The McComb city board will borrow $2.5 million to settle a year-long legal battle with Siemens Building Technology over a disputed contract to install digital water meters.
The city plans to issue general obligation bonds to raise funds to pay off the company, which had a $4.5 million contract in 2010 to install 6,900 water meters in the city.
The meters didn’t get installed on time, and city officials had problems getting electronic readings from those that were installed.
The city sued Siemens and recently reached a settlement, with McComb keeping the meters that had been installed if it pays the company $2.5 million.
“We don’t anticipate an increase in taxes” because of the bond issue, Mayor Whitney Rawlings said after Tuesday night’s board meeting.
He said the loan would be paid through the city’s water and sewage fund, which earns revenues from water bills.
Rawlings said he is unsure if rates would go up to pay off the bond issue, but he was adamant that the borrowing would not affect the tax levy.
The meters, which were ordered during the previous administration, are remotely read as a city worker passes by a residence.
They proved to have problems that were costing the city money.
Meters placed at vacant homes could not be read since there was no account number, even though in some cases water was being used.
In September 2011 the city walked away from its contract with Seimens instead of hiking water rates by 6 percent to pay for the system.
The city took legal action after exhausting routes of resolving the issue without litigation, including using a state law that allows city boards to void lease-purchase agreements made by prior administrations by simply not appropriating funds in the budget.
At Tuesday’s board meeting Rawlings announced that the city had reached the settlement, which means the city will own the water meters instead of hiring someone to remove and replace them.
“It is a conclusion to a dispute that we had and a reasonable settlement for the city,” Rawlings said. “It was just an issue that had been hanging over our head.”
Rawlings said that although the city is still working through the problems with the meters, customers are being billed correctly, which was the goal when the meters were installed.
“The system, by and large, is working the way it should,” he said.
In another matter, the city board deleted from its agenda an item regarding the Citizens for Economic Development Act, which is a movement that supports legislation to set additional sales taxes to pay for special projects.
Speaking recently on the matter, Rawlings said he envisioned an additional 1 percent sales tax in the city to pay for needed street work.
The item was deleted because the board had already discussed and voted on it at a previous meeting.
