CITY OF JACKSON, MISSNSIPPI

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Plan for Uncollectable

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Water & Sewer Debt
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Pursuant to HB 359
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Of the Mississippi Legislature

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 Introduction

The City of Jackson's Water-Sewer Business Administration (WSBA) has experienced chronic

billing issues following a project began in2014 to upgrade its billing system software. Numerous

complicated factors have combined to create this situation: 1) the unsuccessful replacement of a legacy,

manual water metering and billing system with a new billing system and AMI water meter system; 2)

winter storms; 3) aging infrastructure;4) a declining customerbase; 5) a mismatch between personnel

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skills and training, and the needs of the new billing system; 6) and the COVID-19 Pandemic. These

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factors combined in various ways to cause the City to institute shut-off moratoriums at times to protect

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customers, including a shut-off moratorium implemented at the beginning of the COVID-l9 Pandemic

that is still in effect. y

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According to Mississippi law, a debt to a municipality can only be compromised under very
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limited circumstances. Likewise, the statute of limitations does not run on debt to a municipality.
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Accounts receivables for the City of Jackson reveal nearly three decades of accumulated water and
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sewer debt, a great deal of which has accumulated since 2014. Addressing this large build-up of debt is
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the key to allowing the City of Jackson to recover necessary operating revenues, restore trust, redevelop
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good payment behavior among customers, and secure a better financial position for the City of Jackson.

Central to the recovery of the City's Water-Sewer Enterpiise, which funds the operation, maintenance,

and debt service of the City Water-Sewer Utility, will be the promotion of the payment of bills by

customers as they become due, rather than the continuation of the current habit of arrearage

accumulation caused by disputed bills and affordability. Providing customers with timely and accurate

bills combined with the arrearage management program set forth in this document is aimed at returning

collection rates to normally expected levels of 93%o or greater, which result in the elimination of

arrearages going forward, thus promoting a positive financial position for the City of Jackson.
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 2021 Legislation - HB 359

House Bill 359 was signed into law at the close of the 2021 Mississippi Legislative Session. The

law allows the City to adopt rules and procedures to provide accounting system accommodation of

certain uncollectable water and sewer debt. The procedures must be outlined in an overall plan to be

approved by the Mayor, Municipal Director of Public Works, and Executive Director of the Mississippi

Public utility staff by July 1, 2021.

The legislation also requires a report to the Governor, Lieutenant Governor, Speaker of the

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House, and Mississippi Public Utilities Staff by January 1,2022 that details the utility's revenue

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collection, the number of accounts that have been adjudged uncollectable, the number of accounts that

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are participating in the installment payment plans, the number of accounts that are overdue, and the
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effect of the program on the utility's revenue collection. The report shall also include the utility's plan

to address any remaining disputed or delinquent claims that have not been resolved, to provide fair and
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accurate bills to customers, and to reduce future equipment, process, and billing failures.
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Summary of Accounts Adjudged to be

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Disputed or Delinquent
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The City of Jackson's uncollected revenue can be identified by three types of accounts:

l. ACTIVE - Customer who are currently receiving water and are not paying.

2. INACTIVE - Customers who have closed accounts with outstanding balances.

3. LEGACY - Customers who had unpaid balances on closed accounts that were included in the

2014 billing upgrade and were classified as uncollectable.

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Active Debt

Active debt consists of customers with an active account who are currently receiving water and

sewer services from the City of Jackson. This category includes 14,558 customers who are receiving

water that have not paid their present or past due charges. These customers owe the City a total of

$39,706;58.27. Of this amount, $863,583.38 is curently set aside as disputed within the administrative

hearing process. A small percentage of ghost revenue is represented in the total number due to leaks,

meter malfunctions and billing error adjustments that may ultimately be credited back to an account

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holder.

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For those residents who qualify, an affearage program will be instituted pursuant to HB 359 to

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address disputed and delinquent claims that are deemed to be uncollectable. The program shall include

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the elimination of late fines and fees and the movement of a portion of arrearages from the total bill once
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ongoing payment history is established.
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Inactive Debt
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Between the years 2014 -2021 almost 17,000 accounts were closed that had arrearages. When
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these accounts were closed, deposits were applied to offset arrearages. However, these "inactive"
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accounts have a remaining balance of $43,362,105.00. This balance is considered "inactive debt." The
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best method to verify this data and assist the City in determining what portion of this revenue is in fact

collectable is the use of a recovery agreement with one or more collection agencies. Entering into a

recovery agreement could assist with:

o Identifying uncollectible related to bankruptcy

o Death of account holders

o Refusal to pay by the debtor

o Verification of current address

o Verification if customer is still on the property

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 All recovery agreements and procedures must comply with Miss. Code Ann. S2l-17-l

concerning debt collection by a municipality and all applicable federal and state laws and regulations for

the collection of debt. Monies recovered pursuant to the recovery agreement will be forwarded to the

City of Jackson with the collecting attorney or agency authorized to retain a fee above the recovered

payment as to be defined in each recovery agreement and as allowed by Mississippi law.

