33 Miss. Code R. § 16-A
The information following this paragraph is the City of Jackson's proposed work plan developed by the court appointed Interim Third-Party Manager as submitted to the program. Elements of this work plan (including debt relief) will be moved to the IUP's Priority List once the EPA and the State have determined that the project/activity is eligible for assistance through this appropriation/ DW SRF program. |
City of Jackson Water System (JXN Water) SRF Priority List for FY 2024
Utility | Description | Zip Code | Service Area Population | Loan Amount 2024 | Total Project Cost |
Jackson Water | Debt Retirement | 39215 | 155000 | $220M | $220M |
Jackson Water | Find and Fix Water Leaks | 39215 | 155000 | $12M | $24M |
Jackson Water | Distribution System Optimization | 39215 | 155000 | $34.5M | $54.5M |
Jackson Water | Intake Structure Repair OBC | 39215 | 155000 | $5.5M | $5.5M |
Jackson Water | Chemical Feed Repair OBC | 39215 | 155000 | $24M | $24M |
Jackson Water | Treatment Process Renewals | 39215 | 155000 | $40M | $90M |
Jackson Water | Small Diameter Pipe Replacement | 39215 | 155000 | $20M | $30M |
Jackson Water | EPA Admin/Technical Assist | 39215 | 155000 | $1.6M | $2.0M |
Totals | $357.6M | $450M |
Note: "Loan Amount 2024" is sum of 2023 + 2024 columns from table above.
INTRODUCTION
The City of Jackson received a direct appropriation through the Consolidated Appropriations Act, 2023 to be administered under the Section 1452 of the Safe Drinking Water Act as follows:
For an additional amount for "State and Tribal Assistance Grants'', $450,000,000, to remain available until expended, for capitalization grants under section 1452 of the Safe Drinking Water Act (42 U.S.C. 300j-12): Provided, That notwithstanding section 1452(a)(1)(D) of the Safe Drinking Water Act, funds appropriated under this paragraph in this Act shall be provided to States or Territories in EPA Region 4 in amounts determined by the Administrator in areas where there the President declared an emergency in August of fiscal year 2022 pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.): Provided further, That notwithstanding the requirements of section 1452(d) of the Safe Drinking Water Act, for the funds appropriated under this paragraph in this Act, each State shall use 100 percent of the amount of its capitalization grants to provide additional subsidization to eligible recipients in the form of forgiveness of principal, grants, negative interest loans, other loan forgiveness, and through buying, refinancing, or restructuring debt or any combination thereof: Provided further, That the funds provided under this paragraph in this Act shall not be subject to the matching or cost share requirements of section 1452(e) of the Safe Drinking Water Act: Provided further, That the Administrator of the Environmental Protection Agency may retain up to $1,000,000 of the funds appropriated under this paragraph in this Act for management and oversight.
PROJECT SELECTION PROCESS
On November 29, 2022, Henry T. Wingate, United States Federal District Judge in the United States District Court for the Southern District of Mississippi (Northern Division) signed an Interim Stipulated Order in Case No. 3-22-cv-00686-HTW-LGI, the United States of America v the City of Jackson, Mississippi. This order appointed an Interim Third-Party Manager (ITPM) to control the drinking water system in Jackson, serving the residents of Jackson, the town of Byram, and a portion of Hinds County. The Order also included a list of priority projects that were to be completed by the ITPM as expeditiously as possible to ensure safe and reliable drinking water remains available to all customers, at all times. These projects have been programmed with other available funding in the Financial Management Plan developed by the ITPM in January 2023 and those programmed for funding through the State Of Mississippi, Drinking Water Systems Improvements, Revolving Loan Fund Program (SRF) in 2024 are included in this appendix.
PROGRAM ACTIVITIES
Debt Retirement: The water enterprise in Jackson is currently heavily burdened with debt from private bond issuances dating back to the early 1990's. These bonds were refinanced multiple times with no benefit to the water system. Additional series were issued in from 2013 through 2015 to finance the new billing and AMI metering project. The total outstanding private bond debt is around $175M with approximately $20 million of debt service annually through 2041. Additionally, the enterprise is carrying $115M in SRF debt that adds another $4M annually to debt service requirements.
The Financial Management Plan calls for retirement of all debt as soon as possible with a portion of the direct appropriation from the Consolidated Appropriations Act, 2023. Retirement of all debt removes the $23M of annual debt service and allows the utility to begin building reserves and generating cash to be used to reinvest in a "pay-as-you-go" method. Long-term financial strength and stability is the key to ensuring the Jackson Water System remains reliable and safe for generations to come. The model shows the Jackson Water System building reserves to 90 days, cash on hand, by 2029, while generating over $20M annually for PAY-GO reinvestment.Over the 20-year planning period, the $290M investment in debt retirement will generate more than $340M in capital to reinvest in the system and avoid more than $100M in interest payments.
