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Month: December 2018

News + Notes
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Cash advance to speed up Kaliste Saloom expansion and other projects authorized

The gist: Several big ticket projects could start faster by way of a cash advance paid on an upcoming bond issue. LCG will divert $18 million in general fund dollars to shovel-ready projects and reimburse the payment when a $35 million bond sale is finalized next year.

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Not so fast. The cash is available pending authorization by the bond commission in February. The bonds would then be sold a few months later. In other words, the general fund advance shaves off at most a couple of months on project timelines. Still, the quicker start will be welcome on tired projects.

Yes, Kaliste Saloom is on that list. The second phase of the expansion, a $15.4 million leg currently in planning, is ready to go out to bid, according to Public Works Director Mark Dubroc. That phase would complete the stretch south of Ambassador Caffery Parkway by the first quarter of 2022. You can see the full list of projects in the bond program here. Note that not all of these projects will be shovel ready, meaning they may not be eligible for the bond advance.

Shovel ready is in the eye of the beholder. There is $70 million in street projects alone on the bond program list. The University Avenue Corridor improvements, Downtown sidewalks, the fabled Johnston Street pilot project and the N. St. Antoine extension are all included on a slate packed with drainage projects, park improvements and public building upgrades. What gets fast-tracked will depend on what’s ready to go when the money is available come February. Dubroc tells me these projects are “ready to go.”

  • Kaliste Saloom Road Widening from Ambassador Caffery Parkway to Grand Pointe Apartments
  • Frem Boustany Extension from Farrel Road to The Vineyard
  • Dulles Drive Widening  from Ambassador Caffery Parkway to Westgate Road

“In general, all projects budgeted this year can and will benefit” from the ready cash, Dubroc says.

News + Notes
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LUS rate reduction and refund shelved

The gist: The LPUA deferred indefinitely a pair of proposals to reduce utility rates and return money raised for a $240 million bond sale that never happened.

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Some background. Rates were raised 8 percent beginning in 2016 with a $240 million bond issuance in mind. That package included a controversial power plant, and after some pushback, the bond ask was reduced to $70 million in February 2018. At the last minute — literally the day of the bond commission meeting in April — Robideaux pulled the $70 million bond request, orphaning the rates. That was days before he signed a letter of intent with NextGEN Utility Systems to consider privatizing manage of LUS. Settling the issue was delayed during the ensuing controversy.

LUS says the money has been put to good use. In a bond scenario, the money raised would go to pay the interest on the bond. Since there’s no bond, LUS has essentially used the money on a pay-as-you-go basis, moving forward on projects included in the $70 million package. Some major projects include $48 million for electric system upgrades and $41 million in sewer treatment work. Interim LUS Director Jeff Stewart tells me about $15 million was diverted to those work orders.

“The last thing I want to do is scale back a rate and then come back to raise the rate to meet unexpected needs,” Councilman Bruce Conque says.

Word is bond. Councilman Kenneth Boudreaux, who authored the ordinances, argues that good use doesn’t matter. The money was raised for bonds, and the ratepayers should expect that the money be used for that purpose. “I personally believe we have misled the people, and we’re gaining from it,” he said at the council meeting Tuesday night.

LUS disconnects 1,900 customers each month for delinquent payment. Boudreaux brought that figure forward to warn that even a small rate increase can have dramatic effects on low-income families.

“We boast about how good our rates are, but we still have a large population that struggles to pay those rates each month,” Boudreaux tells me.

What to watch for: If and when a bond is ultimately issued. The administration intends to go forward with a $70 million bond sale, now that the NextGEN episode is over. With cash in hand, LUS can continue ongoing projects but can’t necessarily complete them without the added capital.

News + Notes
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Robideaux and council forming joint committee to prepare for separate councils

The gist: There’s a lot to do before 2020, when the City-Parish Council splits into separate bodies. The 15-20 person committee, featuring citizen and government reps, will tackle the thornier issues stemming from the change.

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“The whole gamut of what was inside the charter changes” will be up for discussion, Councilman Jay Castille tells me. He singles out budgets, board appointments and commissions among the major issues on the committee’s docket. Next year’s budget will need to be drafted with an eye toward 2020, when separate city and parish council members take office. Budget issues figure to take up the most air, but the charter amendments also created separate zoning commissions, for instance, and this body will sort through how to get them seated in an orderly fashion.

