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THE FINANCIAL CASE FOR RECREATION REFORM IN WEST AND NORTH TERREBONNE PARISH

This is not about all the improvements that have been done already. I express my sincere appreciation to Parish President Dove and the Parish Council for all the action they have undertaken over the last year to make improvements in the recreation system. There are really too many to list and the point of this article is not to list all the things that have been done, but to discuss a matter that has not been addressed by all those improvements – completing the Bayou Country Sports Park located between HWY 311 and Valhi Extension.

My background and how I got involved in Rec 2/3 Governance
My name is Michael Bergeron. I am Louisiana licensed Certified Public Accountant. I own and operate a CPA firm with offices in Houma and Thibodaux. In May of 2018, I was one of nine new appointees to Terrebonne Recreation District 2/3.
We got started with new Rec 2/3 Board meetings in June 2018. In our first meeting, the long-time director announced his retirement in a letter to the Board. He was gone by July. We had numerous issues to tackle and no administrative support. Our Board had to quickly get up to speed on purchasing rules, employment rules, public bid rules, etc. In stark comparison to larger organizations, new Board members have to do most of this stuff themselves. Shortly after we were appointed, we conducted a planning retreat, prioritized our spending plan and hired a new executive director. We held town-hall type planning meetings that were, to my disappointment, sparsely attended. We set up a loose “committee” structure that allowed a group of Board members to meet privately to get a handle on construction, finance, personnel, etc.
As the end of the year approached, I decided that I could not longer serve as Board chairman, so I decided to not place my name in the hat. Happily, Mr. Jeff Teuton was able to take over as chairman.

Where we are now?
As of the January meeting, I am no longer the Chairman. At our last meeting in February, which I missed because my older son flew in that day after living a year away in Arizona, our Board unanimously passed a motion to ask voters if they will support a 10-year renewal of the 5-mil property tax which supports Rec 2/3’s mission. That mission is to build and maintain recreational facilities and parks in the recreation district. If I were present at that meeting, I would have supported that vote.
A lot of supporters of Recreation Reform ask me why I would have supported that tax. The people who oppose consolidation seem to view the passage of TPR’s 2.2 mil property tax on the December ballot as an endorsement of the status quo and that renewal of the 5 mil Rec 2/3 as another endorsement. I view the renewal of Rec 2/3’s 5-mil tax as a separate issue from rec reform for a simple reason. Rec 2/3’s 5-mil tax, which brings in about $255,000 per mil – is an operational renewal. It will not get the rest of Bayou Country Park built. The Bayou Country Park is a much larger issue that one Recreational district CANNOT handle on its own.
This realization was formed after months of being involved with the District at a very granular level. I’ve seen all the underlying details, signed checks to the vendors, seen the employees’ pay, observed their duties and benefits, dealt with consultants, etc. No way is that $1.2 million Rec 2/3 collects each year going to be enough to deal with the scope and cost of the Bayou Country Sports Park construction.
I set forth on a financial analysis of not only Rec 2/3 but also of adjacent Rec Districts – Rec 9, Rec 1, and Rec 8. Those districts are all within a couple of miles of the BCSP. I looked at where we are in terms of completion of the BCSP and how we could possibly collect enough to get to completion. I was searching for how many dollars the public was paying already towards recreation to determine how much might be available to be re-purposed to help fund the BCSP.

Why is one rec district charged with responsibility for a $28 million project?
Former Parish President Michel Claudet would be the best person to answer that question. I think the short answer is this – the Park is located inside the boundary of Rec 2/3. The bigger question is this – with the $3 million in its fund balance and a potential $1.9 million in state capital outlay dollars (which is far from a sure thing) and potential sales proceeds of the front portion of the MLK property of an optimistic $1.5 million, how is Rec 2/3 going to fund construction of a further $14+ million? The answer is clear as day – it cannot.

