Warning: The Lumumba Administration considers this post to be disinformation.
The Wall Street firm KKR* proposed to take over Jackson's water system last year in deal that would have raised rates in exchange for promises of millions of dollars to Jackson and much-needed repairs to its water treatment plants. It is a rather interesting proposal because Jackson Mayor Chokwe Antar Lumumba has been decrying any and all proposals to "privatize" Jackson's water system this year. Highlights of the proposal are:
* Jackson makes a concession agreement with a partnership of KKR fund operator Suez Environment/United Water. United Water is a subsidiary of Suez. The term of the agreement is 40 years.
* KKR claimed Jackson would get "millions in an upfront payment."
* KKR pays $750,000 to Jackson every year. Keep in mind the water/sewer system should (and used to make) a $7 million a year profit when it was properly run. The amount of the rate increase depends on the amount of investment.
* "Immediate capital improvements" would be made to Jackson's water treatment plants.
* No layoffs (How do you layoff employees when the plants are probably 50% staffed? )
* The proposal promised to help the less fortunate such as senior citizens and the poor.
* The "private consortium" would "work with the city" to obtain low-interest (1.5-1.7%) funding for major upgrades to the water plants.
* KKR created a similar partnership in Bayonne, New Jersey in 2012 with Suez Environment. Reuters reported in 2012:
Private equity firm KKR & Co LP on Thursday kicked off a joint venture with Suez Environment to run the water and wastewater systems of a New Jersey city it hopes will become a model for cash-strapped local authorities in the United States.
KKR and Suez subsidiary United Water will pay $150 million to the city of Bayonne for the rights to a 40-year concession, allowing them to collect water and wastewater revenues but also requiring them to come up with another $157 million over the life of the contract to manage and upgrade the systems.....
Bayonne will pay off over $130 million of its debt with the money it gets from KKR and United Water, cutting its municipal debt burden in half. It will see the two firms take over more than 96 miles of water mains and more than 83 miles of sewers serving the city’s 63,000 residents.
Consumers and businesses in Bayonne will see an initial 8.5 percent bump in their water and sewer charges, translating to an additional $5 per month for residential users. Rates will then freeze till January 2015 and then rise annually based on an inflation-linked formula....
KKR will fund 90 percent of the joint venture with United Water. Two thirds of the investment will be financed with debt on an average interest rate of about 5 percent.... Article
KKR also formed similar ventures in Pennsylvania (2014). KKR sold its stake in the Bayonne operations to Argus Infrastructure Partners in 2017.
The opening lines of this post stated the proposal was "interesting." It is interesting because it is the Mayor who presented the proposal at the Capitol over a year ago. Indeed, he told Mississippi Today in April:
And I’m going to call out what that is already. I’m going to beat them to the punch and let you know that behind the scenes, there has been an effort to try to get Jackson to either privatize its water or do a concession. That has nothing to do with an overall effort to improve the conditions. What that is about is money, how do you profit from Jackson. We have to call that out. Article.He has repeated that line over and over again, including his recent press conference at the O.B. Curtis water treatment plant.
Kingfish note: The city said it did not have a copy of this proposal when JJ submitted a public records request for it.
* Kohlberg Kravis Roberts & Company
35 comments:
yeah.... no
Last thing we need to do is globalize our local water with a 40 year contract with a French-based entity.
speaking of that.... where is the public service commission on the whole jackson water situation?
the erroneous billing, the constant issues with EPA and MS Dept of Health
I'm tired of misinformation on Jackson's water situation. Da Mair has put together an intelligent plan to solve this situation but has been held back by the man at every turn. Consider the following FACTS:
- It was hot in July/August
- It rained in August
- The water system requires qualified Jacksonian technicians
- The inaction of the mayor who held office in the 2017 to 2021 term.
These are all unprecedented FACTS of historic proportions. No one could prevail in the midst of such trials and tribulations.
Water systems are money makers and there is no reason to think that this proposal or another could not work. The real key is no free water just like any other service. Also hire people that will work and use normal business practices. But for some reason Jackson seem to attract con men and this could be fishy with all the up front money. I doubt any regulatory agency would over see this since the City is a public body.
Public Service Commission has no jurisdiction over city water.
Sign the contract. I don’t care if it is for 40 years. All the city will need to do is quit paying it and take bankruptcy. The city is bankrupt. By the way, wouldn’t you love to own some Jackson Ms. municipal bonds?
"Jackson Mayor Chokwe Antar Lumumba received a prestigious award from the Harvard Kennedy School.