Uncollectable Legacy Debt

In the current billing system 67 ,844legacy accounts were transferred from an older system in

2014 and identified with the designation "UNCOLL." This designation dates these accounts from 1992

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to 2014. These accounts were transferred from the legacy system into the current billing software as

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uncollectable accounts. The legacy accounts total $23,687 ,472. While a recovery agreement might

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identify some possible targets for collecti on, affearages of this age appear to be patently unrecoverable.
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The legacy debt should be identified as a doubtful claim and moved to the appropriate account reflecting
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uncollectability.
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SUMMARY OF DISPUTED OR DELINQUENT ACCOLINTS

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TYPE ACTION VALUE NUMBER OF

ACCOUNTS
Active debt Begin the severance process Sept. l. Offer $39,706,758.27 14,558
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installment account programs pursuant to HB 359

Inactive debt Engage a collection agency. Categorize those types $43,362,105 16,903
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ofaccounts that have potential for recovery and

age out and move the balance over to doubtful
claims.
Uncollectable Move to doubtful claims immediately $23.687,472 67,844

Installment Payment Plans

House Bill 359 provides that in instances where the customer's ability to pay or the amount of

the customer's overdue balance for water and sewer service can be reasonably adjudged to be

uncollectible, an installment payment agreement may allow additional time to pay aprescribed portion

of the outstanding balance. If the customer fulfills all terms of the installment plan, the City may use

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accounting procedures to move the remaining balance to a special municipal accounting category of

uncollectible or inactive accounts.

Stranded Bills

For purposes of calculating a payment arrangement, customers who currently have stranded bills

will be eligible for a flat rate substitution of any unbilled water and sewer charges during the time frame

in which the bill has been stranded. Customers who currently do not have an account or do not receive a

bill, but are receiving water andlor sewer services, must contact the WSBA by March 1,2022 to be

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eligible for any assistance through the Low Income Assistance Plan (LIAP) or Courtesy Payment

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Arrangement Plan (CoPAP).

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Severance
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The City of Jackson will resume severance procedures as of September 1
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2021 and shall not

discontinue severance, except for the protection of public health and property or declaration of an
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emergency by Federal or State authorities. Severance is an important tool for maintaining the financial
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stability of the water and sewer system and is a necessary component of any plan to collect arrearages.
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Low Income Assistance Plan (LIAP)

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Consistent with HB 359 Section 1(b), LIAP will provide an installment payment arrangement for

low-income customers who have a delinquent balance that can be reasonably adjudged to be

uncollectible. Customers demonstrating participation in certain state or federal assistance programs shall

provide automatic eligibility for the LIAP

The program allows active customers to pay their curent monthly bill plus $10.00 each month

on any water/sewer affearage until the arrearage is satisfied or the expiration of 24 months, whichever

comes first. To encourage compliance with the monthly payment requirements of LIAP, customers will

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receive periodic reductions to their arrearage amount at six-month intervals. After six months of

participation, the City will remove 25Yo of the beginning arrearage to the doubtful claims account. An

additional 25%o of the beginning affearage amount will be moved to the doubtful claims account after

each successive six-month period such that at the end of the 24-month period the entire arrearage has

either been paid or moved to the doubtful claims account.

To enter the program, customers must submit an application and comply with all of the following

conditions:

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Participants must timely pay their current monthly billing amount, excluding the

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arrearage, for a period of 3 consecutive months before they are eligible for the program;

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and

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Participants must provide a determination letter or other verification of
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government assistance with the account holder's name listed as the beneficiary. Eligible
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assistance programs are as follows:

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Headstart
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Lifeline
Low-Income Home Energy Assistance Program
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Medicaid
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Medicare Part D (Low Income)

SNAP

SSI

TANF
WIC
Unemployment Benefits

In the event a customer does not receive one of these benefits, but believes they should
qualify for LIPA because of their low income, the customer may submit a Special

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 Circumstances Form to the Special Circumstances Panel, according to the process
described below in the Special Circumstances Panel portion of this program.
a Participants must provide proof of a completed application for utility assistance under any

available Federal or State Utility Assistance program. Current programs available are the

Low Income Home Water Assistance Program (LIHWAP) administered by the Mississippi

Department of Human Services and the Federal Emergency Rental Assistance Program

(ERA) administered by the Mississippi Home Corporation as the Rental Assistance of

Mississippi (RAMP) program. Applications for these programs shall be available at the

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WSBA office.

