Pupusas are often treated as nibbles. Pupuseria Usuluteca #2 isn’t that kind of joint. Come with an appetite.
Lafayette’s Quiet Town neighborhood is starting to get quiet again because Alzina Dural is making noise.
The gist: Waitr Inc.’s stock price hit new all-time lows last week, sinking below $1 per share. Meanwhile, paperwork has been filed for a class action lawsuit on behalf of investors accusing the app-based food delivery company and key personnel of materially misrepresenting the state of its business. Waitr’s rough first half of the year keeps getting worse.
That’s a loss of tens, if not hundreds, of millions for South Louisiana’s economy. Before Houston billionaire Tillman Fertitta bought Waitr and took the company public last fall, the majority of its shares were owned by founders, investors and employees who lived in or around Lake Charles and Lafayette. Even after the deal with Fertitta closed, the locally owned portion of Waitr’s shares was likely still worth tens, if not hundreds, of millions of dollars. Now the vast majority of that wealth has evaporated.
Some investors are suing to recoup their losses. The legal complaint filed in the Western District of Louisiana asserts that Waitr’s management misrepresented the company’s financial strength and the success of its business model. Among other issues, the investors say the company’s reliance on employed drivers rather than contract labor offered no advantage and claim Waitr’s $323 million acquisition of competitor BiteSquad failed to pay off. Companies with crashing stock prices often face litigation from disgruntled investors. But the additional legal jeopardy comes at time of struggle for the once booming startup.
The suit follows legal action taken by drivers and restaurants earlier this year. Drivers filed class action lawsuits in February and March claiming they were making less than minimum wage in violation of federal law. And some restaurants filed a class action lawsuit in May claiming that Waitr broke contracts when the company raised the percentage of revenue taken from restaurants. The first driver class action lawsuit was dismissed by the plaintiff, but the second driver class action and the restaurant class action are still ongoing.
“The claims are baseless and wholly without merit,” according to a statement from Waitr. “We intend to vigorously defend our company against these unfounded, unsubstantiated allegations.”
Waitr continues to shed leadership. Part of what spurred the latest drop in stock price from $1.11 on Wednesday to 62 cents on Thursday last week was the news that CFO Jeff Yurecko is leaving the company, as are two board members. Waitr’s last CFO, David Pringle, resigned in February of this year. Founder Chris Meaux resigned his position as CEO in August, followed by company President Joseph Stough in September. Meaux remains chairman of Waitr’s board.
Waitr only has enough cash to run through March of next year, according to its latest financial report. Waitr lost $24.9 million and ended that quarter with $72.8 million in cash. At the current burn rate, the company could run out of cash in less than three quarters. If Waitr’s new leadership can shrink those losses, that runway can be extended. But the company has limited options to raise more capital given its stock price and long-term debt load of $80 million.
What to watch for next: What happens in November. In early November Waitr will release its third quarter earnings. That will show if the company has found a way to extend its runway and bump up its stock price. Another weak quarter could be crippling.
The gist: Changes to LUS and LUS Fiber leadership, announced suddenly the night before October’s primary, were said by the Robideaux administration to be tied to an ongoing internal review of transactions between the systems that was requested by the Louisiana Public Service Commission. PSC representatives, however, contradict that assertion — saying no such internal review was asked for, and the leadership change is not related to any request from the commission.
Get caught up, quickly. LUS and its sister company LUS Fiber have been under fire for a pair of potential violations of a state law that prohibits government dollars from propping up the municipal telecom. The most recent of the two, $8 million paid over eight years for a power outage monitoring system, was self-reported by Mayor-President Joel Robideaux in July. In a press release distributed Oct. 11, Robideaux announced he was removing LUS and Fiber’s interim directors, claiming the swap was made to “facilitate an internal review on behalf of the Public Service Commission” and linked the review to the power outage monitoring payments. Robideaux named his chief administrative officer, Lowell Duhon, to oversee LUS, and Kayla Miles, Fiber’s business administrator, as LUS Fiber’s interim director, replacing Jeff Stewart and Teles Fremin, respectively.
“Subsequent to the self-reports, the PSC requested that a more in-depth and internally unbiased review of all LUS Fiber inter-agency transactions be performed, necessitating the staff changes,” Robideaux wrote in his October press release, suggesting that the PSC itself had requested the leadership changes or supported the decision.
