Advertising
The increasing debate on an issue should bring clarity. Instead, whether intentional by certain Bossier City policymakers and Port of Caddo-Bossier allies, another round of the proposed water deal between the two made matters murkier than ever – perhaps as a tactic to push him over the goal-line.
By Jeff Sadow
Earlier this week, Bossier City Council held an unprecedented review workshop on a plan to have the port build a water distribution and waste treatment facility and accessories that would be connected 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 debts behind it by providing after-cost services to the port’s customers at half price up to the full amount — around $62 million, according to Ports Manager Eric England — which the city would also collect the full amount over 40 years.
The idea was problematic from the start, when Republican City Councilman David Montgomery — who has received over $600,000 in commissions from the port for writing his insurance policies since 2008 — first put the item on the council’s agenda. It progressed from that meeting, a workshop was held, after initial approval, the next meeting was taken off the agenda, and then this workshop to reduce maintained, indicating opposition from the majority and insistence from the minority to keep it alive.
This second bite in the apple revealed little new about the deal itself, but offered maximum opportunity for the deal’s backers, England and apparently prosecutor Charles Jacobs, as it often reflected England’s rhetoric, meaning that by extension the GOP Mayor Tommy Chandler (and perhaps city engineer Ben Rauschenbach, as attested to by the large amount of work his department had already had to undertake as if the deal were going through and the deference England showed him throughout their testimony) to try , diverting the questioning from a simple fact: once a drop of water came out. Even if the system was claimed not by the port but by the city for its own customers, the city made a long-term liability of $ 62 million for something that would not be hers. Admission from aldermen, particularly Republican Chris Smith, kept returning, perhaps because England and Jacobs kept telling them the city would not pick up the debt.
But that wasn’t what was asked for, it was the total long-term liability cost to the city, which no one would confirm. Whenever a councilor confronted England with this sort of question, he declared himself unable to respond and said inquiries should be made to the port’s solicitor – former Caddo community solicitor Dannye Malone, who appears not to be the had trouble attending the workshop—or Jacobs. Finally, without giving an amount, Jacobs insisted that the revenue-sharing agreement end once the port’s bonds are repaid, meaning the city would be off the hook if it didn’t pay off $62 million within 30 years would have paid for the difference in the revenue generated.
However, this assertion is found nowhere in the Agreement and is in clear contradiction to Section 3.05.1 of the Agreement which reads: ‘In no event shall Bossier City’s total payments to the Commission exceed the principal and interest payments made or to be made made by the Commission in respect of the Bonds described in Section 1.02, unless Bossier City and the Commission agree that early payment or payments are to be made on the Bonds. Notwithstanding the foregoing, Bossier City’s total payments to the commission may not be less than the principal and interest payments made or to be made by the commission on the bonds …” [emphasis added]. Nor is it reflected England’s related claim that the city may ‘walk away’ from the deal after the port has repaid the bonds, implying the same thing; Instead, Section 3.06 provides the City’s only early termination by “Bossier City may discontinue the supply of water under this Agreement to the Commission or any of its users if Bossier City’s monthly bills are not paid in accordance with Bossier City’s ordinances.” ”
Rather, at several points England stressed that the deal was designed to make the port “whole”, as if the city would bully it under the deal, and demanded compensation equal to the entire amount of the debt paid off as a result. Yet so many times has he reiterated that the city would not pick up the debt, though no one made the point as if it were a means of distracting attention from the enormous liability the city would incur — representing more than a quarter of its current corporate debt constitutes – through the conclusion of a contract.
That was thwarted by David Crockett, the Council’s frequent commentator, who pointed to a press release by Republican Treasurer John Schroder and Legislative Accountant Mike Waguespack warning companies pursuing collaborative effort agreements that Agreements do not have the characteristics of debt and may therefore be challenged and voided. The press release indicates that this proposed CEA could conflict with at least two issues that would require SBC approval, namely the make-whole provision upon termination and ownership of the goods and products.
What was not discussed during the workshop also spoke volumes. While England reiterated that he was confident – although he could give absolutely no guarantee – that the port could eventually amass enough business to make the $62m pay-to-play deal, additional municipal water Aside from the quarterly payback rate, the argument that Montgomery originally made when he first introduced the ordinance, that it would allow for the expanded capacity needed for the city’s own customers, was nowhere articulated. That’s perhaps because even on its busiest day, the city used only 60 percent of its existing capacity, with less than a quarter being used on typical days. It may be decades before capacity becomes an issue.
“Why get into such a terribly complicated, unnecessary, and risky relationship?”
So it makes little sense to invest $62 million just for the right to more corporate income for 40 years, which England has touted as a benefit because it deviates from the city’s mission, which this utility provides. It’s out there because residents and businesses in the city need water and its treatment, not to become providers of those services in the marketplace. And even if ownership became part of the deal, it seems an unwise expense when capacity clearly won’t be an issue for years to come.
In summary, the agreement asks the city to assume a $62 million liability that gives it no assets, just a chance to repay what it may not, or more if it does relative to its Commitments has no need for residents and businesses to bet on earning as much or more. Why enter into such a terribly complicated, unnecessary and risky relationship when the port, if it wants to attract business to water, could simply split itself and the port at far lower costs for pipelines tapping existing, demonstrably underutilized city capacity than the city contracts to provide?
Perhaps because this is a textbook example of what happens when insiders try to put their interests ahead of the people. Montgomery — who should refrain from voting on the matter given the significant financial benefit he derives from the port, although neither the city nor the state legally requires it — has a number of allies on the port’s administrative commission who this is what the port would want in order to expand its presence without paying for the supply infrastructure.
Why Chandler would want to enter into such a one-sided deal with so much unnecessary risk and so little return for interest payers is intriguing.
Council members don’t have to let all the head forgery distract them from this truth. You have to give up the deal.
Jeff Sadow
Jeff Sadow is an associate professor of political science at Louisiana State University Shreveport and writes the political blog Between the lines. Opinions are his own and are not presented on behalf of the University, nor do they express the official positions of the University.
The views expressed herein do not necessarily reflect those of BossierNow’s publisher or advertisers. Opinions are welcome. Send yours to [email protected] for possible publication.
Advertising
Continue reading
Source