City won’t receive $20M grant to pay off customer water bills, debt written off instead

JACKSON, Miss. (WLBT) - Just hours after the People’s Relief Campaign was launched, Jackson Mayor Chokwe Antar Lumumba stood in front of reporters touting a $20 million grant received to fund the program as an example of promises made, promises kept.

The announcement was one of several made by city leaders, community activists and JXN Water officials before and after the campaign began telling customers the funds had been made available to pay off their old water and sewer debts.

“We told you that we were going to find a way to provide relief and equity to residents. And now you see that happening,” the mayor said.

However, at the time those announcements were made, the city had not received the grant and just days after the program officially got underway, JXN Water learned the grant wasn’t coming.

Even so, nearly $13 million in customers’ bad debt has been forgiven, with JXN Water “writing off” the amounts, rather than using grant money to pay the amount.

Interim Third-Party Manager Ted Henifin says the mistake was due to a miscommunication from the U.S. Department of Health and Human Services. He said the funds were guaranteed to the city at a meeting with the agency prior to the relief program’s kickoff. He learned later that the information shared by department officials was incorrect.

Henifin, a 40-year public works veteran was appointed third-party manager over Jackson’s water system as part of a federal court order handed down in November.

“There were dollar signs floating in all of our eyes, thinking we were gonna bring in some serious federal dollars to Jackson,” he said. “It wasn’t until after that date that we get a notice from the Health and Human Services person doing the talking... [saying], ‘Oh, I misspoke.’”

“The air went out of the room quickly when we learned that.”

The grant would have come from the federal Low-Income Household Water Assistance Program (LIHWAP) and be used to retire old debt accumulated by city water customers prior to the third-party manager taking over. As debts were paid, the funds would go into the city’s coffers, like typical water payments.

“If it were forgiveness, it would not be revenue, right? It would just be something forgiven and wiped off,” said Tariq Abdul-Tawwab, chief experience officer with JXN Water. “When you have debt relief, that money goes into the revenue because we’re relieving the customer and the customer is still paying their bill.”

However, Jackson never received the funds and the nearly $13 million that has already been forgiven through the program is now being written off.

Henifin, meanwhile, was unsure where the $20 million figure originated. “There wasn’t a firm $20 million. Not sure where that number came from,” he said. “I think it came from my staff, so I’m not saying it hasn’t floated around.”

He says Jackson is expected to receive about $960,000 in LIHWAP money from funds already awarded to the state. However, that amount is far less than the $20 million previously announced.

As for the customers who have already had their debt forgiven, Henifin says they don’t have to worry. “So, the $13 million is just writing off money, not cash coming into the city,” he explained. “It helps people see a balance reduction on their bill... The LIHWAP money does the same thing but actually brings cash with it to the water fund.”

So what led to the miscommunication?

It occurred at a meeting with federal officials on February 22.

Henifin says he was told the city would be eligible for the grant if the state expended 25 percent of its LIHWAP allocation before March 1.

At the time, Mississippi had already spent 23 percent of its LIHWAP dollars and Henifin believed it would be easy to spend the other two percent.

“We didn’t think hitting 25 percent would be difficult at all,” he said. “We were confident the state was in play for more money.”

However, those hopes would be dashed days later, when Henifin received an email from HHS saying the state had to spend 75 percent of its LIHWAP dollars before additional funds could be made available. And the deadline to reach the 75 percent threshold had passed.

“At that point, we had already had the kick-off, the press conference had happened... That’s really what’s making this whole thing ugly at this point.”

Henifin says he never corrected initial reports because he believed - per his conversations with Health and Human Services - the city would be receiving not only the $20 million, but more money on top of that.

“I thought we’d have a really good story to tell when we get $25 million,” he said. “So, I was sleeping fine at that point until I got the HHS emails.”

The news is yet another blow for a city that has seen its uncollectible debt skyrocket in recent years. Between 2017 and 2021, the latest audit available, the amount of uncollectible water and sewer debt has doubled from $42.3 million to $94 million.

Meanwhile, it’s unclear whether JXN Water can legally write off that debt.

State statute prohibits publicly owned utilities from providing free services, like water and sewer.

The Mississippi Constitution also prohibits gratuities “in favor of any person” unless it is approved by two-thirds of each branch of the legislature.

Henifin says the Constitution, as well as a state statute, is open to interpretation and does not necessarily refer to uncollectible water/sewer debt.

“We’re looking at this sort of as an acquisition, a business acquisition, where you inherit debt from your predecessor,” he said. “I had nothing to do with billing, and now I’m being told to collect this old debt. So, what we’re doing is, if the customer has disputed it and we can’t resolve that dispute with known data, then it’s eligible to be written off.”

City officials declined our request for comment.

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