There is no written record of such requests from the PSC. Requests for management changes “would absolutely be in writing,” commission spokesman Colby Cook says. “We rarely make those kinds of recommendations. It’s a financial audit.”
PSC Executive Secretary Brandon Frey confirms the commission has not asked for an internal review of inter-agency transactions. “There is nothing pending on anything like that,” he says.
To date, the PSC has investigated only one self-reported violation from 2018. Robideaux’s July letter concerning the power outage monitoring system triggered no new review or request from the PSC, according to PSC staff. The last formal correspondence between the administration and the PSC was a June audit report concerning the 2018 discovery of payments from LUS to Fiber for services to sewer lift stations and some electric system components that were never connected. After a comprehensive review of inter-system transactions, the PSC found that besides the $1.7 million in sewer and electric payments paid out over several years, which Fiber reimbursed, the system was in compliance with state law and PSC rules, according to the report.
The June report raised concerns about having a single director run both Fiber and LUS. Longtime Director Terry Huval ran both LUS and LUS Fiber, an arrangement PSC staff wrote “may have weakened the strength of internal controls.” That concern was moot by the time the audit was concluded, as two different interim directors were already in place by the end of 2018.
Robideaux took widespread criticism for a bid to privatize management of LUS. The deal, first revealed by The Current in the spring of 2018, would have sold management rights to private equity firm Bernhard Capital Partners and at one time potentially included Fiber. Huval retired early from a previously announced decision to step down amid the controversy. The episode pitted Huval against his former boss, as the retired director publicly opposed the Bernhard deal. Later that fall, the City-Parish Council and the mayor-president agreed to divide LUS and Fiber into separate divisions. Robideaux appointed Stewart and Fremin to their interim posts, which they held without incident until October’s shakeup.
The self-reports have figured in political campaign materials. The Lafayette Parish Republican Executive Committee, whose Facebook page is run by Robideaux’s political consultant Joe Castille, used these transactions as a wedge issue against Councilman Bruce Conque, who lost his re-election bid to Andy Naquin, and mayor-president candidate Carlee Alm-LaBar.
(Disclosure: Alm-LaBar gave seed money to The Current in 2018; view our list of donors here.)
The administration has yet to officially respond to the June report from the PSC. Within a month of receiving the June audit, however, Robideaux claimed to have found the second potential violation of the act and said he hand-delivered a letter outlining those findings to the PSC, writing to the PSC that LUS may have made illegal payments totaling $8 million to LUS Fiber over an eight-year period. He actually hand-delivered the letter to Public Service Commissioner Craig Greene, when he visited the commissioner to discuss the June report.
“[Commissioner Greene] hasn’t had any more conversations other than when Mayor Robideaux had given us the letter, and we said we’ll get this to our staff. We gave no formal recommendation as to what they should do with [it],” says David Zito, Greene’s chief of staff. “None of the commissioners have approached us, and we have not approached any of the other commissioners about it.”
The legality of cross-subsidization between LUS and Fiber is regularly tested in annual attest audits, and interagency transactions are run through LCG’s finance department. In his letter, Robideaux, an accountant, took issue with the accounting method used to price the cost of power outage monitoring system, saying the approach likely violated state law. An audit conducted by LUS Fiber’s independent auditors in 2012 and a PSC audit for 2011 and 2012 did not take issue with the payment computations, which were based on the annual estimated savings from power outages. That means numerous oversight mechanisms, including Robideaux’s own administration, would have failed to detect any problems.
Robideaux has not asked the PSC to audit that issue, yet he references it as one of two self-reported findings to justify the leadership changes.
“We are committed to providing the most complete and unbiased report possible to the PSC, and the need for fresh sets of eyes is what prompted the naming of new interim directors at LUS and LUS Fiber,” LCG spokeswoman Cydra Wingerter writes in an emailed response to questions about the management changes sent this week. “The outcome of this in-depth, internal review will be formally provided to the PSC, and it is expected that a decision will be made as to whether the findings will be included in the initial self-report or taken up separately.”
Robideaux told commissioners in the July letter that Fiber’s annual attest audit began in May 2019 and would be filed with the commission by August. As of Tuesday, the attest audit had not been turned over to the PSC, its records show.
“There’s nothing pending at the commission involving the July letter,” says the PSC’s Frey. “I don’t think there’s been any request from them to open up an audit.”
