Sunday, April 29, 2012

Stennis Study Part 5

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 15 through 17
Link to full report HERE
Previous section HERE

Top of Page 15

In 1973, 174 lots were offered in Glen Cove and Harbor View; there were 630 contracts offered. In July, 1975 there were 1,500 contracts offered for 149 lots in Audubon Point. When 194 lots were offered in Pelahatchie Woods in June 1977 there were 2,100 contracts offered; in September 1978, 2,575 contract offers were received for the 109 lots offered in Sunrise Point and Paradise Point. When duplicate contracts were offered on a single lot, a drawing was held to determine the selected lessee. Over this period the market value of residential lots was increasing. For example, in September 1978, Sunrise Point waterfront lots were receiving annual rentals of $540 with development fees of between $24,500 and $42,000, and water view lots were receiving annual rentals of $360 with development fees of $13,000 to $18,000.

In November 1978, the District changed its policies and procedures for the leasing and development of residential lots; the Board of Directors determined to allow private developers to lease tracts of land at “wholesale” prices, install utilities, streets, and other amenities, and then to subdivide and sell individual lots. In September of 1979, Roses Bluff Subdivision was the first area leased using this new approach. Subsequent developments under this new program were North Bay, Brenhaven, Hanover, Bay Bay Pointe, Fox Bay, Windward Oaks, Northshore Village, and Palisades. As of June 1992, 1,450 residential lots had been developed in the District and all but 50 lots had been leased; of these, 900 lots had been developed by private developers using the “wholesale” developer approach adopted by the District in 1978.

Difficulties between the District and the Hinds County Board of Supervisors began to surface following the Easter Flood of 1979, when the Pearl River rose to a record high of 43.25 feet. A group of victims called the “Wetbacks” contended that the reservoir was partially responsible for their homes being flooded and brought suit to block tax payments from Hinds County to the District; this suit was eventually dropped but drew public attention to the property tax revenues from Hinds County that were supporting the District. The successful development of the area around the reservoir located in Rankin and Madison counties, including a golf course and library being developed in the District, caused dissatisfaction among the Hinds County Board of Supervisors, who

Page 16

sought an injunction to prevent the District from requesting its annual tax levy and to request that any funds that were “unlawfully” spent by the District be refunded to Hinds County. Hinds County requested the four other counties in the District to join in the law suit; only Leake County participated.

On August 20, 1982, in the case of Hinds County v. Pearl River Valley Water Supply District the District’s accounting methods in the use of property tax revenues for the payment of principal and interest on outstanding bonds were the basis for a chancery court lawsuit. The Hinds County Board of Supervisors and Leake County Board of Supervisors brought suit in the Chancery Court of Hinds County to stop the District from using any state ad valorem tax revenues for any purpose other than to pay, prepay, redeem or retire bonds; the complaining parties sought an accounting from the District on its use of funds, and a return of all funds that had been used for purposes other than bond payments. The complaining parties objected to the District’s use of public funds to finance services to the private residents leasing District property instead of applying these property tax revenues to accelerating the payment of bonded indebtedness. The District contended that its enabling legislation allowed it to use the ad valorem tax revenues to cover the costs and expenses of operating and maintaining the reservoir.

The Hinds County Chancery Court ordered the District to cease using the tax levied in the five-county area of the District for residential services and held that the levy could only be used to retire the bond indebtedness. On appeal (445 So. 2d 1330, 1984) to the Mississippi Supreme Court, the Court partially reversed and remanded, in part, the Chancery Court’s decision. The majority of the judges ruled that the District Law anticipated that the payment of costs and expenses for the operation and maintenance of the project would be paid first, and then the balance applied to the retirement of the bonds using the revenues from the two mill countywide property tax levies authorized under section 51-9-131; and that in the event insufficient funds remained to pay the cost of interest and the retirement of bonds, after all gross revenues (all monies from any and all sources), the District then had authority under section 51-9-139 to assess a (additional) special levy of two mills. The Court also affirmed the Chancery Court’s  refusal to order a complete accounting of District funds. The Mississippi Supreme Court

Page 17

remanded the case to the Hinds County Chancery Court to reconsider the issue of whether or not District funds were being expended in accordance with state law and in compliance with the District’s trust indenture.

The District and the Hinds County Board of Supervisors negotiated a final settlement that was affirmed by the Chancery Court on February 26, 1985 and amended on October 28, 1987. The terms of the settlement were as follows:

1. The District was to maintain a budget and accounting system that identified all direct and indirect costs for providing services on residential and commercial leased property to include: utilities, police and security services, fire protection, road and street maintenance, garbage collection and disposal, general maintenance for the primary benefit of lessees, water and sewer services, and meeting facilities;

2. the District shall terminate the services to lessees, unless the District has initiated and implemented action to recover the full costs of such services from charges or assessments paid by the lessees, other than ordinary annual lease payments, or from contributions (in cash or in kind) from other political subdivisions excluding the ad valorem tax levies authorized under Mississippi Code 51-9-131 and 51-9-139; and

3. no special tax levy (51-9-139) could be levied unless and until the District had applied all revenues from all sources (including revenues which the District deposited in its Property Improvement Fund) toward the payment of bond principal and interest; and

4. that Hinds and Leake county’s ad valorem tax payments and the City of Jackson’s annual contract payment of $500,000 would terminate after the year ending September 30, 1991.

In December 1984, the PEER Committee was requested to conduct a feasibility study for performing an accounting of all District funds over the period 1961 through 1982. In February 1985, the PEER staff found that an accounting of this nature “could not be done because of incomplete and missing accounting records and the District’s past practices of not identifying expenses incurred to provide municipal and related services to lessees."

The Rez News
Barnett Reservoir

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