Some 7,000 property owners in Jackson receive illegal water. What is that costing the city?

JACKSON, Miss. (WLBT) - An estimated 7,000 properties in Jackson could be illegally receiving water, so says the city’s third-party water manager.

More details of the city’s ongoing billing challenges were revealed at a hearing in federal court on Friday.

Interim Third-Party Manager Ted Henifin told U.S. District Court Judge Henry Wingate that between 6,000 and 7,000 properties receive water, despite not having accounts set up with the city to pay.

In some cases, property owners removed the meters themselves. In others cases, meters were never installed.

“When new developments were built, and the city was slow in putting the new meter in, the developer... would get tired of waiting and illegally pipe,” he said. “They would connect themselves to the water with their own plumber without putting the meter in place.”

Henifin said his estimates are based on data from the Hinds County Tax Assessor’s Office.

“When you take all the parcels with an account we have, there are about 7,000 improved parcels in the assessor’s database that don’t have corresponding accounts,” he said.

He told Wingate Horne LLP, which will look at additional public records this summer to come up with a more exact number.

“They’re working on it... working as we speak,” he said. “Once we have the list, we’ll start the actual field work, getting out there and verifying.”

Henifin estimates providing water to those customers costs the city about $3.6 million a year in revenue – funds desperately needed to run the water and sewer systems.

Meanwhile, that problem is compounded by the city’s dismal collection rate.

“We collect roughly 56 percent of what we’re billing,” he said. “You can’t bring in the revenue you need to survive. It’s probably one of the reasons [we’re in this] position today because of years of declining revenue.”

Henifin told Wingate collections have been a challenge for years, in large part, due to the failed Siemens contract.

The company was brought on a decade ago to completely overhaul Jackson’s billing system - work that included replacing all of the city’s residential and commercial meters, installing new software at the billing office, and putting in a network of transmitters and repeaters to allow the meters to communicate directly with billing.

The contract was touted to be “revenue-neutral,” meaning it would pay for itself over time. However, the system never worked and Jackson’s water/sewer enterprise fund nearly went bankrupt.

Citing the failure, the city eventually sued Siemens and settled out of court for $89.9 million, the full contract cost.

“Whether they admintted guilt in that or not, Siemens knew they didn’t do what they were supposed to do,” Henifin said. “Siemens is probably the single biggest [contributor] to the problem we’re in now.”

The problem also is exacerbated by the city’s annual debt service. Jackson has about $290 million in water and sewer debt and is paying about $23 million a year to retire it.

“You pay that debt, if you’re only collecting 56 percent, you need all that money to operate the system,” he said. “I think [the city has] been having to hit the general fund and other sources to balance the books.”

To help improve collections, JXN Water is replacing all of the Siemens meters as part of a contract approved by the city in 2021. So far, about 45,000 new meters have been put in place.

Additionally, JXN Water announced plans to begin shutoffs for nonpayment in August.

Henifin also expects to roll out a new rate structure in the coming weeks, telling the judge he would provide him with details of that plan later this month.

“We need to generate a little over $70 million a year. We’re not generating that even in good years,” he said. “I think the last great year of collections was $65 [million] but I’m guessing at this point. It hasn’t been sufficient for many years.”

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