Jackson should have enough to cover bond debt with improved water collectionsBy ANTHONY WARREN,
Jackson city officials say they are now bringing in just enough to cover its debt service and basic operations and maintenance, after having to dip in the general fund to pay its water and sewer bond debt last year.
In September, Moody’s downgraded Jackson’s bond rating, citing instability in the water/sewer billing department, and the city’s reliance on general fund revenues to repay bonds.
Chief Administrative Officer Robert Blaine said many of the billing problems that contributed to the decline in collections are being addressed and the billing department is now bringing in around $6 million a month.
“If we keep making the numbers we have for the past two months, we’ll be able to meet debt service obligations and operations and maintenance,” he said. “Our goal in the next six months is to move water and sewer back to a $7 million-a-month enterprise.”
Because the city is now generating $6 million a month, Blaine said it won’t have to rely on general fund dollars to make bond payments. The news could result in the city’s bonds being upgraded, or at least not being downgraded, when ratings come out again this fall.
Last year, Moody’s downgraded Jackson’s bond rating Baa3 to Ba2.
Jackson has around $239 million in water and sewer bond debt, including a nearly $90 million bond that was used to pay for the Siemens “energy performance contract.”
Siemens was hired to replace tens of thousand of water meters across the city, as well as implement a new billing system and do some infrastructure repair work.
Payments on the Siemens bond alone will run the city around $7 million a year through 2041, Mayor Chokwe Antar Lumumba said.
In all, Jackson will be paying about $19 million a year in principal and interest on its water bond debt through 2024. After that, payments drop to around $16.9 million, an amount the city will have to pay through 2033. That year, bond service will decrease to around $7.4 million a year, the bond catalog states.
All current water debts will be retired by 2041. Between 2017 and 2041, Jackson will repay $374 million, of which around $152 million will be in interest.
Water bonds are issued based on a city’s ability to repay the debt from its water and sewer enterprise fund.
Revenues in that fund are generated through water and sewer use fees collected from customers.
Last spring, though, Jackson’s water system was about to go belly up, because thousands of bills were not getting to customers.
At the time about it was estimated that 15,000 customers were not receiving bills due to complications with the new billing system - the same system put in place as a part of the Siemens contract.
That number was later increased to around 23,000.
Public works has been working to address the problem for months.
Blaine said remaining issues in the billing department should be addressed in the coming months.
“We are collecting about 90 percent of our billed amounts, with about 10 percent of bills becoming stranded,” he said. “We’re not at 100 percent, but we’re going in the right direction.”