Increasing debate about an issue should clarify. Instead, whether intended by certain Bossier City policy-makers and Port of Caddo-Bossier allies, another round over the proposed water deal between the two made matters murkier than ever – perhaps as a tactic to push it across the goal line.
Earlier this week the Bossier City Council held an unprecedented repeat workshop over a plan to have the Port build a water distribution and waste treatment facility with ancillaries that would connect to Bossier City’s system. The Port would own it but the city would maintain and operate it while paying the equivalent of the principal and interest on the debt behind it by providing after expenses half-priced services to the Port’s clients up to the point of the total amount of that – from representations previously made by Port Executive Director Eric England around $62 million – where beyond that the city would collect the entirety, for 40 years.
The idea has been troubled from the start when Republican Councilor David Montgomery – who has received over $600,000 in commissions from the Port since 2008 for writing its insurance policies – first put the item on the Council’s agenda. It was continued from that meeting, a workshop held, after initial approval pulled off the agenda the next meeting, and then this workshop redux held, indicating majority resistance and minority insistence to keep it alive.
This second bite at the apple revealed little new about the deal itself, but provided maximal opportunity for deal supporters, England and apparently City Attorney Charles Jacobs as he often mirrored England’s rhetoric which means by extension GOP Mayor Tommy Chandler (and perhaps City Engineer Ben Rauschenbach as witnessed by the large amount of work he had his department undertake already as if the deal would go through and the deference England paid him throughout their testimony), to try to deflect questioning away from a simple fact: once a drop of water came from the system, even if drawn not by the Port but by the city for its own customers, the city incurred a long-term liability of $62 million for something it would not own. Admission of the point councilors, particularly Republican Chris Smith, kept returning to, perhaps because England and Jacobs kept telling them that the city would not be responsible for the debt.
But that wasn’t what was being asked, which was the total long-term liability cost to the city, which neither would confirm. Whenever a councilor buffeted England with this kind of query, he declared himself incompetent to answer that and said inquiries should be made to the Port’s counsel – former Caddo Parish Attorney Dannye Malone, who couldn’t be bothered to attend the workshop it seems – or Jacobs. Finally, without giving an amount Jacobs insisted that once the Port’s bonds were paid off, the revenue-sharing agreement ends, implying that if the city hadn’t paid in $62 million from the generated revenues within 30 years it was off the hook for the difference.
Yet that assertion is reflected nowhere in the agreement, and runs in plain contradiction to Section 3.05.1 of the agreement, which reads “In no event shall the total payments by Bossier City to the Commission exceed the principal and interest payments made or to be made by the Commission on the Bonds described in Section 1.02, unless it is agreed by and between Bossier City and the Commission that early payment or payments should be made on the Bonds. Notwithstanding the foregoing, the total payments by Bossier City to the Commission shall not be less than the principal and interest payments made or to be made by the Commission on the Bonds …” [emphasis added]. Nor is reflected the related assertion made by England that the city could “walk away” from the deal after the Port paid off the bonds, implying the same; instead, Section 3.06 provides for the only early termination by the city in that “Bossier City may discontinue water service under this Agreement to the Commission or any of its users for failure to pay monthly bills rendered by Bossier City in accordance with Bossier City Ordinances.”
Rather, at several points England emphasized that the deal was constructed for the Port to be “made whole,” as if the city would victimize it under the deal and it demanded compensation to the tune of the entire amount of the debt paid out by it. Yet as often he repeated that the city wouldn’t be responsible for the debt, even as nobody argued that point, as if a means to distract from the huge obligation the city would incur – representing more than a fourth of its current enterprise debt – by signing on to the deal.
Which had a spanner thrown into its works by frequent Council commenter David Crockett, who pointed out a press release made by both Republican state Treasurer John Schroder and Legislative Auditor Mike Waguespack that warned entities pursuing cooperative endeavor agreements may require State Bond Commission acquiescence in determining such agreements don’t have the characteristics of debt and therefore could be challenged and invalidated. The release suggests this contemplated CEA may run afoul of at least two points that would require SBC approval, the make-whole provision upon termination and ownership of the goods and products.
As well, what also did not come up during the workshop spoke volumes. While England reiterated that he felt confident – although he could provide absolutely no guarantee of this – that at some point in time the Port could drum up enough business to make the $62 million pay-to-play deal generate additional city water and sewerage business beyond the quarterly payback level, the argument initially made by Montgomery when first introducing the ordinance that this would allow for needed expanded capacity for the city’s own customers was nowhere articulated. That’s perhaps as even on its busiest day ever the city needed only 60 percent of its existing capacity, with typical days asking for less than a quarter. It may be decades before capacity becomes a problem.
As such, there’s little point in dumping in $62 million only for the right to generate more enterprise revenue for 40 years, which England hyped as a benefit, because that strays from the mission of the city providing this utility. It’s out there because residents and businesses in the city need water and its treatment, not to become a vendor of these services in the marketplace. And even if ownership became part of the deal, it would seem an unwise expenditure when capacity clearly won’t become an issue for many years to come.
To summarize, the arrangement asks the city to take on a liability of $62 million that conveys to it no assets but only a chance to make that back, which it may well not, or more when it has no need relative to its obligations to its residents and businesses to gamble on making that much or more. Why enter into such a horribly complicated, unnecessary, and risky relationship when, if the Port wants to attract business with water, it and the Port simply could split far lower costs over piping that taps into existing demonstrably under-utilized city capacity that the city contracts to provide?
Perhaps because this is an object lesson in what happens when insiders try to put their interests ahead of the people’s. Montgomery – who by all rights should recuse himself from voting on the matter given the substantial financial benefit he draws from the Port even though neither the city nor state legally requires that – has a number of allies seated on the Port’s governing Commission, which would like the Port to expand its footprint without paying for the utility infrastructure. Why Chandler would want to go along with such a one-sided deal with so much unnecessary risk and so little return to ratepayers is baffling.
Councilors need not be deflected from that truth by all the head fakes. They need to bin the deal.