Tuesday, August 10, 2010

Jackson's water bond failure: the Rest of the story.

Mayor Harvey Johnson lashed out at the Bond Commission last week after he learned from the Clarion-Ledger a six-million dollar bond package was not approved by the government body. The newspaper reported on his reaction:

"Mayor Harvey Johnson Jr. urged the State Bond Commission today to reconsider its decision not to approve $6 million in state bonds to fund water and sewer improvements.

“We were counting on those dollars,” Johnson said in a hastily called news conference at City Hall. “This is truly a great setback.

Johnson learned the commission had already made its decisions for a planned fall bond offering by reading about it in The Clarion-Ledger.."

Harvey even made a veiled threat to the state:

"Johnson said another option is to demand state offices in Jackson catch up with unpaid water bills. The mayor said state government owes the city millions in overdue water charges.
Exactly how much the state owes the city was not made available at the news conference. After mentioning the debt, Johnson steered the discussion back to his appeal to the commission.
“We’ve opted not to cut state government off,” he said. “But that’s not the story.”

There is a reason Harvey was very upset. It seems he counted his chickens before they hatched:

"Johnson said he already had included the money in his proposed budget for the fiscal year beginning Oct. 1. He said he was unaware the commission could turn the request down after it had been approved by the Legislature and signed by the governor.

“I didn’t realize that we needed representation at the bond commission,” he said. “Perhaps it was wrong for us to assume.” Article

The Mayor is indeed correct. It is wrong for us to assume. One should always look at the facts and in this case, the first fact to be examined is the law that was passed earlier this year by the Legislature. HB #1701 was passed by the Legislature and signed by Governor Barbour. Section 44 (p.213) states:

"(1) (a) The Mississippi Development Authority (MDA) is authorized to provide one or more interest-free nonrecourse loans to the City of Jackson, Mississippi, to assist the City of Jackson in paying the costs associated with making repairs, upgrades and improvements to portions of the city's water and sewer systems infrastructure located in the areas within and in close proximity to the state grounds and lands described in Sections 29-5-2 and 29-5-81, Mississippi Code of 1972. The aggregate amount of all loans made under this section shall not exceed Six Million Dollars ($6,000,000.00), and the time allowed for repayment of a loan shall not exceed seven (7) years."

The law further states there is a four-year window for the bonds to be issued: "No bonds authorized under this section shall be issued after July 1, 2013."

How does Jackson get this money? Section (b) states:
"(b) The City of Jackson must submit an application to the MDA. The application must include a description of the purpose for which assistance is requested, the amount of assistance requested and any other information required by the MDA"

Did Jackson submit an application? JJ is (say it out loud class) filing a public records request today but for the purposes of this post, it will be assumed one was filed in a timely manner. JJ spent several days investigating this story. This columnist has spoken to numerous individuals in state government, local government, and the business community. To put it bluntly, it appears Jackson dropped the ball.

Everyone at the Bond Commission and at the DFA's Bond Advisory Division is well aware of Jackson's water problems this year. They suffer along with the rest of us when the water system breaks down. They do not have it in for Jackson, contrary to the conspiracy theories residing in the logical labyrinth that is Donna Ladd's mind.

The Bond Commission is not an "antiquated vestige of days gone by" as it was called by the Clarion-Ledger yesterday but is a brake on the whims and horsetrading of the Legislature. A Senator from Pontatoc wants a $30 million bond issue for his district, a Senator from Biloxi wants a $60 million bond issue for his district, then another one from Jones County will want a $10 million for his district. They all agree to vote for each other's projects and voila, there is suddenly a monster bond bill the state can ill-afford. The Bond Commission can thus act with the power of a line-item veto as it approves and issues all bonds passed by the legislature.

The Clarion-Ledger doesn't understand this because it doesn't understand simple concepts such as debt, interest, and bankruptcy. It rarely, if ever, opposes higher spending or bond issues proposed. No surprise since its favorite remedy for budget problems are tax increases. It advocates giving the Legislature the keys to the car and letting it drive Mississippi off the Cliff of Debt. DFA has no power under the law to decline to issue bonds for a particular project. It merely acts as an underwriter of bond requests- there is no ability to decline a bond issue on its merits alone.

