In all the frustrating and heartbreaking reports surrounding the desperate difficulties of the Jackson, Mississippi water situation, I heard a snippet that buzzed around in my head for a bit.
Well, 2 actually. First, of course, their water problems are all legacy “institutional racism.” In this day and age? GOES WITHOUT SAYING. *eyeballroll*
The second? Something about a near $100M settlement with Siemens Corporation for…faulty water meters? Did I hear that right? If that’s true, why and where’d that money go?
To the first, oft-repeated assertion, I can only point out Jackson has been a Democratically controlled city (with a one-off Republican in the 40s, and Mayor Ditto, who turn coated from Dem to Rep for the last 2 years of his mayoral term) for the better part of a hundred years (WIKI List). We are all aware of what Southern Democrats of a certain era were capable of.
Jackson has been a Democrat-controlled city since Mayor Johnson, in 1997. So a quarter century to start taking things in hand. Make those changes. To be fair, they were up against a rock and a hard place, with a declining population, “white flight” to the suburbs or elsewhere, leaving a lower income citizenry in its wake, with a city to support on a tax base that was melting away. In fact, according to WABE, “a population 20% smaller today than in 1980.”
I get it.
But good decisions are what needs to happen when you get your shot, and, HOO, BOY, did not. This is where the Siemens debacle came in.
In 2013, the city contracted with Siemens to upgrade sewer lines, the water-treatment plant, and install new water/sewer meters with a streamlined modern billing system. Sounded like a terrific deal. Lots of promises, according to this excellent Jackson Free Press article.
… In 2013, the City of Jackson entered into the $90-million performance contract with Siemens to upgrade Jackson’s sewer lines and water-treatment plants and to install a new automated water-sewer billing system. Court records show that, in the months leading up to the contract, Siemens had promised $120 million in “guaranteed savings” for the city. The corporation stated that the new water-sewer repairs and billing system alone would generate enough savings to pay for the $90-million project.
“In its pitch to the City, Siemens repeatedly invoked the guaranteed structure of an energy performance contract,” the City’s June 2019 lawsuit against Siemens reads. “When it came time to execute an agreement, Siemens effectuated a ‘bait-and-switch’ that fell short of a true performance contract.”…
PROGRESS, Hallelu…well, no. To make a long story really short, the water meters Siemens installed were purchased through a middleman (heckuva mark-up made for someone there), and, as Mississippi Today points out, cost quite a bit more than water meters dang near anywhere.
In a deal the Mississippi Development Authority approved, Jackson agreed to pay roughly $1,000-per-meter for equipment and installation alone., according to the Jackson Free Press. By comparison, recent projects in San Francisco and Baltimore came with $285.71 and $208-per-meter price tags, respectively.
GULP.
So my first impression is “due diligence” inclined. Didn’t anyone price shop? I see something for sale on QVC, and I check 6 other websites before I go, “Yeah, buddy! ADD TO CART.” No one thought to ask?
It gets worse. As water meters go, Siemens had never hooked that manufacturer up to the Oracle database they were going to use for the new billing system, so Jackson became a “test case.” On their dime.
Speaking of “dimes,” they didn’t collect any! HOW many is NONE? Oh, boatloads. Enough to about crash the city financially (JFP).
…Instead of generating revenue or savings for the City, the work Siemens contracted to complete resulted in problems that have thrown Jackson’s water-sewer system into crisis and the City further into debt, the lawsuit charged.
Not long after Siemens and its subcontractors installed the new billing system, residents reported not receiving any bills, sometimes for months or years. Those who did receive water bills reported inaccurate—and unusually high—amounts, which they often did not pay.
On Feb. 27, Public Works Director Bob Miller confirmed to the Jackson Free Press via email that the City “has 34,804 active water and sewer customer accounts with outstanding balances over $100 that in arrears more than 30 days.” (sic) Those balances add up to a total of $43,541,780.35, he wrote.
The unpaid bills have depleted the City’s enterprise fund and forced it to dip into the general fund to continue making repairs on Jackson’s deteriorating water-sewer system. The City had to take out loans to make vital water-sewer repairs, such as the $7-million emergency loan that the Jackson City Council approved in October 2019.
