.One of our reporters has been looking into the Terrebonne Sanitary District’s proposed budget and we have a few questions.

First, as we have stated before, this budget is full of very old numbers, but we believe it is also full of exaggerated and understated numbers. We will review each area we believe is misstated and give you our thoughts. Once we have updated the numbers, we will attempt to rebuild the spread sheet and see what it tells us. This piece may be a little long so grab a snack and Lets GO….

The Proposed Budget can be found here

Cost Index
The district has embedded a yearly increase in the budget of 3%. This means they are planning on all the costs going up 3% every year. Will that be enough? What kind of increases have we had in the last 5 years? In addition they are planning to raise the fees to the customer by 3% every year FOREVER. In 10 years it’s $135! We have no problem expecting the cost to go up, but fees every year forever?

Equivalent Dwelling Units (EDUs) Increase per Year
Let’s dig into this number. What this means is they expect to add 10 NEW HOMES per year FOREVER!

They say they START AT 160 (see “EDUS in District” for more info) and in 10 years will have 260. Are you kidding me? Of course more lots will want to be built IF they are near a sewer and IF they have the money to build more sewer lines. Here’s a little fact we got from the county records: about 1 new home is built in the Terrebonne area on average per year for the last 10 years… and that is a district 15% the size of the Terrebonne Sanitary District’s area. 10 per year is a no-go for the district… maybe 4 but more like 2 for quite some time.

EDUs in District
Just a refresher, this is Equivalent Domestic Units. Each home is counted as 1 EDU and businesses are counted on how much sewer they produce FOR SEVERAL EDUs. As noted above we have written an entire page on this subject (see our post Who Will Pay for the Sewer System?) so we will just say here that this number is Big-Time-Pie-In-The-Sky.

Their start number of 160 will be more like 80 and the increase per year will be more like 2. Changing this number in addition to increased loan costs makes this district unsustainable.

Monthly Rate per EDU
The rule when starting a district is you have to be able to break even at least in order to exist….PERIOD! They have set a rate of $100 in their budget. By the time we adjust all the numbers that need adjusting this number we will be closer to $225 to pay the bills. By over projecting EDUs, Increases in EDUs, and underprojecting all the related costs the $100 will never hold.

REMEMBER ALL FEES WILL GO UP 3% EVERY YEAR!

Personnel
From what we can gather this dollar amount is supposed to cover billing, and any other costs besides materials and services that will be needed to run the district. If that is the case they are assuming that $9,600 or $800 a month can run the district. Let’s just start a little list of items we believe a district like this would pay for. The dollar numbers we are using are our best guess based on other districts of like size.

Insurance: $5,000, Legal Services: $5,000, Bookkeeping: $10,000, Auditing: $8,000, Utilities: $2,000, Bank Charges: $2,000, Dues and Fees: $2,000 and Telecommunications: $4,000

This is really an estimated list of costs any district would have, and the total is already at $38,000. It may very well be higher as this does not even include any employees or an office.

WE BELIEVE THIS NUMBER WILL BE AT LEAST $45,000 IF THEY DO NOT HAVE ANY EMPLOYEES AND $145,000 WITH EMPLOYEES

Materials and Services
This number represents the possible cost of maintaining and servicing the sewer system. The costs were based on enquiries of companies that do this kind of work…all well and good.

But…..things are different now that they were 3 years ago when these numbers were obtained. With inflation and the increase in labor we feel this number is about 40% to LOW. We would use the number $38,000 until there is further investigation of these costs.

COR WW Treatment
This is the cost to the district to be paid to the Redmond Wastewater Division to take sewer from TSD. (Yes, your sewer water will be pumped to the Redmond Wetland Complex about 4 miles away.) Like other areas of this projected budget this number is OLD. After we reviewed the contract that TSD has signed with Redmond this number will be $25.95 per customer per month….plus 5%. This change moves this line in the budget to $52,248 per year. The only good thing is this number will not increase…at least until….. Redmond Increases its Rates.
Increase this line from $31,277 to $52,248…OUCH!

Total Debt Service
This line of the budget really goes off the rails. Not only have the amounts borrowed gone up (that is putting it lightly), but the number of loans and the interest rates have gone up. First the loan from DEQ has increased from about $2,900,000 to now being about $5,250,000. We would say that is almost double!

In addition to that the interest on that loan has moved from .96% in 2022 to the current 1.57%. There is also a .5% fee every year. There is also a new loan, not noted on the budget, for about $1,250,000 to Redmond for the new district’s connection! What this all means is that the district’s projection for loan payment goes from……
$127,123 to $219,828 PER YEAR FOR 30 YEARS!

And that payment number allows for the planned forgiveness of $2,000,000 of the money borrowed.

Reserve Fund
The last item on our list is not even noted on the budget form. But do not worry it is only $160,000!!! When making the kinds of loans the district is applying for, the borrower is required to set aside about 75% of the yearly payment amount in a reserve account. This money can NOT be touched for the duration of the loan…..and that would be 30 years in a “Lock Box”.

So now we need to set aside $160,000 on DAY ONE!

So there you have it. We ask the board, “Why have you not addressed these issues?… What are you waiting for?”
This plan should reflect a business attitude and NOT EVER proceed until you have a solid BUSINESS plan BEFORE you put shovel one in the ground.

We will be making an effort to build our own budget for the sewer district but we do not hold out much hope.
NOT ENOUGH RATE PAYERS AND WAY TO MUCH BORROWED MONEY. YOUR MONEY!