PEER investigates complaints against utility authorities

MISSISSIPPI GULF COAST — The PEER Committee has released a report on its finding involving county utility authorities and their use of the Mississippi Gulf Coast Regional Infrastructure Program.

The executive summary of the report says: “In the 2006 Regular Session, subsequent to Hurricane Katrina, the Legislature passed the Gulf Coast Region Utility Act, which authorized creation of individual county utility authorities to manage water, wastewater and storm water in the Gulf Coast counties. Gov. Barbour designated $655.7 million of the Community Development Block Grant (CDBG) funds that Mississippi received after Hurricane Katrina for water, wastewater and storm water infrastructure improvements through the Mississippi Gulf Coast Regional Infrastructure Program. The county utility authorities have undertaken 67 projects to expend the program’s CDBG funds for improvement of water and wastewater infrastructures.

PEER received complaints regarding some of these utility authorities, alleging possible wasteful spending, lack of transparency in making project/spending decisions and conflicts of interest. Rather than limiting this review to determining whether these complaints were valid or to reviewing specific expenditures, the PEER Committee chose to evaluate whether Mississippi maximized the opportunities presented by the Mississippi Gulf Coast Regional Infrastructure Program.

This report addresses the following questions:

• What is the Mississippi Gulf Coast Regional Infrastructure Program and how did it begin? The Mississippi Gulf Coast Regional Infrastructure Program began from a commission initiated by the governor that recommended the creation of a regional utility authority to manage water, wastewater, and storm water across the six coastal counties. Since 2006, the U. S. Department of Housing and Urban Development has approved $655.7 million in Community Development Block Grant funds for the Regional Infrastructure Program. In response to the commission’s recommendation, the Legislature passed the Gulf Coast Region Utility Act to promote consolidation of utility systems and thereby increase efficiency in services, mitigate against future storms, and improve the natural environment. However, the act created separate utility authorities in each of the coastal counties, which has not promoted consolidation of utility systems across county lines.

• What is the status of the program’s projects? According to estimated project completion dates, fifty of the program’s projects will have been completed by December 31, 2011, and seventeen will be completed in 2012 or 2013. Four of the county utility authorities are expecting to complete projects within planned budgets, while one utility authority is projecting a deficit. As of June 30, 2011, the five county utility authorities had spent a total of approximately $454.7 million on water and wastewater projects in the Gulf Coast region. Estimates of low future utilization for some projects suggest that maintenance costs might be spread over a smaller customer base than anticipated, resulting in increased per-customer costs.

• What has been the program’s impact on the Gulf Coast and what factors have affected its impact? The Regional Infrastructure Program has impacted the Gulf Coast by providing more consolidated and storm-prepared utility systems, although the impact is limited due to the lack of physical interconnection of systems countywide. Also, because the infrastructure is being built to accommodate significant future growth that might not materialize in certain areas, the infrastructure in those areas would be underutilized, resulting in increased per-customer cost for infrastructure maintenance during the period in which population projections are not met.

Several factors have affected the program’s impact, some of which have been beyond the control of the Mississippi Department of Environmental Quality and the utility authorities. These are: the change from a regional concept to a county concept for utility infrastructure; increased emphasis on building utility infrastructure for economic development; legal constraints on the consolidation of utilities; requirements of the U. S. Department of Housing and Urban Development for use of funds for low/moderate income populations; and, the costs of consolidation.

• What are the lessons learned? The Regional Infrastructure Program provided lessons that will benefit the state in the future should a similar situation occur. Lessons learned include: provide funds for complementary utility infrastructure; utility providers should consider the benefits of entering agreements with county utility authorities; reduce or eliminate use of term bidding (i.e., bidding projects based on engineers’ conceptual designs) for this type of effort; and, assist in identifying start-up funding for newly created entities.

• What complaints have arisen from the program and are the complaints valid? PEER determined that two complaints against the Hancock County Utility Authority, one alleging wasteful spending and another alleging a violation of the Open Meetings Act, were valid. Conversely, two complaints against the Stone County Utility Authority, one alleging lack of transparency and another alleging conflict of interest, were invalid.”

For the full report, visit www.peer.state.ms.us.

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