‘Yeah, it’s essentially gone’: Henifin outlines JXN Water’s plans as federal flex funds dry out

JACKSON, Miss. (WLBT) — With a large pot of federal funds “essentially gone,” JXN Water might need a loan to stay afloat until collections improve.

Interim Third-Party Manager Ted Henifin spoke to WLBT last week, where he outlined JXN Water’s challenges, in particular, what’s going to happen once $150 million in flex funding runs out.

Henifin has relied on the funds to help cover operations since taking over the city’s water system in late 2022. However, the remaining $3 million will be gone by next month.

“I just got in a request for reimbursement for the Jacobs contract — the March invoice, which I just got,” he said. “Once that gets paid out, there’ll be somewhere, maybe $1 million left, and we’ll get that drawn down next month as a portion of the Jacobs payment… Yeah, it’s essentially gone.”

On Tuesday, the Jackson City Council is expected to vote on a proposal to increase water rates. Because it’s been more than a year since the last rate increase went into effect, Henifin will be able to implement the rate increase without the council’s support.

Henifin says he needs the increase, in part, because federal funds are drying up.

But even when that increase goes into effect, JXN Water will still not be generating enough to cover operations and maintenance based on the current collection rate.

“We kind of need a bridge loan to get us from where we are today to where we will be once everyone’s paying their bills with the new rates,” he said.

He said the loan would be needed for at least eight months to a year — enough time to ramp up collections and severance efforts for the 14,000 customers who are not paying.

To get that money, Henifin says he’s talking with Congress to get permission to use a portion of $450 million in infrastructure money awarded to the city back in 2022 to cover operational costs.

Those funds were part of an omnibus spending bill — the same measure that included the $150 million in technical assistance funds.

Katherine Robbins, communications advisor for Sen. Roger Wicker, says the senator has been in constant communication with JXN Water and stands ready to help.

Officials in Sen. Cindy Hyde-Smith’s Office did not respond to our request for comment, while officials in Congressman Bennie Thompson’s office say JXN Water has not reached out.

Should that effort to modify the previous legislation fail, Henifin says JXN Water likely will try the private market or ask vendors to “carry this for some people for a time on their own. If they would, then we would pay them interest at some point when we have [the] money to pay them back.”

He said people have likely already noticed some repairs are taking longer as a result.

“Some of the road patching work has slowed down a little bit. The holes are staying open a little bit longer with the gravel on them,” he said. “That’s not our intent… And then we’re having to triage the leak repairs much more diligently than we did in the past.”

“Now, we look at it and say, ‘That one can wait. We’ll try to do it next month,’” he said. “We’re trying to spread all that out to get a lower month-to-month cost… And we’re struggling. We’re all struggling.”

Henifin was appointed manager over the city’s water system and water billing system in November 2022 as part of a federal takeover of the system. The following year, he was put in charge of Jackson’s sewer system.

As receiver, he is responsible for bringing the water system into compliance with the federal Safe Drinking Water Act. On the sewer side, his job is to bring the sewer into compliance with the Clean Water Act.

In late 2022, Congress approved some $800 million in funding to help him do that job. Those funds included $150 million in technical assistance dollars, which could cover operational costs, and another $450 million in State Revolving Fund dollars to fix infrastructure.

The idea was that the technical assistance funds would be used to cover operations until problems with the billing system could be worked out. However, more than two years later, collections are still down.

In calendar year 2024, the utility reported just $54.6 million in net water income. Henifin says JXN Water needs at least $115 million a year just for operations.

“We’ve largely solved the infrastructure. Sewer is not running down the roads. People have water. It is at pressure; it’s there all the time. It meets the standards it needs to meet… We’re getting fewer and fewer complaints about discolored water,” he said. “The infrastructure piece… I always thought would be the easiest part… The trust in water and the ability to finance this sustainably, locally, [have] been the challenges.”

Henifin says part of the problem stems from previous decisions to suspend cutoffs and the failure to raise rates as needed.

“One of their campaign things brags about the fact that they suspended shutoffs for long periods of time, and then they just told people they need to pay their bills,” he said, referring to a Lumumba campaign ad on social media. “The council, over the years, many times said, ‘Oh, don’t pay your bill.’ That’s just not responsible.”

The city has been struggling with its billing system for more than a decade, in large part due to complications from the Siemens contract.

In 2015, the Clarion-Ledger reported that former Mayor Tony Yarber placed a moratorium on water shutoffs as a result of complications with the contract. And according to his social media page, Lumumba suspended shutoffs in 2017. The mayor also quietly discontinued shutoffs during the COVID-19 pandemic.

Moratoriums aside, city leaders have only raised rates a few times in recent decades. Before the federal takeover, the last time the city increased rates was in 2021. Before that, the last increase was in 2013.

Tuesday’s vote, meanwhile, would mark the second time in two years Henifin has asked for a rate increase since being appointed.

Said Henifin, “If they’d been raising rates. If they had money, they, again, probably wouldn’t have failed anyway. So, I wouldn’t be here. I wouldn’t have to worry about it.”

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