Moody’s downgrades city’s water bond ratingBy ANTHONY WARREN,
Despite making progress in addressing its water/sewer billing problems, a national rating agency has downgraded Jackson’s water bond status
Moody’s Investor Services recently downgraded the city’s water bond rating, citing instability in the billing department.
The news comes years after Jackson paid Siemens $91 million to do a complete overhaul of its water system, and months the city brought back the same firm to help sort out continued billing problems.
“The downgrade reflects the operation and financial worsening of the enterprise (fund) from 2016 to 2018 and the system’s reliance on support from the city of Jackson general fund in order to” pay debt service, Moody’s states in September 10 press release.
The bond ratings were reduced from Baa3 to Ba2.
According to the agency’s Web site, ratings with a Ba are “judged to have speculative elements and are subject to substantial credit risk.” Bonds with a Baa rating “are subject to a moderate credit risk.”
The ratings affect the city’s ability to borrow additional monies, as well as the potential interest rates the municipality could receive.
The release went on to say that bonds could be further downgraded if instability in the system persists.
The instability is the result of problems in water/sewer billing. The department has had challenges for years, but the issues have gotten worse in recent years following the installation of a new billing system put in as part of the Siemens overhaul.
The international firm was brought on in 2012 to completely update the water system, including installing new automated meters citywide, repairing some burst water mains and replacing the antiquated billing system in the water/sewer billing department.
Much of that work wrapped up in 2016, but challenges have lingered since, and collections continue be down, even after the city has addressed thousands of stranded accounts.
Through the third quarter, for example, Jackson brought in just $34.3 million, 69.2 percent of the $49.5 million billed.
During that time period, collections averaged $3,808,724 a month. Based on that average, Jackson will bring in just $45.7 million in water and sewer fees this year.
That $45.7 million is far less than the $71 million in revenue the city projected to bring in at the start of 2018 fiscal year, and far less than the city collected in water and sewer usage fees in previous years.
In 2017, for instance, Jackson brought in $61 million. The year before, the city collected $63 million in revenues, and in 2015, the city brought in $59.8 million, annual audits show.
Funds brought in through usage fees go into a special enterprise account and can only be used for water and sewer needs, such as making main break repairs and paying debt service.
Collections have been down, in large part, because thousands of customers were not receiving regular statements.
In the spring, the city reported that 20,000 customers had “stranded” accounts.
In April, Jackson brought Siemens back on to help correct the problem. To date, about 17,000 accounts had been corrected, but about $15 million in outstanding balances remain.
Jackson has $214 million in water and sewer debt.