The Caddo-Bossier Port Commission hopes to have pay off the over $600,000 it has shuttled over the years to Republican Bossier City Councilor David Montgomery as he literally carries water on a deal likely to be favorable for it but to turn sour on Bossier City residents.
This week, in its meeting the Council delayed a motion by Montgomery to begin approval of a cooperative endeavor agreement between the Port and city. Its complicated nature reflects the maze of interests involved.
The Port seeks to have an alternative source of water and its treatment to its present hookup with Shreveport. It pledges to issue $35 million in bonds to allow buildout of additional capacity for both. However, it wants Bossier City to run the facility and pay for its construction and maintenance in the city’s exchange for transmission and distribution of water and treatment of resulting wastewater to the Port and its users with those entities paying it for that service.
From the start, the convoluted nature of the deal stands out. If already hooked up to Shreveport, why not draw more from it instead of building pipes under the Red River to reach Bossier City’s capacity? While it makes sense not to become a utility provider, why then would the Port build the facility and ask another to run it instead of just contracting with the other and the other would increase its capacity with its own resources, skipping the need to build at all except for connecting pipes?
The financial aspects also are questionable for the city. The city would bill the Port for its water provided both through the new plant and its own, as well as sewage treated from both. But it also would have to pay the Port the lesser of either half of its operating revenues minus operating expenses for the services rendered for the quarter-year or an amount equal to the pro-rated amount of the next ensuing scheduled quarterly payment of principal and/or interest on the bonds. In fact, over the lifetime of the agreement the city can’t pay in less than the total payoff of the bonds, or at an interest rate of five percent an amount over $67 million, although the agreement lasts 99 years. Additionally, in all of that time the city must pay for maintenance of the facilities that it won’t ever own.
It’s difficult for the city to win with this deal. Throwing in maintenance costs, let’s say over the life of the agreement it costs the city a minimum of $1 million a year. If it sells no services for that century minus a year, that goes out the door (its unclear whether city taxpayers or only the somewhat smaller set of utility ratepayers would have to pony up this) but technically this wouldn’t be due until as a lump sum at the very end. If it does sell services, essentially it begins to reduce what it owes at half off (but still footing outside of this maintenance costs) on a quarterly basis, but anything less than sales margins of twice the bond payments still would accumulate a liability going forward (again, maintenance costs aside) that would exist until all paid-in principal and interest are compensated or 99 years pass, whichever comes first.
The only way the city wins is at extremely high volumes, so that service payments more than double the bond payments plus maintenance costs over the life of the deal. It then keeps the excess margins after that point, but only if the new capacity is enough to reach that above-breakeven level given the incremental gain per unit of service sold. Of course, this depends upon the Port’s decision-making discretion, such as whether it and/or its users figure Bossier City services are cheaper than Shreveport’s and switch to meet the built capacity, but also upon economic reality, such as if the Port can generate enough business within itself and among its users to use high volumes. The city also might win by reversing the flow if city demands skyrocket, being able to use the new capacity, but only if the Port makes few enough demands to leave enough slack and the incremental charge collected from city ratepayers surpasses maintenance costs.
In other words, a lot has to go right largely out of the hands of the city to make the deal worthwhile, making it as a whole rather speculative. During the discussion in the meeting, Montgomery did allude to documents not made public that purport to show a breakeven point and broached the possibility that the city could use the new facility to expand capacity on the cheap (alleging without the deal ratepayers would suffer).
This suggests the Rube Goldberg-like plan acts a backdoor way to expand capacity for city use with minimal political fallout. Hovering close to a half-billion dollars in debt, the state’s highest per capita by far among its cities which has drawn fire from critics, Bossier City might disguise through this tactic its essentially taking on more debt. Still, with the Port and Fortuna having far more command over future prospects than the city, potential future net gains from these avenues are anything but likely while creating a net liability, even if not in the form of debt.
By contrast, the Port makes out well under the deal. Essentially, it gets a free water distribution/treatment facility without maintenance worries and potentially lower-cost services for nearly a century, if not an assurance that water needs won’t go wanting under expansion.
No party Councilor Jeff Darby suggested the deal needed more review on its financial terms and proposed a delay until the end of May. This triggered Montgomery, who claimed the deal had been in the works for some time and needed immediate acquiescence – a strange argument to make given the incredibly long-term horizon to it. Instead, it was continued for two weeks.
Possibly Montgomery wanted consideration sooner rather than later precisely because more analysis would reveal the deal’s shortcomings. And a delay past the middle of May he especially might have wanted to avoid because that comes after annual financial disclosure reports of elected officials are due that might remind the public of his close relationship with the Port that could prompt him to run interference for it on this issue so strenuously.
From 2008, with policies brokered by him personally and through his insurance agency, Montgomery has received over $622,000 in business from the Port. This represents about two-ninths of the nearly $2.8 million he has made writing policies for a variety of local government agencies, almost all of them based at least in part in Bossier Parish. And this likely significantly understates his total earnings from such agencies; he has been on the Council since 2001 but reporting requirements didn’t begin until 2008. His take last year from the Port at almost $63,000 was his second-highest ever remuneration from it.
As well, the Port’s nine-member governing Commission is stacked with his political allies. They include Bill Altimus, until 2022 the longtime Bossier Parish administrator and representative of its Police Jury who by dollar volume has been an even better client of Montgomery’s; former city attorney Jimmy Hall under former Mayor Lo Walker whose agenda Montgomery often fronted to the Council; and Walter O. Bigby, on whose behalf Montgomery pled with the Council earlier this year to continue on a course to build a statue honoring Bigby’s father for at least $300,000 in taxpayer money.
The Council wisely decided to review this and it would seem better terms for the city are in order to consider advancing it. That would put the interests of Bossier Citians first and foremost rather than those of well-connected political insiders.
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