Jackson borrowing $30 million for consent decree work
the capital city is moving forward with another round of consent decree work, and is issuing $30 million in loans to pay for it.
Recently, the Jackson City Council approved taking out a $30 million loan through the state revolving loan fund (SRF) to pay for improvements at the Savanna Street Wastewater Treatment Plant.
The interest rate had not been set at press time, but will likely be around 1.75 percent, according to Public Works Director Robert Miller.
Under terms of the loan, Jackson will pay nearly $1.8 million a year over the next 20 years to retire the debt.
The city will have 24 months to complete work at the plant, and will not have to begin repaying the amount until work is finished.
“SRF loan regulations require that the city has the ability to meet its loan obligations within 90 days of contract completion. We anticipate that we will have funding in place by that time,” Miller said.
The council approved the loan on a 5-2 vote.
Voting in favor of the measure were Ward One Councilman Ashby Foote, Ward Seven Councilwoman Virgi Lindsay, and Councilmen Melvin Priester, De’Keither Stamps and Charles Tillman.
Voting against it were Ward Three Councilman Kenneth Stokes and Ward Six Councilman Aaron Banks.
Stamps supported the measure but questioned why Jackson has to pay interest on the loan when the money is given to the state by the federal government.
He also questioned why other cities paid lower interest rates on SRF loans than Jackson. He asked the administration to look into his claims and report back at a later meeting.
The loan is being awarded through the Mississippi Department of Environmental Quality (MDEQ). According to MDEQ’s Web site, the state is not allowed to grant the money, but issue loans. Loans also must have an interest rate based on the market rate.
“(This) is an appropriate financing practice by a municipality. Many municipalities like this have a combination of revenue bond debt and state revolving loans,” Miller said. “It (is) an expected practice because terms (of the loans) are much more favorable than revenue bonds.”
Prior to the council’s vote last week, the city had borrowed nearly $70 million in SRF loans, including one in 2016 to make repairs to the West Bank Interceptor.
The interceptor is a major sewer line running along the west bank of the Pearl River. Under the decree, the city also had to rehabilitate that line to reduce the number of sanitary sewer overflows going into the river.
The overflows occur when untreated sewer water leaves the sewer system and enters into waters of the USA. Under the decree, the city is fined for each occurrence.
Jackson is issuing the debt only weeks after learning the water/sewer billing department was about bankrupt.
As of March 1, the city had about $3.2 million in cash on hand, about half of what it needed to meet bond covenants.
The city’s cash balance has shrunk in large part to problems in the water billing department. As of last week, about 15,000 customers in the city were still not receiving regular statements.
Additionally, the city’s water/sewer funds were drained to cover nearly $2 million in costs associated with the January water crisis.
The city’s one-percent infrastructure tax oversight commission gave the city nearly $7 million to help make ends meet.
Funds from the SRF loan will be used to make a number of upgrades required as part of the city’s sewer consent decree.
Repairs include replacing three “clarifying mechanisms,” pumps, sludge de-watering equipment and adding a new emergency generator.
Clarifying mechanisms basically are used to remove solids from sewage water after it arrives at the plant. Sludge de-watering equipment removes that waste after it settles at the bottom of the plant’s storage basins, so it can be processed and hauled away.
In dry months, The plant is permitted to treat approximately 46 million gallons of wastewater a day. From November To April, it is permitted to treat up to 60 million gallons a day.
The city entered into the decree in 2012. Under terms of the agreement, the city must make between $600 million and $800 million in repairs to its sewer system to bring it into compliance with federal water quality laws.
