City owes millions on bonds to fix water system
Bonds issued to completely overhaul the city of Jackson’s water system will carry nearly $113 million in interest.
In 2013, the city issued $89.9 million in bonds to pay for what was ultimately a $91 million “energy performance contract” with Siemens. The firm was brought on in 2012 to upgrade the city’s aging water system. The loans come with interest rates ranging from five to 6.875 percent, according to city documents.
Payments are due on June 1 and December 1 of each year, and will mature in 2041. Loans were issued in June 2013 through Trustmark National Bank, during the final days of Mayor Harvey Johnson’s third term.
The balance is to be repaid through the savings generated by the Siemens work.
The project included replacing all of the city’s residential and commercial water meters, as well as replacing or repairing some dilapidated sewer mains and making repairs at the city’s O.B. Curtis Water Treatment Plant.
Additionally, Siemens was charged with updating the city’s water and sewer billing system.
Johnson said the contract would be “revenue neutral,” meaning that savings generated from the work would go toward repaying the bonds.
However, the city’s water/sewer revenues have fluctuated greatly since the Siemens work began.
Today, with the Siemens work complete, some 15,000 customers are still not receiving regular statements, and collections are millions of dollars off each month.
Bond covenants require the city to maintain a certain amount in the water/sewer fund to ensure payments.
If the funding is not there 30 days before payments are due, bondholders can petition the state to divert sales tax dollars to cover the costs.
Jackson was in danger of defaulting on its water debt earlier this year, when Mayor Chokwe Antar Lumumba approached the one-percent infrastructure sales tax commission for help.
Commissioners gave the city nearly $7 million to reimburse it for emergency repair costs dating back to September 2016.
The funds will help ensure the system is solvent until the summer.