Because debt was issued for the water and sewer system, much of the outstanding private debt has not been able to be clearly unraveled to determine DWSRF eligibility. The 2013 Series of private bond debt, however, appears to be eligible as it provided the funding for the Siemens metering and billing system performance contract. The payoff is estimated at $75 million. Additionally, the DWSRF outstanding debt is clearly eligible with an outstanding balance of approximately $35 million. Thus, the FY 2024 IUP has included $220 million for debt retirement.
The City of Jackson received other funding for water system repairs through other programs, some of which must be obligated in short order. As a result of those funds, more than $135M is programmed. This level of capital investment will stretch the capacity of the local contracting community and the ability to coordinate and manage such an aggressive program by the ITPM.
Without putting the Jackson Water System on a sustainable financial path through debt retirement, the one-time Federal funding through the Consolidated Appropriations Act, 2023, is at serious risk of not meeting expected service life and the system needing another one-time appropriation in 10 to 15 years. This investment (debt retirement) is akin to "teaching Jackson to fish" as opposed to just providing fish for today's meal.
Find and Fix Water Leaks
The find and fix program in Jackson is a coordinated effort between JXN Water, consultants, and multiple contractors to locate and repair water leaks throughout the distribution system. The list of leaks are initiated through sources such as known historical leaks, leaks called into JXN Water by private citizens, and leaks observed by contractors and others visual scanning the Jackson system. The list of leaks is prioritized and directed through consultants and scheduled with an appropriate contractor based on availability, capability, and the complexity of the work. Consultants will provide daily oversight through construction inspection for documenting, tracking, and conformity to construction standards. Separate paving contractors will also be engaged to follow behind to restore roadways.
Distribution System Optimization
As solutions are identified in the analysis process, this program will design and construct the specific projects required to balance and maintain pressures. These solutions may be significant capital projects or smaller tactical investments and operating changes. Until the analysis is complete, no new investments can be added to the system. Repairs and replacements will continue during this period.
Intake Structure Repairs (OB Curtis)
The intake structure at the Ross Barnett Reservoir has fallen into a state of disrepair. The building that houses needed chemical feed equipment and water quality monitoring sensors needs replacement to protect those systems from the weather. Full water quality sensing at the intake allows operators to see changing raw water conditions to prepare treatment processes for changing water chemistry. Additionally, new flow-paced chemical feed equipment can be directly informed by the raw water data collected at the intake structure, ensuring reliable treatment, and minimizing chemical use. The chemical feed at the intake structure is not functional currently. Feeding chemical at the intake reduces build-up of marine growth in the intake pipes and reduces loading on the screens in the plant.
Chemical Feed Repair (OB Curtis)
The chemical feed and disinfection systems and supporting facilities at the O. B. Curtis WTP need to be replaced with safer and more reliable systems. The current systems do not support reliable operation of the WTP process for safe, reliable, and sustainable drinking water. Aluminum chloralhydrate (coagulant), sodium permanganate (oxidizer), coagulant aid polymer, and fluoride system will be replaced with similar processes. The disinfection systems will be transitioned from gas to liquid feeds. The existing chlorine gas system will be replaced with an on-site hypochlorite generation system to feed hypochlorite and the existing ammonia gas system will be replaced with a liquid ammonium sulfate system.
Treatment Process Renewals
As part of the third-party operation and maintenance of the water treatment plants, a comprehensive process review was conducted to ascertain process improvements required to maintain safety and reliability. This assessment identified various projects that need to be implemented to address condition, reliability, and capacity constraints. The projects include residual handling system upgrades, granular media filter rehabilitation, electrical system replacement, SCADA and cybersecurity upgrades, rapid mix, flocculation and sedimentation rehabilitation and upgrades, raw water pipeline rehabilitation, and clearwell rehabilitation.
Small Diameter Pipe Replacement
A significant factor in the challenges to maintain pressure and water quality in the distribution system is the over 100 miles of piping in the Jackson Water System that is less than 6 inches in diameter, with a majority of that 2-inch diameter galvanized pipe. All small diameter piping needs to be replaced with a minimum of 6-inch diameter pipe. This will improve localized pressure issues, meet current fire protection standards, and will improve aesthetic qualities of the water (taste, odor, color) in homes and businesses served by these 2-inch pipes. This program will replace the 2-inch through 4-inch diameter mains as well as service lines back to the edge of the public rights-of-way. The work will be coordinated with funding for wastewater system improvements to allow replacement of sewer lines in the same streets at the same time - preventing streets from being opened twice.
SCHEDULE FOR COMPLETION
This program is scheduled to begin immediately and continue through 2029 with additional funding phases in future fiscal year programs. The 2024 plan presented here will obligate $357.6M by September 30, 2024. The entire $450M appropriation will be obligated by 2029.
EVALUATION PROCESS
These investments will be evaluated through the reduction in the need to issue large precautionary boil water notices (more than 500 customers impacted) as well as improved permit compliance at the water treatment facilities.
Financially, the evaluation will be the days cash on hand and the amount of PAY-GO generated each year.
33 Miss. Code. R. § 16-A