Should we go into debt to finance the construction of the Bayou Country Park?
Since Rec 2/3 does not have money in the bank or any other reliable sources to draw from, segregating our tax collection into funds for operating and capital projects is needed. Even the most optimistic operating assumption – that the District can operate on about $600,000 per year – leaves only $600K per year to spend on capital projects. How do you tackle those projects when almost every feature of phase 3 of BCSP costs more than $600K?
The answer in government is that you borrow money and pledge a portion of your tax collection to re-paying the debt. Rec District 2/3 has a several other parks in its portfolio-Broadmoor, MLK, Westgate, Summerfield, Rozands, the Skate Park among others. Those places will need improvements too, slides will break, new equipment will be needed. If we tie up all of Rec 2/3’s capital outlay for re-paying bonds, the other parks will deteriorate. No one wants to see that.
We are facing a $13 million shortfall. A mil in each district collects differing amounts depending on the assessed values of properties within each district. Rec 2/3 collects the highest amount of tax per mil due to the large concentration of businesses in its boundary. Collectively, all four districts identified collect approx. $455K per mil. Three mils would be enough to generate $1.365 million per year which could be dedicated to a bond issue which could in turn produce proceeds of approximately $13 million which should be enough to complete the park. The 3-mil tax collection would be used to pay back the bonds principal and interest each year for about 10 years. I’d propose a sunset on that tax after 10 years.

What are some options for a Path to Completion of BCSP?
The options for funding BCSP as I see them are as follows:
1. Consolidate districts 1, 2/3, 8 and 9 and level the tax among all the districts to 8 mills with approx. 3 mills in the new consolidated district dedicated to debt service. 3 mills will bring in about 1.365 million per year, so the numbers may need to be tweaked. There will be a re-assessment in 2020 so 3 mils might be enough. Place an expiration on the 3 mills after the debt is retired or 10 years, whichever is first.
2. Do not consolidate and have a ballot initiative to raise a special debt service millage on just R23 to 5.7 mills (in addition to the current 5 mills needed for operations) – so 10.7 mills would be the total assessed on property owners just in 23.  Place an expiration on the 5.7 mills after 10 years or the debt is retired, whichever is first.
3. Get the council to create a special debt service taxing district to create a special tax election over Rec Districts 1,8,9, 2/3 and 10 imposing a 3-mil tax on this special purpose district. Place an expiration on the 3.0 mills after 10 years or when the debt is retired, whichever is first.
4. Do nothing and this project will languish, with smaller pieces being built as we go from cash flows. Phase 3 will need to be scaled back substantially.
Under options 1, 2 and 3 – the park can be completed in 3 to 4 years as envisioned and designed.  Rec 2/3 has (tentatively) enough for phase 2, but nowhere close to enough for phase 3.
There is almost enough money being collected within the 4 districts now to make this a reality, but it cannot be pledged to debt because it is being collected by 4 districts and each district has certain caveats that they have placed on their collection. For instance, Rec 9’s millage does not allow the money collected to be “spent outside” Rec 9 district. Action is required on the part of the Parish Council and our elected and appointed leaders to chart a course to completion.
Timing for dealing with this is crucial. Much momentum will be felt this year (2019-2020) at the park. My advice is to not let it languish – finish it and honor Terrebonne residents with a first class completed facility. Much of the dollars needed for this are being collected already through recreation district millage, we just need to be able to consolidate them and pledge them to bond funding. We could get this done in a few years, but action is required to make that a reality. We need all four districts to participate so all the dollars being collected can be leveraged to create the maximum impact.
I think the least costly of the three options is option 1. Consolidate four of the Rec districts and enact 5 mills to operations and 3 mills to debt service. Sunset the 3 mils after 10 years or the debt is re-paid. I know some oppose consolidation, so I figured a way to accomplish this without consolidation, I just think it is costlier and will not result in a shared vision for parks and recreation. That’s really what I think we need, a shared vision, not the parochial mindset of “I know what’s best for my district.” Frankly, no one really knows what Rec district they are in unless they look at their property tax bill. The proposed consolidation area is pretty homogeneous. We shop at the same stores, we attend rec events together, we need to pull together and share in the cost of this community asset together.
As soon as one of the four districts incur indebtedness on its own, consolidation plans are sunk unless there is some sort of bond refunding and replacement with a new consolidation bond issue – which would be not so smart considering the cost of floating a bond issue. I urge everyone to seriously consider this proposal in the cooperative spirit it is offered. I have NO political motivation or aspiration – I just want to see the BCSP built the way it was envisioned, and I want to see it soon. •

BY MICHAEL BERGERON, RECREATION 2/3 BOARD MEMBER

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