 million in there for what we’ve already done.”
Typically water and sewer expenses are covered by the water/sewer enterprise fund, which is generated through collections from customers. Jackson has approximately 53,000 customers.
Commissioner Jonathan Lee questioned whether the vote was legal. “I’m unsettled pulling the trigger on this not knowing if it’s a legal use of funds,” he said.
Lee also questioned if the funds would be used for water/sewer operating expenses, something not allowed under one-percent rules.
Deputy City Attorney Carrie Johnson, who also serves on the commission, said as long as the funds are used to cover construction costs, the allocation would be legal.
She pointed to the master plan passed by the commission in 2017, which states funds may be allocated annually for emergency needs. “If this is a part of the master plan, it appears there is consistency.”
According to a copy of documents provided to the commission, the allocation would be considered a “restoration” of water/sewer funds.
Without the restoration, the city would be in potential of defaulting on the loans or having to borrow from the general fund to cover water/sewer expenses.
Defaulting or having to borrow from the general fund could hurt the city’s credit rating.
(photo) In 2017 the city repaired several sewer breaks on Meadow Heights Drive impacting a large area of the Northside