Saturday, March 31, 2012

Stennis Study Of The PRVWSD Part 3

Continuation of excerpts from the Stennis Report
details here:

The Pearl River Valley Water Supply District:
An Overview For Decision Makers
The John C. Stennis Institute of Government
Mississippi State University

Pages 9 through 12
Link to full report HERE
Previous section HERE

Bottom of Page 9

The total bond issuance was to be in the amount of $22,000,000; upon the recommendation of the investment consulting firm, a $4,400,000 increment bond sale was offered by public auction on December 8, 1959, rather than being sold by sealed bid. According to the State Times (December 28, 1959), the bonds were purchased by

Page 10

the Leland Speed Company, the First National Bank of Memphis, Allen and Company of Jackson and Hamp Jones of Jackson for a bid of 4.4999 percent interest; with no competitive bids being entered at the sale. A subsequent $8,800,000 bond issue was sold in May 3, 1960 by sealed bid to A.C. Allen and Associates of Chicago. On Tuesday, December 16, 1964 the New York Times and the Wall Street Journal reported that a $24,500,000 revenue bond issue by the Pearl River Valley Water Supply District failed to receive acceptable bids; reports indicate that the PRVWSD rejected the only two bids that were received. Some reports attributed the failure of this bond issue to the low 3.65 percent interest ceiling the District had placed on the bonds and other sources indicate that the NAACP boycott of the sale of these bonds was the cause.

In an agreement dated November 18, 1959, the District was to receive $500,000 from the City of Jackson over the life of the bonded indebtedness. The agreement stipulated the specific obligations of the District to the City of Jackson; these items included the construction of the reservoir and spillway; a satisfactory flow of sanitary quality water, and the installation of an intake structure. The agreement also required the District to perform a study of shoreline development and planning, and directed the District to obtain the maximum benefit from revenues from the shoreline development with the objective of early retirement of the bond issue.

The original master development plan anticipated that after the 5th year of operations, 4,000 residential lots would be leased at $125 per lot per month and that approximately 20 commercial lots would be leased at $20 per lot. In 1960, MWH Engineering began construction on the reservoir; it was completed in 1963 and filled to its normal capacity by 1965. The dam is an earth-fill dam that is 23,400 feet in length with a maximum height of 64 feet; elevation at the top of the dam is 308 feet. The principal spillway consists of ten 40– by 21-foot tainter gates with a discharge capacity of 180,000 cubic feet of water per second (U.S. Army Corps of Engineers).

Page 11

On May 10, 1963, R.M. Hederman, the Publisher of the Clarion Ledger and President of the Pearl River Valley Water Supply District, brought forward a motion to name the reservoir in honor of Governor Ross Barnett; the motion was unanimously approved by the Board of Directors of the PRVWSD.

On May 10, 1963, the District entered into an eight year contract with its first managing broker, Wortman & Mann, Inc., to provide land use planning, marketing and general real estate consulting services. The real estate consultant was the sole and exclusive agent for the leasing of all property. A Master Plan adopted in 1963 by the PRVWSD Board of Directors, laid out a plan that provided for approximately 60 percent of the area below Highway 43 to be leased; of a total of 5,038 acres, 3,002 acres were designated for leasing to private and commercial establishments; 1,397 acres were to be reserved for parks and public use, and the remaining 638 acres were identified as non-developable or wilderness. Above Highway 43 in the upper reaches of the lake, the area was to remain rustic with some cabin sites, camp grounds, and trailer parks. At the recommendation of the real estate consulting firm, the District adopted its method for

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conveying lots to homeowners using a renewable, long-term lease vehicle. This method is described as follows: the value of the lot was appraised at market value by the real estate consulting firm; in addition, the estimated total cost of developing streets, sewers, and water within a subdivision was assigned pro rata to each lot within a subdivision (development fee). The “lessee” (purchaser) then paid the District a “down payment,” or front end payment, which was equal to the pro rata share of the estimated total cost of development, and the appraised market value of the lot was paid over the 60-year life of the lease at an estimated rate of 6 percent of the total appraised value per year. Early leases indicate that the development fee was frequently paid in three installments over a two year period and financed at 6 percent interest. For example, a 1973 lease in Bay Park Subdivision required a development cost of $3,000 with one-third of this amount ($1,000) payable upon execution of the lease, a one-third payment ($1,000) with 6 percent interest twelve months from the date of execution of the lease, and a
one-third payment with 6 percent interest twenty-four months from the execution of the lease (the annual lease payment on this specific lease was $150 dollars per year for 60 years). Compensation for the real estate consultant was established at a commission rate of seven and one-half percent (a 5% commission fee for selling and a 2.5% commission for managing) of the total value of the development fee plus the property lease. This basic contract with Wortman & Mann remained essentially unchanged until April 8, 1983, with amendments to name specific individuals as the designated agent of
Wortman & Mann. On April 8, 1983, the District’s contract with Worman & Mann
identified David L. Lane as the designated consultant; on May 9, 1986, a new contract with H.C. Bailey Management Company was negotiated, naming David Lane as the designated consultant.

The Rez News
Barnett Reservoir

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