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- A federal judge wants to know where the city’s settlement money with Siemens went while JXN Water continues to pursue a rate increase.
Where nearly $100 million went is the question a federal judge wants answered by Jackson officials before deciding if JXN Water can increase its rate by almost 12 percent.
Earlier this week, U.S. District Judge Henry Wingate held a status conference with JXN Water and city officials to discuss where funds from the 2020 $89.8 million Siemens settlement went.
JXN Water’s Interim Third-Party Manager Ted Henifin told the judge the money “went somewhere else. It didn’t go to the water and sewer system.”
Jackson’s City Attorney Drew Martin explained to the court that one-third went for attorney fees. Martin added that Jackson received the settlement in April, and by September of 2020, roughly $50 million had been sent. He continued, $37 million went to cover bond debt and bring the city’s failing water system into compliance with existing water and sewer bond covenants.
The remainder, Martin said, was used to offset the department’s deficit due to delinquent customer payments.
“Whatever those numbers add up to, all of that was spent either to cover bond covenants or shortages in the water, sewer, sanitation system,” Martin told the judge.
The city’s answers came after a frustrated Wingate issued subpoenas last week demanding how the settlement funds were spent by Jackson officials.
“This court has waited for information on these matters since the time this court started working with these particular problems, and the court has just not received it… Thus, this court has taken this action of submitting these subpoenas to various people,” Wingate wrote, explaining why he issued subpoenas to four law firms, Henifin, the Jackson Mayor’s Office, Jackson’s Public Works Department, Mississippi Department of Environmental Quality, the U.S. Department of Environmental Protection – Region 4, and the U.S. Department of Justice, Environmental and Natural Resources Division.
The subpoenas seek financial documents, including audits, legal and contractual records, federal agencies’ email and phone logs, reports, and public disclosures within 30 days, according to the four-page court order.
In 2019, the city sued Siemens for “massive fraud.” Jackson argued it hired the global conglomerate to revamp its water billing system, allowing meters to interface with the city’s water department. The city, at the time, declared the contract would be revenue-neutral.
However, the system never worked, so the city sued, leaving the water system still outdated, underfunded and causing headaches for customers.
Earlier this summer, Henifin approached the Jackson city council about a needed rate increase of about 12 percent to head off additional deficits. The council denied the request and then the issue landed on Wingate’s desk.
Wingate wrote, “Before saddling the public with a rate increase, [we] wanted to be sure this court has investigated every potential source of funds for water and sewage matters to ensure that a rate increase is absolutely necessary. As I said before, ‘Once this court obtained power to address [the] water and sewer problems here that bedeviled the system, this court asked what financial resources are available here to take care of the water and sewer plants, to make them financially self-sufficient’ … And constantly, the court was reminded of the Siemens settlement, and constantly, this court was reminded of the question, ‘What exactly happened to those settlement funds?’”
What actually happened to those funds is on Jackson ratepayers’ minds, especially if it results in a water rate increase.
Alice Anderson, a 56-year-old raising three of her grandchildren on $12 an hour, said any rate hike to her water would be a struggle, much less an 11.8 percent increase.
“I’m raising my three grandbabies, they [are] teenagers and always showering,” she said, noting her water bill is usually between $90 and $100 per month. “I don’t know how we would be able to pay more than that.”
Sierra Finley may have found a solution if the rates jump.
“I’ll tell my kids to take their shampoo and soap with them to the pool,” she joked.
The 34-year-old administrator said a double-digit bump in her monthly water bill would be a hassle, but like food, gas, and rent, water is a necessity.
“If it goes up, I’ll find a way to pay it,” Finley said.
Daniel Tyson
