Judge orders water service to remain for 14 days at six Jackson apartments amid bill dispute

• Several Jackson apartment complexes are suing the local water utility, JXN Water, over high bills and potential shutoffs.
• The property owners claim the bills are inaccurate and the rate structure is unconstitutional, while the utility says the complexes haven’t paid in months.
• One complex allegedly collected over $138,000 in water fees from tenants but did not pay its bill to the utility.
• The property owners also argue JXN Water violates due process by not providing a formal way to dispute bills.

U.S. District Judge Henry Wingate ordered Friday, Sept. 5, for water service to remain operational for the next two weeks at several Jackson apartment complexes facing water shutoffs due to unpaid bills, temporarily preventing JXN Water from disconnecting servces.

Woodlands Property Holdings LLC and Blue Magma Residential LLC filed a suit on Aug. 28, citing inconceivably high bills, an unconstitutional billing rate structure and unconstitutional collection activities by JXN Water — the utility headed by Interim Third Party Water Manager Ted Henifin.

Woodlands owns six apartment complexes in Jackson: the Park at St. Andrews, the Park at Newhaven, the Park at Marsala, the Park at Inverness, the Park at Sussex and the Park at Queens Court. Those complexes are managed by Blue Magma.

The suit comes after JXN Water notified Blue Magma that the Park at St. Andrews — a 200-unit complex at 2119 Woodland Way — was at risk of being shut off for nonpayment.

JXN Water refuted the owners’ claims during court proceedings Thursday, Sept. 4, revealing that St. Andrews had not paid its bills for months despite collecting roughly $138,000 in water, trash and pest control fees from tenants. The utility also stated it delayed collection and disconnection multiple times to allow property owners time to pay their balance, establish a payment plan or address any ongoing leaks.

Wingate said water service at the six complexes will continue as normal while JXN Water and Woodlands prepare briefs aimed at persuading the judge to rule based on their submitted materials by noon on Sept. 10. The case is set to resume at 9:30 a.m. on Sept. 11.

“I think these issues here are sufficient to justify an extension of the TRO,” Wingate said, referring to an Aug. 29 order. “I don’t want to not extend the TRO and be faced with some shutoffs, only to find out that there’s some issues there that have come up with regard to these matters. … During this time period, we’ll move forward and try to get to the bottom of this.”

Wingate made the determination one day after an evidentiary hearing on Thursday, Sept. 4, at the Thad Cochran United States Courthouse, where both parties presented their arguments before the court.

High water bills

Court records show St. Andrews received its first high water bill around April-May 2022 after a new meter was installed under the city’s contract with Sustainability Partners.

Attorney Robert Ireland, representing Woodlands, argued Thursday that the complex paid its bills through August 2022, when billing ceased. Ireland stated no further statements were issued until February 2024, when St. Andrews was issued a $261,000 bill.

Back in April 2024, JXN Water issued a statement identifying St Andrews as one of five different apartment complexes owing massive water balances. At that time, St Andrews reportedly owed $325,000. As of Thursday, JXN Water stated the complex owes an estimated $384,000.

Blue Magma Residential LLC’s Chief Financial Officer Carol McAllister testified Thursday that the company contacted JXN Water in February 2024 seeking assistance and questioning the accuracy of the water meter.

McAllister said throughout the process, the company did not remain idle, actively addressing any “out of the ordinary” expenses — especially water-related issues — by identifying and repairing any leaks.

McAllister said the company spent approximately $178,000 on repairs, actions that proved to be unsuccessful in reducing water usage.

“We also had leak detection companies and other plumbing services to walk the outside. We did the inside. So, when the bills stopped, we still couldn’t figure it out. But when we got that high bill … We picked back up again with regard to what we can do to affect the usage.”

McAllister said plumbers were unable to locate any major leaks, attributing the high bills to a faulty meter. McAllister said despite contacting JXN Water, no representatives came to inspect the meter.

“We rarely had any communication that helped,” McAllister addressed the court and Ireland. “That’s why we reached out to your firm, to counsel, to see if we can get better answers than we did.”

JXN Water attorney Mitch McGuffey refuted the faulty meter characterization, saying the significant increase in 30-day water usage — from 900 to roughly 7,580 gallons per occupancy unit for St. Andrews — is due to the replacement of old, less-precise meters with new ones that provide more accurate readings and charges.

On cross-examination, McGuffey questioned McAllister about a billing gap from Aug. 11, 2022, until Aug. 11, 2023.

