A constitutional amendment on a countywide ballot June 3 could either provide better service, more efficiency and much-needed economic development to water and sewer customers in the city of Prichard, or lead to the financial ruin and possible insolvency of a precarious, 20,000-plus resident municipality on Mobile’s front doorstep, depending upon who you talk to.
As a referendum looms next week to transfer the assets of the city’s Water Works and Sewer Board to the much larger Mobile Area Water and Sewer Service, Prichard Mayor Troy Ephraim is on the offensive, warning the vote is all or nothing for the city’s future.
“This represents a clear and present threat to the fiscal solvency of the city of Prichard whereby the city is headed back to bankruptcy court next month … and we’re obviously going to have financial obligations we’re mandated to meet. So the city can ill afford the actual loss of any revenue we have,” Ephraim said last week, pausing to note he was under a gag order in the city’s unrelated, 4-year-old bankruptcy proceedings.
Ephraim and others supportive of the board’s lasting sovereignty are making a late case for $1.3 million in municipal fees tacked on to bills annually, which pay for the city’s garbage collection contract and other services. In the event of a takeover, they claim MAWSS will not have the duty or the leverage to collect those fees on the city’s behalf.
Advocates of the bill, which is co-sponsored by State Sen. Vivian Figures and Rep. Napoleon Bracy, hope voters will support the transfer by the same margins as in 2012, when a statewide referendum endorsed it three-to-one.
As a result, MAWSS actually operated the system for a period of seven months in 2013, until the state Supreme Court returned control back to Prichard and recommended a local ballot measure decide its fate. During that period, according to Director Charles Hyland, MAWSS maintained the fee collection for the city and given a second opportunity, would have the same responsibility.
“We didn’t make changes to how payments were made to the city of Prichard, so I’m not sure what those criticisms or concerns are,” Hyland said Monday. “Since [the appeal] was in court, the basic stipulations were that we could not do anything that could not easily be undone. And we have to honor all obligations that exist whenever we take over the system. That same stipulation will be in effect this time.”
Hyland admits that while MAWSS “cannot cut someone’s water off for not paying” the fee, neither can Prichard. MAWSS provides Prichard’s water wholesale and as a condition of the contract, Prichard may not cut off a customer for nonpayment of municipal fees, Hyland said.
Meanwhile, both Ephraim and Prichard water board Chairman Russell Heidelburg point out that municipal fee collection is not in the language of the local amendment, which is otherwise brief, but sweeping in its authority to transfer all “assets and liabilities” to MAWSS — at no cost — while dissolving the board that governs it.
The amendment protects current MAWSS customers from rate increases as a result of an acquisition, but lacks similar assurances for its 11,000-or-so new bill payers. At the same time, Prichard customers will have no representation on the seven-member MAWSS’ board of commissioners, which is appointed by the Mobile City Council.
Aside from the potential losses in fee collections, Prichard officials were also concerned MAWSS would be handed an estimated $50 million in assets without any commitment to compensate the city.
“If [MAWSS] takes over the water board, it will crush the city,” Heidelburg predicted bluntly. “It will be dissolved within a year or two. If the city doesn’t have collections on franchise and municipal fees, it will dissolve. If it is not compensated for its assets, it will dissolve.”
Heidelburg, a member of the Prichard water board since 2008, is waging a last-minute campaign against “misinformation” he believes is behind the effort to label Prichard’s rates as callous or arbitrary.
He said upon settling a lawsuit related to massive, undetected sewage discharges in 2003, the board was forced to take on debt to repair wastewater treatment facilities and perform line maintenance. Subsequently, a court-appointed arbitrator compelled the board to incrementally raise rates to repay the debt.
Today, Heidelburg said the board is financially solvent and on the cusp of a “game changing” plan to pump its own water and eliminate part of the $1.5 million per year it pays to MAWSS for access to its water source. Heidelburg also says that despite what some may say, Prichard’s water rates are among the lowest in the state.
“This board has a $7.5 million, fully funded pension plan and we pay retirees all the time,” he said. “We are financially sound, have an A-minus credit rating and are projected by S&P to be stable in the long run. We have a $22 million bond issue and other debts we are operating, and we take in $10 million a year. We’ve been told if we do a revenue-generating project we can borrow money that we don’t have to pay back until wells start producing revenue … if we dug six-to-eight wells, we could save $40,000-60,000 per month. That’s a tremendous savings.”
MAWSS claims at the end of the day, the ballot measure is the result of customer complaints. But in the event of a transition, it cannot ensure rates for Prichard’s customers will be unaffected.
“We will be assuming whatever obligations and debt the water board has incurred and we’re not sure what those will be,” Hyland said. “That is the driver on what rates people would have to pay. It’s how expensive it is to operate that system and we won’t know until we take a look again at what we will be assuming. What obligations there are, what debts there are and also what revenue stream there is.”
Along with an ambition to provide better customer service and more efficiency to the system, Hyland heralds MAWSS’ ability to manage Prichard long term, citing the economy of scale.
“I would think that part of this would be the idea that we would have the ability to help with both water and wastewater as far as providing capacities,” he said. “Both in that area and other areas that may be outside of Prichard that would help that system grow and would help the economic potential for Prichard and in turn the whole area.”
But Heidelburg and Ephraim said the tradeoff would be “devastating” and could lead to the county or the city of Mobile eventually being responsible for police patrols or fire response in Prichard.
“You take $1.3 million from our budget and even if you were to get a reduction on your water bill, you’re going to get further losses in service from the city of Prichard because we struggle from month-to-month just to maintain those services,” Ephraim said. “It’s almost like an inverted taxation … and that does not bode well for us.”
Mobile County has not expressed an official opinion on the vote and County Commissioner Merceria Ludgood, who represents the district including much of Prichard, declined to comment. But Mobile Mayor Sandy Stimpson said he was following the situation closely.
“My understanding from Mayor Ephraim is that the Prichard Water Works is vital to the city of Prichard, and losing it could cause the demise of their city,” Stimpson said in a statement. “That should be a concern for every municipality in Mobile County.”