The Bond Commission meets five to six times a year. State Treasurer Tate Reeves stated last week the Commission reviews up to one hundred bond requests at each meeting. The saga with Jackson's "water bonds" started several years ago. The state found some money available to improve Jackson's water system. Jackson only had to submit an application. The application had to be filed before a deadline. Frank being Frank, it was not filed before the deadline. More money was found a few years later, an application was required, none was provided on time. As one can imagine, the desire to carry Jackson's water (pun intended) diminished as efforts to help Jackson were literally ignored by the City.

The legislature passed the bond package. The bonds are available to Jackson in the form of non-recourse loans. For those of you over at the Jackson Free Press where taxes are rarely paid, that means the state can not sue the city for repayment if it defaults on said loans (Disclaimer: the terms of the loan will spell out the non-recourse features). However, the Bond Commission is hesitant to issue bonds when there are other options available to the requesting government similar in nature.

Jackson can request loans to improve its water infrastructure through two loan funds. The Mississippi Department of Health offers the State Drinking Water Revolving Loan Fund. The MDH website states:

"The Improvements Revolving Loan Fund Program is intended to provide low interest loan funding to counties, municipalities, districts and other water organizations that are tax exempt, for the construction of new water systems, the expansion or repair of existing water systems, or the consolidation of new or existing water systems. There is no set limit on the amount of the loan, but a maximum amount may be set at the discretion by the Local Governments and Rural Water Systems Improvements Board, as long as expenses meet program guidelines. As well, the funds from a loan may be coupled with funds from other source(s) to meet other needs of the overall project. The present interest rate is 1.95%, compounded monthly, to be amortized within 20 years of the project completion. Expect the loan process to take 6-8 months." See matrix, list of related documents

DEQ administers the Water Pollution Control Revolving Loan Fund Program. There is no maximum loan amount, the interest rate is 2% of below, and there is a twenty-year repayment schedule, and no interest accrues until the project is completed. Highlights of program, Program documents

There is a natural tension between local governments and the Bond Commission. The local governments want bonds to fund their programs, the Bond Commission mission is to ensure the state is not loaded down with debt as has occurred in New Jersey, California, and other states. The Commission wanted to know why it should add six million dollars to the state's burden of debt when there are other low-interest loans available to Jackson from the state. Keep in mind the non-recourse nature of the loans Jackson sought meant the state's options to recover its funds from Jackson were limited as well.

The bonds were not denied, they were not rejected, they are still sitting on the table where they await further review. Jackson has four years to obtain the Commission's approval. One factor that hurt Jackson was Mayor Johnson fired the lobbyists representing the city. Lobbyists. They wine and dine politicians, throw money around, and are the privileged class in Jackson. However, the good lobbyists are experts on how government works and what procedures need to be followed when dealing with government. Jackson did not replace its fired lobbyists. Jackson also hired a new public works director a few months ago as well. Jackson thus was left without any true expertise on how bond packages such as this one were handled at the state government level.

Mayor Johnson chose to attack the Bond Commission instead of finding out what went wrong and how the problem could be solved. DEQ and MSDH both told this correspondent late Friday afternoon no one from the City contacted them last week about the loan programs mentioned above. Neither Mayor Johnson nor any of his representatives have contacted the Bond Commission as of the close of business yesterday in regards to the bond package. Instead of granting interviews to every reporter in town and running for every camera he could find, Mayor Johnson should have ran down to the Governor's or Treasurer's office to find out what is required to obtain approval and what he could do to make it happen. That is called leadership, Harvey, not lobbying or groveling. You are the borrower, the state is the lender, and the lender has some questions before it approves the loan. What Harvey pulled last week reeked of Frank Melton. Who can forget Frank? Grandstanding for the cameras, making headlines, yet when one looked behind the scenes, nothing actually got done.