Northside, Southside, Eastside, Westside: Castille says the majority of the committee will be private citizens with government knowledge appointed by the council and administration. The makeup of the citizen delegation will be a “cross section” of city and parish stakeholders, Castille tells me. The diversity is intended to build a spirit of inclusion in a process that will have major consequences on the way local government works. Robideaux and Castille will begin putting together a list of names and will start piecing the committee together in the new year. The four councilmen on the council’s transition team announced last week will be on the committee, along with the mayor-president and administration staff.

The most likely headache? Cost allocation. It’s the wonkiest of consolidated government issues and is at the heart of its dysfunction. City general fund dollars and parish general fund dollars, budgeted separately, are used to pay for shared services. How much each side pays is determined by 24 cost-allocation methods, a patchwork of formulas developed by budgeting consultants. For years, local pols have argued the city has taken on too much of the cost for shared services, in effect subsidizing government functions in the parish like the legal department, IT, building maintenance and more. Tackling cost is where the city gains its autonomy and the parish faces a stark financial reality. When you hear “the city props up the parish,” think about cost allocation.

“The new parish council will have challenges,” Castille tells me. “I’m curious to see how creative they can get.”

$18.4 million in shared services were budgeted by revenue in 2018. In other words, how much each entity can afford to pay. The city picks up more than 80 percent of that tab.

What to watch for: Whether the parties involved can play nice. There’s a visible strain between the council members on the committee and the mayor-president, who opposed the charter amendments. Castille and Robideaux have a notably frosty relationship. “The relationship is OK,” Castille tells me. “I’ll leave it at that.” But this isn’t just about personal conflict; there will be a natural tension on the budget, particularly around cost allocation, where Castille says the committee will spend most of its time.

News + Notes
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In a legal hole, Marshal Pope kept digging, lawsuits claim

The gist: State and federal lawsuits filed this week allege suspended Lafayette City Marshal Brian Pope, at the time facing seven felony counts of malfeasance in office and perjury, took the extraordinary step of targeting his perceived political enemies. The suits were filed by Steven Wilkerson, who co-chaired the failed effort to recall Pope.

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Pope allegedly ordered employees to retaliate against Wilkerson and recall organizers. The suits claim he instructed office personnel to run criminal background and outstanding warrant checks on those seeking to remove him from office. In addition to Pope and interim City Marshal Mike Hill, defendants are Deputy Paul Toce, and an unidentified deputy, dispatcher and warrants supervisor. Wilkerson alleges Pope violated his constitutional rights when the marshal had him arrested Dec. 11, 2017 — less than 24 hours after the recall effort failed — on a defective warrant for issuing worthless checks 20 years ago. In February, District Attorney Keith Stutes dismissed the charges against Wilkerson.

Wilkerson, who says in the suits he has since moved out of state to escape the ongoing retaliation he feared, is seeking actual and punitive damages for public humiliation, embarrassment and invasion of privacy, along with attorneys’ fees.

Pope was convicted on four felony counts earlier this year. The suspended city marshal is awaiting a sentencing date and plans to appeal. Just last week, a 17-count superseding indictment accused him of pocketing approximately $85,000 from the marshal’s office this year after receiving an attorney general’s opinion that he could not legally do so. In April, Pope was also warned by the CPA firm auditing his office’s financial statements — it wasn’t the first warning — to “cease this practice and seek legal counsel regarding compensation taken prior to the January 29, 2018 AG opinion.” It does not appear that Pope will be charged for supplementing his salary to the tune of hundreds of thousands of dollars from 2015-2017 — the time period prior to the January AG opinion, which was merely a restating of an earlier opinion that the fees can only be used to support the operations of the marshal’s office.

— Read the full federal lawsuit here. —

Marshal Hill says he received a state grand jury subpoena to turn over financial records shortly after his October swearing in.

The Louisiana State Police and the FBI have looked into Pope. In early 2018, LSP performed an audit following Wilkerson’s arrest and the allegations around it, according to sources with knowledge of the examination. It’s not known what that audit turned up, but the FBI has been asking questions. Recall co-chair Aimee Robinson says she was interviewed for 2.5 hours by two FBI agents in February. Robinson says the agents asked a lot of basic questions — why she got involved in the recall, why Wilkerson was chosen as co-chair, whether she had a vendetta against Pope, had she known Pope prior to launching the recall — before getting to what she believes was the purpose of the meeting.

“To me the focus seemed to be around Pope’s efforts at retaliation,” she says. Robinson says she hasn’t heard anything from the feds since February.

