Prichard water board members warn of impending default on $55 million bond
For second day in a row, board fails to have enough members to conduct business
PRICHARD, Ala. (WALA) - An attempt to call a special meeting of the Prichard water board Tuesday ended the same way it did on Monday – with only two members present and accusations of a dereliction of duty.
Board member John Johnson Jr. has sounded the alarm about what he describes as an impending default on a $55 million loan the Prichard Water Works and Sewer System took out in 2019. Johnson said the utility made only a partial bond payment in November and has not paid anything since December.
Johnson told FOX10 News that a worst-case scenario is a very real possibility.
“We are in jeopardy of losing this, you know, utility; of Synovus Bank coming in,” he said. “And they have every right to, you know, do that, because they are the bondholder – $55 million is a lot of money.”
Board Chairman Russell Heidelburg, along with members Earnestine Moore and Beverly Bunch were not present on Tuesday or Monday. Heidelburg declined to address the bond default on Tuesday. He told FOX10 News that he had a conflict on Monday and that there was insufficient notice for the meeting Tuesday. He said they were not official meetings.
“In order to have a special-called meeting, you have to have a quorum, three people,” he said. “They didn’t have three people. They had two. So it was not a meeting. It was just a get-together they had.”
Johnson said the water board borrowed the $55 million for a variety of big-ticket projects, some of which he added were never finished. He said the utility planned to dig a well to develop an independent water source so it would not have to rely on buying water from the Mobile Area Water and Sewer Service. But he said the system only completed two of four phases.
Johnson said the system also never followed through on plans to build an outfall line to reroute wastewater from Three Mile Creek to the Mobile River.
The system used part of the borrowed money to install electronic meters so that workers would not have to read meters manually. The other major use of the funds was a project to install sewage lines to a residential subdivision.
Johnson said the last bank statement he saw from about two months ago reflected a balance of about $23 million. He said the monthly payment had been about $142,000 and then rose to about $250,000 in September or October.
The bond issue is the latest in a long ling of financial problems to best the utility. Its former operations manager and two people who worked under her have been indicted on charges that they misused utility credit cards. Prosecutors have said illegal purchases were “in the millions” of dollars.
Addressing water customers who attended Tuesday’s unofficial meeting, Johnson said he has demanded answers from Heidelburg and his allies on the board.
“We are wanting to know: Where is the money that has been collected, that is being collected by paying the customers her at the water utility, going?” he said.
Doyle, who usually votes with Johnson on the divided board, criticized Heidelburg and his two allies.
“They had four months to notify all five board members that we was getting ready to go into default,” she said. “They decided to (withhold) that from me. … It was intentional. And it’s wrong to the customers.”
A handful of customers who gathered Tuesday expressed anger and concern. Gabriel Dortch alluded to high-profile water system failures across the country.
“What scares me: If y’all don’t get together, we are going to be a Jackson, Mississippi,” he said. “Or Flint, Michigan.”
Talking directly to Johnson, Carletta Davis said: “Based on what you’re saying, that money that was deposited should still be there if the project that was not completed.”
Answered Johnson: “You would think so.”
Davis called for impeaching the three board members who were not present on Tuesday.
“I do feel if you cannot do your job, then you need to be removed from the board and let someone else do it,” she told FOX10 News. “It’s obvious to me that in a time of crisis, you need to be showing up, locking yourselves in rooms, figuring out what to do.”
Removing a board member from office would require action from the attorney general or district attorney. Five citizens also could initiate an impeachment proceeding but would have to put up money they would forfeit if the attempt were unsuccessful.
Harry Satterwhite, an attorney that Johnson and Doyle hired with their own money, said the water board does not follow basic rules of operation. For instance, he said, the board fails to produce regulation treasurer reports.
“There’s no transparency,” he said at the meeting. “So my clients don’t know what Synovus has said and what they’re demanding. But I know from my own research, they are asking for audits. … The incompetence of the leadership of this board is blatant.”
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