Commission, city at odds over one-percent allocations

Oversight members say Jackson owes $20 million

Commission, city at odds over one-percent allocations
City of Jackson repairs water main break; Source: WLBT

JACKSON, Miss. (WLBT) - It’s often said that you shouldn’t loan money to a family member, because you might not get it back.

Jackson’s one-percent oversight commission has loaned the city some $20 million in the last two years, and now some members say it’s past time for the city to repay it.

Officials with the Lumumba administration, though, say Jackson doesn’t have to pay, arguing the commission doesn’t have the power to lend the city its own money.

“The commission lacks any express or implied power to ‘lend’ the city the city’s own money,” wrote City Attorney Tim Howard in a September 30 letter to the commission.

The commission oversees the city’s one-percent infrastructure sales tax. Under state statute, it is responsible for drawing up a master plan and ensuring that one-percent monies are spent in compliance with that plan.

At the heart of this matter is some $20 million that the commission says it loaned the city between March 2018 and October 2019.

According to a letter sent to Mayor Chokwe Antar Lumumba on August 18, commissioners said the funds were to be repaid by September 30, 2020.

As of October 15, though, the money had not been repaid.

Oversight members discussed the matter at a recent one-percent meeting.

Commissioner Pete Perry contends that the funds were a loan, and that the mayor and chief administrative officer were in the meetings when the loans were approved.

“They were sitting in that meeting and voted for it and knew it,” Perry said. “They want to say they weren’t loans. That’s OK. But they still are.”

Amounts in dispute were outlined in the August 18 correspondence from commission vice-chair Duane O’Neill. They include $6,985,000, which was made to in March 2018, “to reimburse the water and sewer systems for major maintenance emergency expenditures that occurred September 2016 through January 2018;” $7,250,000 in August 2018 to address additional sewer main failures and cover consent decree management costs; and $4 million for consent decree costs, also awarded in August 2018; $650,000 to repair a major water main break in Belhaven; and $1.4 million again for consent decree costs.In regard to the March 2018 loan, then-Public Works Director Robert Miller told commissioners that the funds were needed to ensure the city stayed in compliance with its water bond covenants.

Under provisions of Jackson’s water bond agreements, the city must maintain a certain amount of money in its reserve balance to cover bond payments.

Not having that money could cause the city to default on the loans or see its credit rating diminished.

In his letter, Duane stated that all amounts were awarded as loans and had to be repaid to one-percent fund by September 30, 2020.

As for the $4 million loan issued in August, the commission said that the council had to “accept and acknowledge” that the funds were a loan before obligating them.

Minutes from the March 2018 meeting do not indicate that the $6.9 million was a loan. However, minutes from the August meeting from the same year show that the city officials understood the allocations made that day were being made as loans.

At the time, Miller was noted as saying that “based on an internal legal review of this matter, the commission can loan or advance funds.”

The vote to award those monies was approved 7-1, with Perry, Blaine, Lumumba and O’Neill among those voting in favor.

The $650,000 awarded to cover the water main break at Myrtle Street also was a loan, according to minutes from the March 13, 2019 gathering. At that meeting, city officials agreed that the funds would be repaid once funds were “secured by the settlement of the contractor” or with monies from the water/sewer fund.

The measure was approved on a 6-1 vote, with the mayor and Blaine among those voting favor.

At the October 9 meeting, when the city asked for additional funds to cover consent decree costs, Perry asked about the likelihood that earlier loans would be paid back. Miller was recorded as saying “he does not have the authority to bind the city to a loan.”

In his letter to the commission, Howard backed up Miller’s claims, saying Jackson is “is not bound by any vote of the commission that would obligate the city to repay money to the special sales tax fund,” and added that there were no records in council minutes showing that the council had approved the loans.

“The City of Jackson is a municipality which, with respect to the borrowing of money, is bound only by the acts of its governing authorities, in this instance, its city council," he wrote.

Howard went on to say that the funds were used on infrastructure projects “sorely needed by the citizens of the city,” and that “all of these projects are important and proper objects of the special sales tax fund.”

A copy of the letters, as well as other one-percent documents, are shown below.

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