News + Notes
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Transition team named to tackle change to separate councils

The gist: Two separate councils will govern Lafayette Consolidated Government starting in 2020, following Saturday’s vote. A four-member council liaison team will convene to cut through the weedy details.

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More councils, more problems. Or so the saying goes. The reality is the team could tackle a swath of issues on its way to untangling a complicated government contraption, not the least of which would be dealing with shared administrative functions. The team’s agenda isn’t yet defined, Councilman Bruce Conque tells me, but broadly speaking it’s tasked with paving an orderly path for transition. That begins with prepping the paperwork necessary to allow candidates to qualify and run for parish or city council seats in 2019. The new councils will get to governing in 2020.

The team is comprised of the charter amendments’ core proponents on the council. Council Chairman Kevin Naquin appointed himself, Conque, Jay Castille and Kenneth Boudreaux to the transition team. Castille and Conque authored and pushed the amendments through the council.

Divvying up the budget pie won’t always be straight-forward. That’s what Mayor-President Joel Robideaux didn’t like in the proposition, when he groused that the parallel councils could deadlock. The transition team won’t necessarily be tasked with sorting out who pays for what; that’s an issue to be tackled at budget time. But in preparing the budget in 2019, the last city-parish council ever will need to produce a document that separate councils can work from. Some functions are easy to figure out. The city council, for instance, has sole purview over the Lafayette Police Department. Easy peasy. But others, like the $5.6 million consolidated government spends on its IT department, will be stickier. The city pays 87 percent of that cost, the parish pays 13 percent; each share is determined by sales tax receipts. Public Works, the largest consolidated agency, could present the biggest challenge.

There are 25 different methods to determine who pays what. And you thought splitting restaurant checks was frustrating. The methods, called allocation formulas, are determined by a contractor, but the council (later councils) approve them in the budget process. Soon to come, the government equivalent of “I only ordered a salad.”

“It’s nothing that’s not solvable,” Conque says of the complications ahead. Given the holiday season, the team likely won’t meet until 2019.

What to watch for: Candidates. Four incumbent council members — Liz Hebert, Bruce Conque, Pat Lewis and Nanette Cook — can run for either council. Conque has already declared to run for city council. Naquin has one term left and can spend it on the parish council only, given his residence outside of city limits. With Boudreaux, Castille, Jared Bellard and William Theriot all termed out, there will be at least five open races, most of which will likely be for parish council seats.

Business + Innovation
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Waitr gobbles Bite Squad and doubles in size

The gist: Waitr announced this morning that it acquired Bite Squad, an online ordering and on-demand food delivery platform for restaurants, for $321.3 million.

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Wasn’t Waitr just bought for $308 million? Yep, that was announced back in May and the deal was only finalized on Nov. 16. So less than a month into being a publicly traded company, Waitr has effectively doubled in size. Bite Squad has more than 11,000 active restaurants, compared with Waitr’s 7,700 restaurant partners as of Sept. 30 of this year. 

Waitr gets swoll. With this deal, Waitr’s operations will expand to cover a total footprint of 500 cities in 22 states. 

Where’d they get all that cash? Landcadia Holdings acquired Waitr for $308 million, but only $50 million of that was guaranteed cash. At that time, Landcadia Holdings was a special purpose acquisition company — a type of entity set for the sole purpose of buying another company — that had raised $300 million. So when Landcadia Holdings became Waitr Holdings, it still had about $250 million left to fund growth. While this deal for Bite Squad was for $328 million, only $202.1 million of that was in cash with the rest paid with 10.6 million shares of Waitr stock. Plus, to help finance a portion of this deal, Waitr has taken on $42.1 million in debt.

This may only be the beginning. Tilman Fertitta — the billionaire co-owner of Landcadia Holdings, the Houston Rockets and Landry’s Inc. — has a track record of growing his businesses through acquisitions. And Chris Meaux — the CEO and cofounder of Waitr — wants to build Waitr into a billion dollar business. So if I were a betting man, I’d say that this won’t be the last major acquisition they make. And that’s potentially great news for Lafayette. 

Am I rich yet? Not unless you were one of the original shareholders. The news hasn’t had much of a net impact on the stock price yet, for those of us who have only been able to buy in more recently. (Disclosure, I own some stock in Waitr.)  Yesterday, Waitr Holdings’ stock (listed as WTRH on the Nasdaq) ended the day at $11.44. While shares spiked to $12 first thing this morning, they settled back down to $11.48 as of 2 p.m. So I’d hold off on buying that ticket to the moon.

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