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o Participants must make timely payments or be expelled from the program with severance

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procedures initiated and aneanges reinstated. Participants may be reinstated one
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time ONLY upon payment of their current bill and a consultation with a representative of
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WSBA.
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Courtesy Payment Arrangement Plan (CoPAP)

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Customers with a meter size of 1" or less and a large arrearage who require financial assistance
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may participate in CoPAP. These customers are reasonably adjudged to have accounts that are
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uncollectible as provided in SB l(aXi) and 1(b).

This plan requires participants to pay 40Yo of their arrearage over an installment period of

24 months. If all conditions of the program are satisfied after the 24-month installment period, any

remaining arrearage is not forgiven, but will be moved to a doubtful claims account. To encourage

compliance with the monthly payment requirements of CoPAP, customers will receive periodic

reductions to their affearage amount at six-month intervals. After six months of participation, the City

will remove25o/oof the beginning anearageto the doubtful claims account. An additional2l%o of the

beginning affearage amount will be moved to the doubtful claims account after each successive six-
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month period such that at the end of the 24-month period the entire arrearage has either been paid or

moved to the doubtful claims account

To enter the program, customers must submit an application and comply with all of the following

conditions

a If eligible, participants must provide proof of a completed application for utility assistance

under any available Federal or State Utility Assistance program. Tenants whose total

household income is below 50% of the area median incomel are currently eligible for utility

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assistance from the Federal Emergency Rental Assistance Program (ERA) through the Rental

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Assistance of Mississippi (RAMP) program. Homeowner assistance may become available in

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the future. Applications for these programs shall be available at the office of the WSBA.

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Participants must timely pay their current monthly billing amount, excluding the
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aftearage, for a period of 3 consecutive months before they are eligible for the
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program.
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a Participants must make timely payments or be expelled from the program with severance
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procedures initiated and anearages reinstated. Participants may be reinstated to the program
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one time ONLY upon payment of their current bill and consultation with WSBA.
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I Hinds County Area Median lncome: Single person $25,900,2-person household 29,600,3-persorr household 33,300,4-person household 36,950, 5-person
household 39,950, 6-persotr household 42,900,7-petson household 45,850, 8-person household 48,800.
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 Special Circumstances Panel

A Special Circumstances Panel shall be established to review those LIAP- or CoPAP- eligible

customers where complex or unusual circumstances have led to an unmanageable arreatage which

would result in an extreme financial hardship if they were required to adhere the repayment

requirements of the respective program. The Panel shall have broad authority to adjust the arrearage

amount in question after considering all facts presented by the customet's application and WSBA.

The Special Circumstances Panel will be comprised of two (2) persons: one selected by the

of Jackson and one selected by the Executive Director of the Mississippi

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Mayor of the City

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Public Utilities Staff. Elected officials are ineligible for selection to the Panel.

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By August 202l,the Special Circumstances Panel will meet as needed, at the request of WSBA,

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in the conference room of the Woolfolk State Office Building on dates mutually agreed upon by the
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panel for a period of one year. The Mississippi Public Utilities staff shall work with the WSBA to
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provide administrative support for the Panel'

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LIAP- or CoPAP- eligible customers with unmanageable arrearages which would result in
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an extreme financial hardship must submit a Special Circumstances Form available from the
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WSBA and will be notified if their attendance is needed before the Panel for further explanation
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of the circumstances involved. Customers are encouraged to provide any supporting

documentation with their Special Circumstances Form or when meeting with the Panel.

The Panel will provide the Deputy Director of WSBA with a recommendation for each

application, which the Deputy Director will use in establishing the customer's arteatage payment

plan.

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 Conchuion

As r€quircdby HB 359, tbcHmonblc tvlayorChokutc AnhLumunba, hblic W6ks

Dirwtor Cbarles Williams, andthD ElrxrfiiveDfuE@r Sd$ Butc,hfiold Doty ofth Mississippi

Fublic Utilitics Sbtr do hrcby rnrunlly apgovc ths nrlcs d procGdurcs contained hcrtin.

This theglday or fin+ . zozt.

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