Horhn: City to Comply with Judge's Subpoena on Siemens Deal

Jackson Mayor Addresses Subpoenas and Siemens Settlement Funds

Jackson Mayor John Horhn recently addressed the public during his first press conference since taking office, focusing on several pressing issues, including the city's compliance with a federal judge’s subpoena regarding the use of Siemens settlement funds. The city is currently working to provide the necessary information to U.S. District Judge Henry Wingate, who has issued subpoenas to multiple individuals and entities involved in the management of the $89.9 million settlement.

During the press conference, Horhn emphasized that the city is fully cooperating with the court’s requests. He noted that Judge Wingate has asked for an extensive amount of records related to how the funds were deployed. These records include financial documents, legal and contractual records, audit reports, public disclosures, and communications with federal agencies.

The subpoenas were sent to a variety of groups, including legal firms, the Jackson Mayor’s Office, the Department of Public Works, and several state and federal agencies. All recipients were required to respond by a specific deadline. Horhn stated that the process of gathering and submitting the requested information is ongoing and that the city is committed to fulfilling its obligations.

In 2013, Jackson entered into an energy performance contract with Siemens Corporation worth $89.9 million. The project aimed to overhaul the city’s billing system, which included replacing water meters, installing new software, and setting up communication infrastructure. However, the system never functioned properly, leading to a lawsuit against Siemens and its subcontractors in 2019. The company eventually settled with Jackson in 2020, agreeing to repay the full amount of the contract costs.

Judge Wingate has been closely monitoring how the settlement funds have been used, particularly as he considers approving a proposed water rate increase from Interim Third-Party Manager Ted Henifin. Henifin had previously requested the increase, citing financial difficulties faced by JXN Water. At a recent status conference, Henifin revealed that he has approximately $29 million in unpaid invoices, with some contractors including Jacobs Solutions, the firm responsible for managing the city’s two surface water treatment plants.

Mayor Horhn has expressed concerns about the proposed rate increase and the current $40 availability fee added to most residential water bills. He acknowledged that many residents are resistant to this additional charge. However, he also recognized the need for solutions, noting that JXN Water is facing significant financial challenges, particularly in covering operations and management (O&M) costs.

Horhn mentioned that the city received $150 million in technical assistance funds as part of a Congressional spending bill passed in late 2022. These funds have been critical in covering day-to-day expenses while efforts continue to improve billing collections. As of July 31, collection rates remained around 71 percent, and the $150 million had been exhausted.

In addition to the $150 million, JXN Water has access to $450 million from the same omnibus spending bill, but these funds can only be used for infrastructure projects. Henifin has sought Congressional approval to reallocate about $36 million of those funds to address O&M needs. Horhn expressed hope that a portion of the remaining funds could be redirected to support these essential operations.

As the city continues to navigate these complex financial and legal challenges, transparency and accountability remain central to the process. The ongoing efforts to comply with the court’s subpoenas reflect the city’s commitment to addressing concerns raised by Judge Wingate and ensuring that the public is informed about the use of settlement funds.