McGuffey said profit and loss statements for St. Andrews during that period show Blue Magma collected $138,816 in water, sanitation, and pest control fees — or “RUBS fees” — from tenants but paid nothing toward water service.

St. Andrews currently charges $90 in RUBS fees for one-bedroom units, $110 for two-bedroom units and $120 for three-bedroom units.

McGuffey asked if Blue Magma placed the collected fees in escrow, to which McAllister replied no. McGuffey then questioned if Blue Magma made any monthly payments from November 2023 through December 2023 and into 2024, to which McAllister again responded no.

McAllister testified that despite collecting fees, the firm did not pay its bills because the owners needed to understand the charges and “why it was so high.”

“The initial bill in 2022 that was high, we had questioned it, but we eventually paid even though we didn’t get any answer. And then when it started back up again, it still didn’t make sense,” McAllister said. “We were questioning and disputing at that time, so we didn’t pay. Yes, we continued to collect, but it’s not profit to us.”

Wingate also questioned McAllister about whether the RUBS fees were placed in an interest-bearing account during that period.

McAllister said the fees were deposited into the company’s operating funds, with a portion used to cover pest control and sanitation services.

“We’re not here, to not pay bills,” McAllister said, mentioning the firm is on a payment plan for another complex and is making payments. “We pay bills when they make sense.”

Water rate structure

Woodlands argued that JXN Water’s tiered rate structure, which charges varying rates per hundred cubic feet based on total consumption, contributes to the issue.

According to previous Clarion Ledger reporting, Ireland attended a June 15 public hearing at the federal courthouse to oppose JXN Water’s proposed rate increases, criticizing the current structure for its “inequity” and recommending a return to a single-rate system. This stance was reiterated during Thursday’s court hearing.

Ireland said in result, the rate structure leaves residents of the city’s apartment complexes to pay more for water than those in single-family homes.

“The basis of the differences in the rate structure was to keep water services affordable for Jackson residents,” Ireland said. “Well, JXN Water took no inventory of the number of apartment complexes in the City of Jackson. They took no inventory of how Jackson apartment residents pay for their water. And they took no inventory of whether the SNAP beneficiaries that are on assistance because they’re on because they have low income … The charges that are produced per unit are astronomical.”

McGuffey countered, stating Ireland’s argument is framed as a constitutional claim to “relitigate” the water rates. McGuffey asserted that opposing counsel simply disagrees with how the rates are applied to one of their apartment complexes and seeks to change them.

“So, what they really want, I guess, is for JXN Water to conceive of either a flat-rate system or go back to the old City of Jackson system. Maybe they want to pick their own rate structure. Maybe we should let apartment complexes dictate how much they pay. Who knows,” McGuffey said.

“They can point too and trot out all these other things, but at the very bottom of the day, the only reason that they have an issue here is because they have a master meter complex. … This is a for-profit, commercial enterprise that has to pay a bill.”

Due process

Ireland’s final argument asserts that JXN Water violates the U.S. Constitution by not offering customers a process to dispute their bills. Ireland argued that JXN Water “owes” the plaintiffs notice and an opportunity to contest their bills and service termination before any disconnection takes place.

“Jackson’s own municipal ordinance goes beyond just constitutional protections and affords water customers in Jackson a specific right to dispute bills,” Ireland said. “There’s a process of impartial review once a genuine billing dispute has been initiated.”

McGuffey explained to the Court that JXN Water is an interim company established to assist Jackson during an emergency water crisis, and under the interim stipulated order, Interim Third-Party Manager Ted Henifin is not required to adhere to state or city codes.

“Their request is apparently that JXN Water complies with the City of Jackson’s ordinances, which required at the time the city to have a full-time employee going to hearings in which the city paid for an ALJ to hear disputes from customers,” McGuffey said. “JXN Water doesn’t have the money to pay for that system, and plaintiffs certainly haven’t offered any ideas about how they would.”

Before the dispute with Woodlands arose, JXN Water was already facing a separate legal dispute with the owners of Tracewood Apartments, another Jackson apartment complex involved in disputes over massive unpaid water bills. JXN Water said Tracewood is $910,000 in debt. An Aug. 29 hearing over the disputes involving Tracewood’s unpaid water bills never materialized without any reason given. The matter with Tracewood is expected to resume Sept. 10.

Pam Dankins is the breaking news reporter for the Clarion Ledger. Email her at pdankins@gannett.com.