Jackson Jambalaya

Mincing no words, the city of Jackson accuses JXN Water of spending its way into a rate increase in a report submitted to U.S. District Henry Wingate Friday.  The city compiled the report after Judge Wingate gave the city permission to dig through JXN Water's books.  The city opposes the rate increase, arguing it will overburden the "60% of customers paying bills." 

Michael Thomas, CPA of Systems Consultants Associates issued the report after reviewing JXN Water finances.  Bill Cooley is the founder of the company.   

Highlights and recommendations of the report: 

* Jackson asks Judge Wingate to order JXN Water to deposit a $1.5 million bond payment with the Court.  The payment is due in March  but the report states the state will start intercepting its sales tax revenue is the deposit is not made. 

* The city aims squarely at Ted Henifin and fires away. "The financial structure of JXN Water has been backwards since Day One and it should have been created differently. 

*Jackson said JXN Water should prioritize bond payments over operations and maintenance. Doing so will require JXN Water to tighten its belt, thus forcing it to renegotiate contracts and open more contracts to competitive bidding.  There is just one problem with this recommendation.  The bond covenants require JXN Water  to pay operations and maintenance expenses before debt payments.   

Mr. Henefin fired back, " The system has been underfunded for years - with the City supplementing with General Fund revenues. There is no way to operate within available revenues and provide safe water to all customers, all the time as well as keeping sewer in the pipes and not running down the streets."

*About competitive bidding.  Mr. Henifin said "Pure supposition that we would save any money and get same level of service. We saved $800K per year moving to Jacobs from the competitively bid Veolia contract and are already receiving better service." 

*  There must be a continued focus on revenue collection based on timely and accurate billing as well as accountability of payment of the billed amounts. The Receiver replied: "His own table clearly shows we are doing this with success."

* The Court should  order JXN Water to work with the city to identify all places receiving water without an account. The report does not state how utility should work with the city.  

Receiver Ted Henifin said there are 6,000 non-account holders receiving water.  Mr. Thomas estimates that at a monthly bill of $85,  collecting from those receiving water without an account will generate $509,280 in monthly revenue and $6 million in annual revenue. 

* The report claims 17,832 customers received bills in September and 20,047 received bills in October but didn't pay.  Collecting from these customers would generate $1 million per month and $12 million per year. 

* JXN Water should seek a rate increase for customers who live more than a mile outside the city limits who have been paying lower rates nor do they pay the $40 monthly availability fee.  The report argues they should pay the same rate and the availability fee as the rest of the customers do. 

* The Court should order JXN Water to work with the city to collect bills that have not been paid.  The report again does not say how JXN Water should work with the city, just that it should do so.  

* Water/sewer delinquencies from October 2023 to December 2025 are $74.4 million.  The city claims if only $10 million of that amount is collected per year, it will improve the system's revenue to $122 million.  

* The city wants to supplement revenue with assistance from the State.  The report states the city is going to get the legislature to appropriate funds for the water system.  Since the legislature does not meet until January, the assistance can be classified as "hoped-for" revenue.  

* The Court should order an affordability study by an expert.  The expert should compare JXN Water's rates to other cities in the Southeast.  However, it appears one such study already exists.  Mr. Henefin said "This was done and is included on page 7 of attachment 4 in the City's filing."

As one can easily see, JXN Water's rates are in the middle of 15 Southeastern cities reviewed.   

*  Time for some trash talk.  The city accuses JXN Water of holding $5.5 million of sanitation fees in 2024 and $8.5 million in 2025.  The report claims an additional $13.7 million has not been collected.  It is curious the city delved into the issue of sanitation fees as Judge Wingate said the city should not study this area. 

* The city takes strong issue with the contract with Jacobs Engineering.  The company manages the two water plants at $3 million per month.  

* The report claims collection rates reached 67% in March but fell afterwards and never returned to that level.  However,  

Mr. Henifin took strong issue with the report.  He said Mr. Thomas did not log into JXN Water's Quickbooks system (expenses) until the evening of December 18, the night before the report was due. 

* The Receiver told the Court at an earlier hearing he did not focus on the billing system when he first assumed office because he spent most of his attention on keeping the system running and making much - needed repairs.  The city used that little statement against Mr. Henifin, arguing he admitted neglecting the system.   

* The city said it is in discussions with lenders to refinance its water and sewer debt.  

Note: The actual report is on p.31 posted below.