JXN Water's Ted Henifin considers resigning after federal judge delays water rate increase

• JXN Water Interim Third-Party Manager Ted Henifin threatened to resign after Judge Wingate rejected his proposals for a water rate increase and a new water authority board.
• Wingate questioned the proposed rate hike given outstanding questions about Jackson’s use of a previous settlement and criticized Henifin’s method of selecting potential board members.
• Henifin claimed he couldn’t continue in his role without the approved rate increase and board, citing financial difficulties.
• Wingate acknowledged Henifin’s potential resignation but reiterated his concern about burdening Jackson residents with increased costs.

JXN Water’s Interim Third-Party Manager Ted Henifin said he would consider resigning after U.S. District Court Judge Henry Wingate opposed a proposed water rate increase, citing concerns about burdening citizens and suggesting alternatives to address the utility’s deficits.

On Tuesday, July 29, Henifin appeared before Wingate inside the Thad Cochran United States Courthouse, where Henifin — once again — requested for Wingate to approve a water-rate increase.

The new rate increase would raise the average residential water bill from approximately $76 per month to $85 per month — up $9 a month, or roughly 12% higher than current rates. That also represents an increase of about $0.30 per day for average customers.

Henifin also requested that Wingate to establish a JXN Water Authority board comprised of least seven board members. The board is required for if JXN Water wants to take out bonds needed to cover operations until collections improve. Collections are currently around 71%.

Wingate rejected both of Henifin’s proposals, asking how could he raise rates while questions linger about how Jackson utilized proceeds from an $89.8 million Siemens settlement.

Wingate then went on to criticize Henifin for submitting a self-selected list of potential board members, rather than advertising the positions and allowing the court to appoint candidates.

“The board should be independent of the CEO,” Wingate said.

After both proposals were rejected, Henifin stated he would have to “seriously consider resigning.”

“I have no way to pay the contractors going forward. You shut down the approach to go get bonds. Everything is falling apart financially,” Henifin said. “Without these two things … my hands are tied. I really don’t think I can go on, your Honor. I’ll consider that and let you know.”

Judge Wingate acknowledged Henifin’s announcement but expressed reluctance to make a decision that would burden citizens with financial hardship, given the current circumstances the city is in.

“If that is something you think is necessary (and that) you need to do, we thank you for what you’ve done,” Wingate told Henifin. “What I said before still stands.”

In 2022, Wingate appointed Henifin to manage Jackson’s water and sewer systems. Henifin later established JXN Water to operate the utilities under federal oversight. Henifin previously said he would work in his current position until 2027.

Why is there a deficit?

According to Henifin, approximately $600 million in federal funds were available, including $150 million in technical assistance funds that he used to cover operating costs while addressing issues with the billing system. As of July, those flexible funds have dried up.

JXN Water is projecting a shortfall of $33 million to $39 million for 2025, with two potential recovery options: issuing new bonds and reallocating federal funds.

Henifin said the proposed bond issue — $50 million — would provide temporary operating funding until revenues catch up. JXN Water is also looking to reallocate $36 million in federal funds. Together, those measures are expected to cover projected shortfalls from 2025 to 2028.

However, Henifin said, the bond deal cannot be done without the water authority board. And while federal funds reallocation from Congress is “likely,” it may not occur until late 2025, calling for immediate action with implementing the rate increase.

Wingate refused on Tuesday to approve the proposal until he gathers more information about the Siemens settlement funds.

In 2013, the city awarded a $90 million contract to modernize its water billing system. The city’s lawsuit against Siemens alleged the company and its subcontractors failed to deliver a working water billing system, installed meters that often didn’t register water usage and left the city with uncollectable accounts and massive financial shortfalls. Siemens, which denied wrongdoing, agreed to the 2020 settlement to resolve the matter. At the time, city officials said the recouped funds would help stabilize Jackson’s water finances.

JXN Water has stated the rate increase is needed to cover the debt incurred by the City of Jackson for its water and sewer system from 1993 to 2013, that the utility was required to assume by the federal court.

Wingate has issued subpoenas to several entities, including the City of Jackson and Siemens, to obtain information on the use of the funds. Wingate said the subpoenas were due to his patience “growing thin” as he awaited answers that never came.

For Wingate, “a number of questions” still loom: How were the funds deposited? Who were the individuals responsible for handling the money? And why has there been no clear paper trail, such as an invoice, showing where the funds were disbursed?

Wingate said that it would be reasonable to resolve the Siemens matter first before considering a rate increase that “might not be necessary.”

“I can’t do it. I just could not face the public, increasing the water rate when we have all these questions about Siemens; $60 million worth of questions,” Wingate said.

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