Harris County ESD 11 commissioner questions $8.5 million loan

During the July 26 meeting, recently elected Commissioner Zach Dunlap questioned why the district would need to take out the loan to cover operational costs. Dunlap pointed to several change orders that have been placed throughout the construction process of the district’s new campus, including roughly $823,000 in demolition costs that were not included in the contractor’s original construction budget.

“I’m trying to look at this from the community’s perspective,” Dunlap said. “It’s hundreds of thousands [of dollars in construction change orders] here and there and here and there,” Dunlap said. “What have we benefitted?”

Hooten said that while there have been unforeseen costs related to the construction of the district’s new campus, the money was tied into the cost of starting a new ambulance service from scratch.

“The fact of the matter is, it costs money to do a startup,” Hooten said. “This board chose to do that. All of this stuff was explained to the board that made that decision."

ESD 11 General Counsel Regina Adams noted the $5 million in expenses the loan was used to reimburse were one-time capital costs that were essential for the new ambulance service, noting commissioners had previously agreed to take out a future loan to reimburse the district when officials decided to pay for some of the construction costs using operating funds.

“It would be one thing if you were issuing a loan ... to pay your electric bill for the remainder of the year or pay your employees for the remainder of the year,” Adams said. “That would be a problem because that’s a recurring cost that you’re going to have to be able cover next year, but this list of items is not something that you’re going to be expending funds on again. The lifespan of this building is going to be at least 50 years.”

Dunlap agreed, but he still questioned how the district would have fared had the loan not been approved.

“It sounds like, though, that we would have had major issues getting to the next year without the $8.5 million,” he said.

Adams said operational costs were not the issue, noting the loan was needed simply to reimburse construction costs that were temporarily taken out of the operating fund.

“The $8.5 million wouldn’t have been spent but for the fact that the district needed those capital items to be created and start functioning and operating,” she said.

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