Mayor Lumumba joins a list of young elected and public service leaders to receive the John F. Kennedy New Frontier Award.
This award honors those under the age of 40 who are changing their communities and the country with their commitment to public service."
Go ahead and read it twice -- you'll chuckle both times.
If Mayor Lumumba makes this deal, he cannot:
1) have total control
2) not charge his constituents
Insecure people need total control. Corrupt people buy off their constituents.
2:53 is right.
No need to entrust this "French-based entity" with local water systems that they will surely ruin.
We have Lumumba for that already, and he is doing a bang-up job.
Will he need to clear this with Detroit Organized Crime 1st?
I like it! In fact, sweeten the deal to include (but not limit to): Education, Law Enforcement, Sanitation, Transportation, Libraries and all Administration. Jackson Inc.
Throw in an option to allow Hinds County to piggy-back...
Any water bill charged by KKR would be a 100% increase when you don’t pay a water bill now. Jackson residents would rather have dirty free water than clean water they have to pay for.
Any of that low-interest 1.5-1.7% money still laying around on the table for major upgrades to to the water plants? (asking for a feriend!)
Did KKR talk to the State first?
A scene in The Big Short is one in which Jeremy Strong, playing Vinny of Front Point Partners, calls Ryan Gosling while Strong’s firm is on the brink of going in on Gosling’s heretical speculation about the housing market. Strong asks the fundamental question that every thinking human should ask when presented with a deal that seems to be too good to be true.
"How are you f*@#@#king us?"
The overtures on water, bridges, etc are part of a public asset bonanza investors anticipate, amid much-needed federal investments in roads, bridges, and climate resilience. Private equity is seeking to capitalize on the one-off spending spree in President Biden’s infrastructure plans, using environmental violations and crumbling buildings to make the case that municipalities can’t manage their own assets.
So, ask yourself, "When Australian investors brought forth the Orange Beach tollway, or when they bought out 75 year leases on Texas toll roads, and Mississippi magically passed a bill allowing this, was this a good idea?"
So, the toll folks proposed a "starter" toll road to go from High Street to the airport, a toll, to the airport a few miles away. Did that make sense? A few miles to an airport where you can go by I55/20 in minutes, free?? Of course not. It would be a proof of concept loss leader to get us used to being effed on a simple commute. But, heh heh Bubba, we ain't a gonner "raise taxes" on mah gasoline, rat??? Fools.
I can't stand LuMumbler, but when any foreign firm starts buying air, water, and farm land, you need to start asking if you'd like to be a slave to them for 40 to 75 years. Actually, forever. Be smart. Good grief.
But, hey, I LOVE paying Harvard Law student loans with my taxes, don't you??? Why not bailout Jackson AND have private equity run things, right???? NOOOOOOOOOOOO.
Too bad we can't privatize the office of mayor.
doesn't Jackson provide water service in excess of one mile outside the city limits?
This is unprecedented. I agree with ALL the comments before me. At this point I’d agree with any criticism of the mayor. At this point most people probably agree Stokes would be a much better mayor. Can you imagine someone saying that 10-15 years ago?
3:16...."This award honors those under the age of 40 who are changing their communities and the country with their commitment to public service." I don't know if he is under 40 but, for sure, he is changing this community from a great place to live and work to a hell hole!!!!
All for it if the water sparkles and fizzes like Perrier.
The proposal mentions fixing and upgrading the water treatment plants but says nothing about fixing the broken down pipe distribution system. What benefit is potable water if you have no way to get it to the customers? Oh, wait. You can put it in plastic bottles and distribute it from a different fire station every day of the week. Sounds yummy to me.
You can't talk about privatizing public assets without mentioning...
THE INFAMOUS CHICAGO PARKING METER DEAL!
"With 61 years left on the 75-year lease, Chicago Parking Meters LLC now has recouped its entire $1.16 billion investment and $502.5 million more.
Private investors from as far away as Abu Dhabi would have made out even better if they hadn’t brought in a new investor and borrowed $22 million at 15% interest to get through the pandemic. That loan was fully repaid last year."
https://chicago.suntimes.com/city-hall/2022/5/26/23143356/chicago-parking-meters-75-year-lease-daley-city-council-audit-skyway-loop-garages-krislov
AND THATS NOT EVEN THE WORST PRIVATIZATION BONING CHICAGO TAXPERS TOOK!
THE CHICAGO SKYWAY TOLLWAY MIGHT BE!!
"Although the parking meter lease is the deal Council members and their constituents love to hate, Krislov argued yet again it “pales by comparison” to the Skyway deal.
