Ergon Biofuels has agreed to pay the city of Vicksburg $904,317.68 in uncollected fees for water service.

City attorney Nancy Thomas told the Board of Mayor and Aldermen Monday the agreement involves water passing through a city water meter that was not read “and it had been there for quite some time.”

She said the meter was discovered through an audit of the water system by representatives of Water Company of America of Houston, Texas. The board hired the company in 2016 to audit the water system and find users who aren’t paying for water service.

According to the city’s agreement with Ergon, the money involves water that went through the meter from June 2015 through July 2018. The back fees will be paid over six months in installments of $150,725.28 per month.

The city hired Water Company of America on a contingency-based contract. Under the agreement, the company would not be paid unless it discovered unbilled water use in the city.

If company auditors discovered unbilled use, according to the agreement, they would notify the city’s utility billing department and receive 55 percent of the past due amount for a 36-month period. After that time, the city would retain 100 percent of the revenue from the previously unbilled account.

“We had a company come in here at no cost and people looked at me like I was crazy, because they get 55 percent of everything they recovered,” Mayor George Flaggs Jr. said.

Hiring the company, he said, “Was a no-brainer. They found this one (Ergon) and they found some others, and I think after April they’re going to give me a list of all they discovered.

“The city of Vicksburg was giving its water away free to these customers and this company discovered it. I don’t understand the checks and balances,” Flaggs said.

“If you run a line, before you complete the line, before you complete the job, you make certain there’s a meter on it and it’s working. You can’t determine the output if you don’t know what the input is. There’s a correlation between water going in and water coming out somewhere, and we assess that.”

He said the city is also auditing the natural gas system, adding at one point 24 percent of the city’s gas “was being given away to somebody free. Now it’s down to 9 percent. Some meters weren’t calibrated.”

Parking lot to be paved

In another matter, the board accepted bids for paving the Mississippi Hardware parking lot off Mulberry Street.

Five companies submitted bids for the project to expand and renovate the parking lot for the building, which is the site of a proposed technical center. The city has a $545,000 Delta Regional Authority grant to renovate and expand the building’s parking lot.

The city has allocated a separate $300,000 toward the hardware building project.

Submitting bids were Hopkins SCM of Madison, $828,961,94; Theobald Construction Services of Vicksburg, $753,655.25; Hemphill Construction of Florence, $1.047 million; Central Asphalt of Vicksburg, $890,284.22; and Fordice Construction of Vicksburg, $950,974.50. The bids were taken under advisement.

Developers involved with the building renovations unveiled plans in August 2017 for a $19 million project to convert the former garment factory and hardware building on Mulberry Street into a multi-floor innovation and tech transfer center to serve the Vicksburg area and the central Mississippi region.

Influenced by the presence of the U.S. Army Corps of Engineers and the Army’s Engineering Research and Development Center in Vicksburg, the hardware building development is expected to create a space to attract small and middle-sized businesses that could potentially work in federal-type programs.

Proposed plans for the building include a center for entrepreneurship and for training, and the relocation of the Mississippi State University graduate program from ERDC to the Mississippi Hardware Building.

The building will also house small business commercialization offices, the offices for the Warren County Port Authority and a manufacturing brewery, outside beer garden and a cafe.