Harvey should apologize for the empty threats he made to the state. Empty threats, you ask? What do you mean, Kingfish? Remember when Harvey claimed last week the state was past due on its water bills and owed the city millions of dollars? Well, it turns out the Mayor was "misinformed". That is what they call it now when one makes something up because the Clarion-Ledger reported Sunday:

"Johnson called a news conference and issued a thinly veiled threat to collect on "millions" in unpaid city water bills supposedly owed by state government offices.
The Clarion-Ledger asked Johnson's office to provide more information, and Barbour spokesman Dan Turner issued a statement that the governor was unaware of any unpaid bills. Late in the day, city spokesman Chris Mims issued a statement that Johnson had been misinformed.
"It appears that a city staff person provided an inaccurate figure after misreading a report," Mims said, adding the state is "fairly caught up" with its water bills." Article

As written earlier, such behavior is rather Meltonesque. Simply put, Mayor Johnson got caught with his britches down and instead of showing leadership, threw a tantrum. It wasn't the Bond Commission that included six million dollars in Jackson's budget. A six million dollars that never existed. Harvey should take some responsibility, meet with the Bond Commission, and take whatever action needed to get its approval.


Anonymous said...

Don't forget the C-L wants taxes raised on everything ... but the newspaper no sir no taxes on the old C-L. I must say that with todays circulation numbers the tax raised would not be very much.

Anonymous said...

Harvey should apologize for the empty threats he made to the state.

Furthermore he should apologize for the threats he has made to Jacksonians to increase their water rates to pay for a project (two-way Capitol Street) that is not, by far, the more urgent infrastructure priority in this city.

Anonymous said...

Dude, you have hit the nail squarely on the head. Squarely.


Anonymous said...

One of the best written, researched articles read anywhere over the past few months. And for an issue (bonds and state government) like this, that many would find mundane and boring, this is an excellent article. I'm sure Harvey and his cronies at City Hall are not going to be very happy that their incompetence is being shown, but that probably isn't high on your list of worries, KF.

BTW, I am thankful that we have a Bond Commission in this state, despite the CL (an antiquated entity in inself) thinking that it is no longer necessary. And with its current makeup they have been able to keep the bonded indebtedness of the state in reasonable check. Too bad they didn't do the same with the previous membership (Musgrove, Bennett and Moore)!

Anonymous said...

We've got a municipal debt bomb about to explode in this country. Harvey Johnson, not wanting to miss the party, wants to load up on any and all debt he can get his hands on so that Jackson can blow up also. It is easy for the downtown interests to encourage these reckless actions because they've got their "deals" which means that the taxpayers will be holding the bag. Then they wonder why people are still leaving Jackson.

Jackson: the Detroit of the South

Anonymous said...

Outstanding piece of work Kingfish.

But therein lies the problem. There is no accountability in Jackson.

Your shining the light is cathartic as you give voice to the tens of thousands of citizens in Jackson who are sick and tired of the incompetence.

But in the end nothing will change.

Anonymous said...

Thanks to KF for reporting the whole story.

Thanks to Haley and Tate for watching out for those of us that are paying the bills!

katpkangaroo said...

KF, bottom line it. Then let me read later. Great work.

Go figure everyone is in favor of a line item veto. Isn't it amazing when what is right bite's one in the ass?

No politics intended.

Anonymous said...

Question -- was Harvey planning to use the bond proceeds to cover general operating expenses? Why on earth would he have relied on bond proceeds (which by definition must be allocated for a specific capital expenditure)in developing the city's operating budget???? Operating budgets are spposed to be based on recurring revenues (i.e., fees and taxes, NOT bond money.

Barney Fife said...

There seems to be a path being made from so many trips to the woodshed with this administration.

Anonymous said...

Slowly but surely all the facts in your story are getting reported at the C-L Kingfish. Harvey definitely screwed up.

Kingfish said...

Trust me, they read this site. ;-)

Of course there is the matter that for that half a million a year, how much more in improvements could've been made to the water system.

Everyone getting this? Half a million extra a year in bond payments on this deal, then a refinance that will cost the city $8 million more dollars and blow a hole of at least $3 million in four years.

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Trollfest '09

Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).

Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.

Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.

In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

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Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!

This is definitely a Beaver production.

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Trollfest '07

Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

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