A Receiver was appointed by Mobile County Circuit Court Judge Michael Youngpeter on November 10, 2023, to oversee the financial and operational management of the PWWSB due to the Board’s default on a $55 million loan with Synovus Bank.
The Receiver has stated publicly that PWWSB faces significant financial challenges. Despite the November 2023 rate increase, the PWWSB has insufficient funds to pay for its ordinary operation and maintenance expenditures. Examples of vendors/contractors’ payments impacted by the inadequate revenue are:
Additionally, construction funds available for water system capital improvements are limited to funds held by the Bond Trustee, which are subject to restrictions dictated by the indenture. Very Limited grant funds (less than $1M) are available for the wastewater system construction improvements.
The Receiver has identified severe operational challenges, including:
Prior to the Receiver’s arrival, a significant rate increase was implemented in November 2023 by the PWWSB. The Receiver is not prepared to recommend any revisions to these rates until a proper rate analysis is conducted. The Receiver needs more information regarding the costs to operate and maintain an efficient PWWSB and the scope and cost of needed capital investment before any rate adjustments are recommended. Additionally, the Receiver is undertaking an Affordability Analysis to assist with determining future rates.
To comply with Consent Orders and improve the reliability of the water and wastewater systems, the Receiver has had regular meetings with the USEPA, ADEM, and Mobile County to seek immediate funding for infrastructure projects.
Since November 10, 2023, the Receiver’s progress toward immediate and long-term solutions includes:
The default on the $55 million loan with Synovus Bank was a result of financial mismanagement by the PWWSB, leading to a motion by Synovus Bank to the Mobile County Circuit Court requesting the appointment of a Receiver.
The appointment of John Young, Jr. as the Receiver signifies a court-ordered shift of control over the financial and operational management of the board. John Young, Jr. is responsible for managing the day-to-day finances and operations of the utility as well as providing a Master Plan to resolve issues associated with decades of deferred maintenance and investments in the water and wastewater systems. The Master Plan will address future governance; management and ownership issues; regulatory compliance; capital investment; and operating efficiencies.