Harris County Emergency Services District No. 11 commissioners approved a loan totaling $8.5 million during a special-called session July 19.

The $8.5 million loan carries a 3.23% interest rate on a 15-year term. ESD 11 officials said the loan was needed to ensure sufficient funds were available for operational costs, such as salaries, for the remainder of the year.

According to ESD 11 Mobile Healthcare CEO Doug Hooten, the loan was a one-time measure needed to reimburse roughly $5 million in expenses related to the September 2021 launch of the district’s ambulance services, ESD 11 Mobile Healthcare, which included the purchase of 40 ambulances as well as the construction of a new 43-acre campus.

“The loan was needed ... to preliminarily pay for items that were capital in nature but not otherwise previously funded from prior loans, such as additional construction costs and capital emergency services equipment that are necessary for an EMS startup,” Hooten said in an emailed response. “Because not all of the construction and capital equipment were funded from the outset of construction, the district utilized its existing unrestricted operating funds to preliminarily pay for such expenditures.”

According to Hooten, the bulk of the district’s revenue comes from the collection of fees associated with providing emergency services, though he noted the collection of some of that revenue can sometimes take as long as 18 months.

“As this is a startup of a new EMS service, it takes time to begin to collect the revenue from providing the emergency services, which makes up 65% of the revenue required to run the system,” Hooten said.

Additionally, Hooten said much of the loan was needed to offset costs associated with the roughly $20 million first phase of construction and renovations of its new campus, which included ESD 11 Mobile Healthcare’s new 911 call center, billing center, and fleet maintenance and deployment facilities.

“With any redevelopment construction project like this, you run into unforeseen issues, such as excess water damage, termite damage, [or] unsafe or out-of-code compliance [issues from] previous construction,” Hooten said.

District officials are working through the second phase of construction on the campus, which will house ESD 11’s main administrative building. Hooten noted district officials are still working through the draft budget for fiscal year 2022-23 to consider any potential future funding issues.

ESD 11 Commissioner Dorothy Dalton, who was elected to the board in May, raised concerns about the loan during the July 19 meeting.

“This needs to be explained,” Dalton said. “The public needs to know exactly what has happened, and it needs to be detailed. ... This needs to all be made public and transparent.”

As previously reported by Community Impact Newspaper, Hooten said he believed ESD 11 Mobile Healthcare's finances would eventually become self-sustaining once the district is able to fully collect the revenues from its ambulance services.