Jackson Free Press

"The largest municipal investigation, maybe in the history of the state" is how Jackson City Council President De'Keither Stamps described the announcement he and other city officials plan to make later this afternoon. On March 5, the Jackson City Council received a briefing from representatives of a consulting firm hired last fall to examine city water revenues.

After spending more than three hours in an executive session to discuss potential litigation and personnel matters, Raftelis Financial Consulting presented an overview of its 85-page report that focuses on water-department revenues and aspects of the $91 million Siemens contract. City council members expressed grave concern about Raftelis' findings and voted to launch their own investigation without going into specifics.

Stamps declined to provide further information when reached this morning, saying he would answer questions at a 2 p.m. press conference at City Hall. City code permits the council to conduct legal investigations of any department under its jurisdiction, including the power to compel attendance of witnesses and the production of relevant documents.

Ward 6 Councilman Tyrone Hendrix said the investigation is necessary to ensure that every penny of taxpayers' dollars is spent efficiently and effectively. Hendrix declined to discuss the motivation for the investigation, but he said that the Raftelis report confirms a lot of suspicions officials have long held about inconsistencies at the water department.

The City asked Raftelis consultants to identify revenue problems based on the symptoms found through the data analysis and detailed on-site analysis that revealed that many water customers continue receiving services despite not paying their bills on time, if at all. It also found that the city has a large amount of uncollected revenue from the number of delinquent accounts or those with large balances. However, the city does not have a good system to collect unpaid or large bills, the consultants note.

Water accounts are coded by letter. For example, G-coded accounts refer to accounts associated with a government entity; E-coded accounts are for emergencies, including clients such as hospitals, which lets the water department know not to disconnect those clients' water.

However, the city's E-coding screen has no control. "Anyone can go into the system and add an E-Code without any oversight," consultants wrote.

In October 2014, the Jackson Free Press reported that the city had more than 1,100 E-code accounts totaling $2.2 million in water fees. At the time, the top 20 accounts—which included local hotels, a dorm at Jackson State University and the Jackson Zoo—represented $1.6 million in E-coded water bills, or 72 percent of all E-coded accounts.

The city council's investigation will focus on whether the water department needs better oversight and whether any fraud is taking place.

Raftelis officials told the city council that the city would likely have to increase water rates or reduce expenses significantly. Hendrix said the report arms his colleagues with the tools to make some hard decisions.

"I'm just happy we have actual information and data that speak to the water infrastructure challenges in the city," Hendrix said.

This afternoon, Mayor Tony Yarber, who did not attend the special city council meeting, issued a statement:

"The council is within its rights to order an investigation. The Yarber Administration recommended to the council that Raftelis be engaged and conduct an in-depth study of the project. Upon confirmation by the council and immediately upon taking her position, public-works Director Kishia Powell recommended an in-depth audit of all the processes and procedures within the department to ensure that the taxpayers were receiving all revenue from their largest enterprise: water."