A decade after investors gave the city more than $1.83 billion to lease the Skyway for 99 years, the rights to run the privatized highway and pocket escalating tolls were sold to a consortium of three Canadian pension plan for $1 billion more than the original price.
“Canadian pension funds spent $2 billion to buy the Skyway and it’s working fine. It would have been working fine for the city if the city had just hired an operator to run the Skyway,” and collect the escalating tolls for the city, Krislov said.
Krislov tried to get the meter and garage deals declared illegal on grounds the city can’t legally sell the public way."
https://chicago.suntimes.com/city-hall/2022/5/26/23143356/chicago-parking-meters-75-year-lease-daley-city-council-audit-skyway-loop-garages-krislov
Management by US Water/Suez would actually be a good thing for Jackson.
The companies have a solid core of customers including Atlanta, Paris and even Laurel MS.
They would insure licensed operators for the water plants, and fold Jacksons current employees into their ledger.
As someone previously stated, a well run municipal water system is typically a money maker for the city.
FYI, Suez built the Suez canal in Egypt in 1858. They are not a fly by night operation.
Disclaimer, I am a Jackson native and retired Water Chemist (37 years).
It is heartbreaking for me to see the water quality issues when training and routine Preventative Maintenance makes this situation wholly unnecessary.
Right. Let’s keep our water undrinkable because parking is expensive in Chicago. Smart.
The proposal mentions fixing and upgrading the water treatment plants but says nothing about fixing the broken down pipe distribution system. What benefit is potable water if you have no way to get it to the customers?
4:50 makes an excellent point. The pipes are an even bigger problem than the treatment plants... which actually aren't that old or outdated. The plants are mostly just neglected due to mismanagement (including inadequate staffing).
The real challenge is the lines, which are much more extensive and probably much older than the plants, and many of which run underneath paved roads, resulting in exponential repair costs. Deteriorating roads cause damage to water lines, and deteriorating water lines cause sink holes under roads. Driving around south Jackson, you can see examples of this everywhere.
What would Chowke's commission, err, finder's fee, err, kickback, err, palm grease, err, bribe, be?
From The Nation magazine: https://www.thenation.com/article/environment/pennsylvania-water-privatization/
I found the dealbreaker on p.8 (*see below copy and paste). Chockwe Antar will take your money all right, but only if he retains the absolute, express contractual right to sabotage the whole thing.
“Execution resources - Funding alone will not solve the city infrastructure
problems. The private consortium would provide engineering program
management to assure proper design, construction and operation of the
improvements where new technologies are employed to deliver better
performance at lower costs
KKR”
The table presented above resembles a PERS forecast. Kingfish should love it.
@ 4:14 - Too bad we can't privatize the office of mayor.
@ 8:06 - What would Chowke's commission, err, finder's fee, err, kickback, err, palm grease, err, bribe, be?
Amen and exactly!
If I were a municipality in Rankin or Madison counties I would not take the deal, but this is Jackson. Posters are concerned about a private company making money off of the city. The thing is though, the water treatment system is getting looted either way, either by Chockwe and his constituents or by private equity. The choice for Jackson is dirty water under Chockwe's management or clean (or at least cleaner) water under private equity's. I vote for clean water.
Yes the lines are going to be the next problem/ the current problem that is simply overshadowed by treatment turbids.
Thank God Socrates and Sista Rukeeya will have a bang-up crew waiting in the wings, to replace those lines as soon as Biden demands the tax payers fund that repair too.
There is literally nothing to be excited about or hopeful for because the decision makers are wholly incapable of doing anything but stealing and begging for more federal funds to replace the stolen ones as the problem that was to be repaired, mysteriously persists.
Spoiler alert: they'll steal those too.
Thank you @3:58!
Privatization has been a costly disaster but "following the money" requires math skills.
We'd have been better off with tax increases in real time even not considering how we would have gotten more for less cost in the moment of being "conned".
Worse, these private companies got plant, equipment,and supplies for free or at "fire sale" discounts that we'd already paid to own! In short, they paid nothing for a business in which they could guarantee themselves a profit. Worse, the new management and employees profiting most aren't likely even locals.
That no one bothers to actually understand the difference between business and ogovernment and professions nor can do math, is turning our Nation into a criminal enterprise!
A contractor is no better the organization managing the service.
Socialists hate privatization. Because the government always does a better job than profit motivated businesses. Uh huh. Doesn’t matter, you couldn’t pay KKR to take the system now.
QUITCHERBELLYAKIN...This is what happens when you put a neighborhood agitator in elective office.
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