JACKSON, Miss. (AP) — A new federal report says Mississippi officials accepted unsupported population growth estimates in developing a plan to use $653 million in federal Hurricane Katrina recovery money for water and wastewater facilities, including some that may not be needed.
The Department of Housing and Urban Development's Office of Inspector General also questioned the appraisal documentation for $2.1 million used to buy land for the projects.
In June 2012, The Associated Press reported on concerns raised by residents and officials regarding the population estimates and the use of eminent domain to acquire private land for projects that may not be needed for years, if ever. AP found that some multimillion-dollar sewage plants in coastal Harrison County were sitting idle or underused, but officials who defended the projects insisted they were designed for long-term growth.
The report said a firm hired in 2006 to help draft the plans hired a subcontractor to help with population estimates. The subcontractor initially estimated growth of 25 percent, but increased it — to 64 percent — less than a month later at the request of the contractor, the report said.
The state "allowed increases to the population growth levels that were significantly higher than population estimates supported by other sources," the report said. The Mississippi legislative Performance Evaluation and Expenditure Committee had also questioned the growth estimates.
The Office of the Inspector General said the state didn't ensure that the capacity of the water and wastewater facilities addressed the needs created by Katrina or supported economic development.
"As a result, disaster funding of more than $653 million was approved to construct 67 facilities that may include some plants, the capacity of which was either too small or excessive, and others plants that may not have been needed," the report said.
Among other things, the report recommends that Mississippi put procedures in place so that future projects are based on "objective and relevant population data."
The Mississippi Development Authority, the state's economic agency, was responsible for administering the HUD funds, known as Community Development Block Grant money. The Mississippi Department of Environmental Quality was responsible for developing Mississippi's Gulf Region Water and Wastewater Plan after the August 2005 storm.
A development authority spokesman referred questions about the inspector-general's report to the environmental quality department.
The department's executive director, Trudy Fisher, issued a statement Thursday saying she and other officials in her department "take our responsibility to properly utilize federal funds very seriously, and strongly disagree with the audit findings and recommendations with regard to both the appraisal issue and the population projections."
The state also said the report overlooked the goal of building water and wastewater infrastructure in areas that aren't as vulnerable to hurricanes to encourage people to move there instead of returning to hard-hit places.
The environmental department hired the Mississippi Engineering Group in 2006 to help develop the plan. Mississippi Engineering Group hired Angelou Economics to assist in preparing the projections, the federal report said.
On July 5, 2006, Angelou Economics gave Mississippi Engineering an estimate that the population in Mississippi's coastal counties would grow by 25 percent for the 20-year planning period. Less than a month later, on August 2, 2006, the estimate had been changed to 64 percent.
A call on Thursday to Mississippi Engineering Group was not immediately returned. Angelos Angelou, principal executive officer of Angelou Economics, said he would forward an AP inquiry to the appropriate person to respond to questions about the population estimates. He said he was not aware of any pressure being exerted on his company to increase the estimate.
The report said Mississippi Engineering requested increases in the estimate, reasoning that the infrastructure needed to be there to encourage growth and that "it would be difficult to justify enhanced infrastructure if the projections were low."
Harrison County, the most populated coastal county in Mississippi, got the biggest share of the HUD money. The wastewater plans in Harrison County were based on estimates that its population would grow as much as 76 percent by 2025. But the population actually dropped from 2000 to 2010, a period over which the wastewater plan expected to see 34 percent growth. Other studies have projected far less growth.
Some people who own land in Harrison County, such as Jim Walker Jr., have for years questioned the need for the massive sewage plants.
"They came in and took our property for a sewage plant that was not needed. They based it on inflated growth projections that were bogus," said Walker, who is still involved in litigation with the utility authority. "We've been fighting this for five years. ... We're heading for a jury trial. That's the only way you'll get justice."
The report did not discuss the Walkers' land, but said the state accepted some appraisals that "lacked assurance that land purchased for more than $2.1 million was appraised at a reasonable price."
The report said that the Harrison County Utility Authority did not provide its appraiser all of the required documents and the appraiser did not read the agreement in the state's regional infrastructure program.
Donald Scharr, the utility authority's executive director, said in a statement that the utility supports the environmental department's response to the report, which challenged its findings. He said the utility will continue to work with HUD and state agencies "to resolve our differences regarding adequate documentation on the projects mentioned in the report."
In one case sited in the report, federal auditors said the Harrison County Utility Authority spent about $340,000 on one property without realizing there was a power line easement there. That could result in additional costs estimated to be more than $70,000 to move the power lines, purchase existing easements or buy new property, the report said.
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