Jackson’s federally appointed water and sewer chief Ted Henifin has announced that he will retain his position of Interim Third Party Manager for four years under the Stipulated Order that went into effect September 30. Initially, he had agreed to remain in Jackson for either a year or a year-and-a-half.
“I think I’m in for the four years of the sewer order,” Henifin said in an exclusive interview with the Jackson Advocate last Friday. “The water order was open-ended. It had no end date. The sewer order does have a four-year term from September 30. My commitment now is to stick it out to the end of that order and do the water at the same time.
“I’ve gotten a lot of information during that first year and several things have happened. One: We’ve got more budget through EPA. The second thing is I’ve become attached to the job at hand. The citizens are showing their appreciation. And with the staff and contractors I’ve put together, I don’t think I can walk out right now.”
Henifin says that he will honor the contracts and obligations that the city had in place before he took over as manager of the water and sewer systems.
The $89.9 million contract made with the Siemens company in 2013 to run the water meter system wound up in court with Siemens agreeing to a $90 million settlement. But the city still has to make payments to the loan underwriter for a total of $282 million through annual payments of $23 million that will run until the year 2041. It is hard to wrap one’s head around the fact that over $120 million in interest will be paid for a loan that was voided in less than a year after it was signed onto by Siemens and the city.
“That responsibility was transferred to me as of Sept. 30,” Henifin said. “I am committed to making those debt payments until I can find some way to pay that debt off. We’re investigating lots of different avenues to try and get that debt retired. Yes, that debt is now my responsibility to take care of, and we are honoring those commitments. We will continue to make those payments until we’ve paid the debt off. Hopefully early. Or we’ll go along for a long time. We’ve got a plan in the works to use some of the federal dollars that we got through some of the other congressional appropriations last year. We’re trying to get a site amendment done to allow us to pay off the sewer debt as well. But that is a huge burden on the system to have that size of a debt for a system our size. So, we’re really working to figure out a way to get that paid off early.”
The federal government provided Henifin with a $600 million package in 2022 to bring Jackson’s water system up to standard, but that money can only be used for the water system. Obligations to sewer contractors will have to be paid from money brought in under the new metering system. But over $200 million of the $600 million will be paid for a water contract that was never of any use to the city.
“There’s a couple of different loose pieces going on there,” Henifin said. “That’s not the only outstanding debt. That was one of several bond issues that date back to the late 90s. The city had borrowed money and then refinanced it a number of times for some sewer and water projects. The last of those was the $89 million Siemens project, which was rolled over into another bond issuance, so the combined aspects of that debt originally totaled about $280 million when they borrowed it. They paid it down to about $170 million, roughly. But they did not use that money – the Siemens money – to pay down the debt they’d borrowed.
Henefin noted that the city paid the lawyers about a third of the $90 million. “They ended up bringing in about $60 million in the settlement and they chose not to apply it to the outstanding debt. I can’t explain that,” he added.
Henifin says he is obligated to continue to make the monthly payments with the debt service being about $23 million a year.
“I have to,” he said. “It’s an outstanding debt obligation. I’m not going to default on that. The city put themselves in this position and I inherited it. I’m now in charge of those revenues, and I have to honor those debts.”
The contract with Sustainability Partners, the company under contract to replace up to 61,000 meters for both business and residential Jackson, has raised several questions in the last year or so. Henifin says the contract is still a viable one, however.
“Early on, I looked at what Sustainability Partners was providing and whether or not we could get out of that contract and do something different,” Henifin said. “In the end, it seemed to be a reasonable approach for the meters we were getting installed over the next 20 years. About 85 percent of the meters are installed now. And we’re getting good meter reads from them. The system’s getting better every day. That will be a long-term expense with an annual payment per meter. Somewhere in there, $400,000 to $500,000 will be paid annually going forward. That’s 20 years to pay for those meters.
“At the end of the contract the city will own the meters. But up to that point, we’ll be paying a fee with the responsibility for maintenance, replacement, and anything [pertaining to] a defective meter on Sustainability Partners.”
There are only 56 percent of household water bills that are being paid on a regular basis while 44 percent are not; there is also another 7,000 meters not even hooked up with the system. Henifin and his staff sent out a letter in September ordering everyone to pay up or get their water cut off. That seems to be an unattainable task to enforce in a system serving over 50,000 houses and businesses. Henifin said that enforcement will center around the bills sent out since the new meters were installed beginning September 2022.
“What we’re trying to collect is what we started billing through the new meters starting last September,” he said. “We’ve got good data, but nobody’s been shut off yet. We’re working first with some commercial properties. We’re calling them up and talking with them.
“We think that with the houses we sent the bills out to recently, those are all bills we can prove if the water was used by a particular household. We’ve still got a lot of work to do to find the folks that aren’t connected to the system. Recently, we had to sue or file an order against Entergy to get their customer information to compare their customer information data to ours. It’ll be a great way to find those 7,000, because if you’ve got electricity in the house, you probably have water. We’re using a number of resources to try and find whoever might be using water and doesn’t have an account. We‘ve already seen an increase, just from that letter that went out. The number of collections has gone up in the last period from 56 percent to 62, and the letter has only been out a few weeks. We think people are starting to realize that they need to be paying their bill, or we’re going to be coming around cutting them off if they don’t.”
Some assistance will be available for households that may be under economic stress. JXN Water, Henifin’s company name, has created a Customer Assistance Fund through the Mississippi Community Foundation. The Fund will be working with several government agencies to help people who can’t pay their water bills due to a financial crisis or other unforeseen problems.
“These are one-time payments to help them deal with those issues, because we want to make sure that everyone has the opportunity to pay their bill,” Henifin said. “We don’t want to shut anyone off.”