The city of Jackson finally pulls the plug on this rolling disaster in 2019, filing a $450M lawsuit against Siemens and four local contractors, eventually announcing a settlement with Siemens on 19 February 2020 for $89M and change. All they’ve done is covered the cost of the contract. Like it never happened to Siemens.
Well it sure happened to Jackson. At least they got something back, and that’s a lot of cha-ching. Where’d it go?
This report from local station WLBT says, in only a shade over year, it went into a big sinkhole of incurred costs:
JACKSON, Miss. (WLBT) – The majority of proceeds from Jackson’s Siemens settlement have gone toward bringing the city into compliance with its bond covenants and propping up its water/sewer billing fund, according to documents obtained through an open record request.
As of June 13, 2022, Jackson had just $8 million left from the nearly $90 million it received in its settlement with Siemens Industry.
Of that, about $30 million went to cover legal costs, while another $36.7 million was set aside to bring the city into compliance with its water and sewer bonds, documents show.
Jackson has approximately $219 million in outstanding water/sewer bond debt, including the nearly $90 million the city issued for the Siemens contract, according to the city’s 2019 bond catalog.
To maintain compliance with its bond covenants, Jackson must maintain a reserve fund to cover payments when water and sewer collections run short.
Another $14.25 million was transferred to the water/sewer enterprise fund or sanitation fund to make up for shortfalls in billing collections.
That amount is in addition to the more than $4.1 million in general fund transfers the city made to prop up water/sewer since 2017.
And they are still not collecting outstanding water/sewer bills.(WLBT) Hello?
…“You’ve got revenue reported during the year that is not going to be collected,” the city’s independent auditor, Scott Hodges said in April. “That needs to be allowed for during the year, so you’re not looking at inflated numbers, and then at the end of the year,
$7 million disappeared because it’s not going to be collected.”…
WHUT?!
I mean, that number is eye-popping. I can also understand the governor’s reluctance – whatever his political persuasion – to dump more big unaccounted-for bucks into the city.
There is also, unfortunately, an ugly sub-current with the four contractors who were named in the city’s lawsuit. Charges made against the locals as “shell” contractors were countered by accusing (WAPT) Mayor Lumumba of using the suit to pay back political foes of both he and his late father (a former Jackson mayor). In an interesting move, one of the gentlemen – Marcus Wallace, president of M.A.C. and Associates – sued Siemens. Via The Mississippi Link, it makes for eye opening reading into the world of EBO (Equal Business Opportunity) contracts.
…The lawsuit states that in January of 2013 the city of Jackson entered into an Equal Business Opportunity Plan contract with Siemens to make improvements to Jackson’s water and sewer system. The improvements would cost the city about $90 million.
The EBO contract with the city called for 58 percent of the construction on the project to go to an African-American company and 32 percent go to a female company. Siemens chose MAC – a minority firm – to perform construction, sewer repair work and meter installation for $20,328,920.
“It is our allegations that when Siemens came to the city of Jackson, they made certain promises to the city as well as certain promises to MAC and Associates,” Gibbs said.
Part of those promises, according to Gibbs, was that MAC would build all of the construction for Siemens’ projects. However, Gibbs said that when the project started, Siemens removed some of the construction from MAC and gave part of the construction deal to Pedal Valve – a general contractor company out of Louisiana – which Siemens introduced to MAC. By doing so, Gibbs alleges that Siemens reduced the percentage of work to minority vendors….
..The lawsuit also states that prior to the city of Jackson accepting Siemens’ proposal, Siemens committed to mentor, train and manage local minority businesses involved in the project.
“The purpose of the contract was for MAC to learn how to be a contractor so the next time a project like this came about MAC could do it on its on,” said Gibbs. The plaintiff is accusing Siemens of not honoring that commitment..
Am I reading that right? His firm got a contract for over $20M to learn “how to be a contractor”?
*blinkblink*
Those folks in Jackson deserve clean water. They deserve a GOOD place to live. But holy moly moly, they need to quit letting fingers be pointed at every boogie man outside the city lines, and start looking HARD at the guys inside the wires, and who their priorities are.
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