SC prisons to pay nearly $1M to town that hiked water rates 400% in move likened to Mafia
The South Carolina Department of Corrections has agreed to pay more than $900,000 to settle a water rate dispute with a small Jasper County community that houses one of the state’s prisons.
The settlement, reached in October and approved Tuesday by the five-member State Fiscal Accountability Authority, provides a large lump sum payment to Ridgeland and reduces the water and sewer rates the state prisons agency pays the 3,700-person town.
The agency’s quarrel with Ridgeland stems from the town’s 2018 decision to hike the prison’s combined water and sewer rates more than 300% and assess $1.4 million in capacity fees, a move Corrections Director Bryan Stirling likened to a Mafia tactic.
“The only thing that’s missing from this is someone saying … leave the guns, take the cannolis,” he told the state’s fiscal oversight board, quoting from “The Godfather.” “They literally came to us and said they were going to shut the water off at a prison that houses about 1,000 people. It could have been very bad for us.”
Corrections officials sued the town in 2019 after it threatened to disconnect water and wastewater services at the Ridgeland Correctional Institution over what it said were more than $11,000 in outstanding bills.
The agency claimed in its suit that its payments to Ridgeland were up to date and the city was improperly charging it for water and sewer use at elevated rates before they had taken effect.
“SCDC was actively negotiating with the town when the rates were raised in 2018; SCDC paid those rates pending the negotiations,” spokeswoman Chrysti Shain said in an email. “When the rates were raised again in 2019, SCDC continued paying the lower rates, as we were still in negotiations and did not believe we would continue to be forced to pay the higher amounts.”
Despite alleging that Ridgeland was “gouging” the state for water and sewer use, corrections officials resolved to settle the dispute because the town’s rate hike was “completely legal,” Stirling acknowledged.
“Honestly, we probably would have lost this in court,” he said.
Going forward, the state prisons agency will pay Ridgeland a minimum of $22,552 per month for water and $40,000 per month for sewer. If the prison uses more than 7 million gallons of water or 5.5 million gallons of wastewater, it will pay the town an additional amount per 1,000 gallons used.
The new monthly rates are about 27% less than what the agency currently pays for water and sewer use at the prison, and more in line with the rates paid by other prisons in the state, Stirling said.
The prison’s water and sewer rates will increase 7% in July 2023, per the settlement, and in July 2024 will become tied to the rates Ridgeland charges its residential and commercial customers.
The deal, which also includes a lump sum payment of $917,682 for past due bills and capacity fees, saves the Department of Corrections more than $23,000 per month in water and sewer costs and provides the agency certainty regarding future rate increases, officials said.
The past due amount and capacity fees will be paid with carry-forward money the agency has historically used for retention bonuses, one-time equipment purchases and emergency needs, Shain said.
Future water and sewer rate hikes will be paid for out of the Department of Corrections’ general operating fund and will not affect any agency programs, she said.
In asking for the state financial oversight board’s approval to settle the lawsuit, Stirling implored its members, who include Senate Finance Chairman Harvey Peeler, R-Cherokee, and House Ways and Means Chairman Murrell Smith, R-Sumter, to enact legislation to prevent municipal price gouging.
“I understand home rule,” he said, “but there should be some redress for state agencies. There’s nothing to stop other water and sewer districts from doing this, across the state, to state institutions.”
When reached for comment Wednesday, Ridgeland Town Administrator Dennis Averkin declined comment on the town’s settlement with the Department of Corrections.
“Technically, it’s still pending litigation,” he said. “We cannot comment on any pending litigation.”
This story was originally published December 23, 2021 at 5:00 AM.