Jackson Jambalaya

The game plan for the use of the settlement funds was spelled out by then-Ward 2 City Councilman Melvin Priester, Jr. in a Facebook post: 

Some quick thoughts regarding settling the Siemens Litigation.

This is a good settlement.

After attorneys fees, the City will net approx. 60 million.

Given that we did $30 million of consent-decree infrastructure work unrelated to the water-meter part of the deal, netting $60 is an outcome that works on multiple levels.

If we had gone to trial, we could have potentially earned much more. But we also could have lost and received nothing. We certainly would have taken several more years for a resolution and the atty-fees and costs would have been higher. Fifty/fifty odds of getting a positive judgment at trial worth $200 million, five years down the road, minus the even higher attorney fees give you a net present value value that lines up exactly where we are. That's why it's a solid, solid settlement.

What do we do with the money? This is the order I think we are required to go in.

1.) We repay the internal city accounts that we depleted to cover the shortfalls created by the crisis. So, a good chunk (approx. 12.5 million) will go back into the general fund to repay the loans from the general fund to the enterprise fund (i.e. the water-sewer department).

2.) We also have to replenish special accounts we are required to keep at certain levels within the enterprise funds as part of our bond covenants (note: I'm talking about bonds beyond just the Siemens bond).

3.) We repay the $7 million loan we took out last year to work on stabilizing the water-sewer billing system.

4.) Pay bills in the public works department that we have been deferring because of the water-bill crisis ($3million).

5.) Further repair the water-billing/metering infrastructure. Because we borrowed to do #3, we've actually made a lot of progress. We still have our challenges but I think when we get through #1-#4, we'll have enough to execute the plan for making the system work as it should.

6.) Pay on the loan associated with the Siemens projects.

So why not use all of the money and make a major pay down of the Siemens specific loan? #1 and #2 are legal requirements we have to do. So those automatically come off the top. #3 in a sense is a Siemens related loan and it has a very short term, so let's knock that out. #4, is a damage that results from the Siemens issues and are water related bills, so we need to pay those bills. #5, again is something we have to spend on to make things function. Plus, by doing #3 and #5, you get to the sort of functional space where you generate the income to service the debt.

What to do with repayment to the general fund? Honestly, we need to think about this. I certainly think we have to use it on hiring new people, esp. in the public works department and police departments. But I don't want to use a one-time infusion of money to create an on-going and indefinite expense. But the City has been extremely understaffed in core departments because we have not offered competitive pay. We offer extremely competitive medical benefits, but our pay is so low that we are working with a skeleton crew. The water-bill crisis has been a driver of that. On the other hand, I'm loathe to spend money received until I am certain we have things sorted in water-sewer.

Last thought: I know we've been focused on water-meters, but this issue is just a small part of a bigger structural problem. We have $600 million to $1 billion dollars of water/sewer repairs we need to make under the consent decree. Our population is declining and our population is made of way too many people struggling to make ends meet. Even if we get the water-meters and billing sorted, we still are confronting the existential challenge of what does it cost to fix Jackson, where is that money coming from, and how do we ensure that water bills are affordable for everyone.

I'm not telling you who to vote for, but without significant federal investment in urban water infrastructure projects, the people of Jackson will have to pay for the necessary maintenance and repairs to our crumbling water-sewer system. Pay that via what? Water bills. We have had a very important and significant event occur, but we're not out of the woods by a long shot. Still, we have some breathing room and I'm very thankful to be in this position rather than the cliff we were looking over just a few months ago.

In his usual effort at being serious, Mayor Lumumba held two town halls so the "community" could say how it wanted to use the funds.  

Kingfish note: Apparently paying the bills was just not a priority.  The Siemens settlement was a great deal for the lawyers, bankers, and bondholders who will enjoy getting $102 million in interest.   

This might explain why U.S. District Judge Henry Wingate went on the warpath yesterday.