The gist: The City-Parish Council voted unanimously Tuesday to move forward a $3.8 million police union backed pay plan, which would allocate the money from the city’s general fund if passed at final adoption next month. The vote and the sprawling discussion around it exposed increasing pressure on the city’s finances.
Get caught up, quickly: Police officers trained by the Lafayette Police Department are leaving for higher paying jobs, according to Chief Toby Aguillard, who characterized the departures as a crisis in remarks to the council. LPD lost 15 officers last year and 18 so far this year, he said. Meanwhile, the city side of Lafayette Consolidated Government is already slated to eat up $11 million of a $50 million general fund balance just to pay for regular operating expenses next year. Drawing $3.8 million in recurring expenses would deplete the general fund more quickly.
If the council approves this pay raise, and nothing else changes, the city general fund will run out of money by 2024. LCG Chief Financial Officer Lorrie Toups shared a pro forma to show what will happen to the city’s general fund balance:
|Ending Fund Balance||$45M||$30M||$21M||$12.5M||$5M||-$1.4M|
The city general fund will also break LCG’s fiscal policy of maintaining at least a 20% operating reserve by 2021. That means LCG will have less capacity to respond to emergencies and as a result will have to pay more to borrow money since lenders will see LCG as a riskier investment.
These numbers were based on a best-case scenario. Toups assumed 2% per year growth revenue, which hasn’t happened in years, and effectively no growth in expenses, which isn’t likely given the many funding needs throughout LCG.
Starting pay for a city of Lafayette police officer is $34,600. Starting pay for any other city in the parish is or will soon be about $40,000, according to Aguillard. Starting pay in McKinney, Texas, where several LPD officers are said to be transferring, is $72,000. An LPD officer with 10 years of experience makes $62,000. The city of Lafayette’s police department just isn’t price competitive and as a result is at risk of continuing to lose talented officers.
The fire department is working on a new pay plan. Fire Chief Robert Benoit spoke in favor of the new pay plan for police, and expressed his hope that LPD and the council would support the fire department as well when it introduces its own proposal in the coming months.
Increasing pay for firefighters will also cost millions of dollars per year. Council member Kevin Naquin tried unsuccessfully to amend the police’s plan to include $3 million for the fire department.
Councilman Kenneth Boudreaux wants to increase all LCG employee salaries 5%. Last year, the council passed a 2% pay raise for employees, overriding a mayor-president’s veto. And this spring, the council approved a 2% cost-of-living increase for all LCG employees, including police if LCG’s property and sales tax revenues increase by 2% or more. If Boudreaux’s new 5% proposal passes, it would mean an increase of another few million dollars in additional annual expenses.
All together, increasing pay for police, fire and all of LCG’s other employees could cost $10 million per year or more as proposed. If no new revenue were found or budget cuts made, the city would deplete its general fund by the end of 2022. Most other LCG employees are paid in part by the parish general fund; a government-wide pay raise would put even more pressure on a constrained parish budget.
New revenue appears necessary to make the police plan work. Mayor-President Joel Robideaux supported increasing police pay and said it can be paid for by a mixture of fund balance, new revenue and more budget cuts. Specifically, he mentioned the possibility of bringing back red light cameras around schools and using that money to support the police pay raises.
Boudreaux proposed two amendments to offset added costs. The first was to eliminate $726,000 budgeted for positions at the police department that are currently vacant. The second was to zero out the $1.9 million budgeted to pay for overtime at the police department. Both amendments failed after receiving significant pushback from the public.
Councilman Jared Bellard proposed eliminating all vacant positions across LCG. He advocated passionately for the need to find the money to fund this new pay plan for police, and suggested also looking at eliminating funding for non-governmental organizations.
What to watch for: A potentially electric final adoption vote on Nov. 5. The council will then determine whether to approve LPD’s new pay plan and/or tweak it further. But if Boudreaux and Bellard follow through on their proposed legislation, the council could face plans to provide 5% raises to all LCG employees and to eliminate all vacant positions across LCG. Hanging over these discussion is the tension of priorities, as councilmembers and the administration angle to find money in a shrinking budget.
The gist: Breaking the day before Saturday’s primary, Mayor-President Joel Robideaux removed interim directors for LUS and LUS Fiber, installing his chief administrative officer over the utilities system and elevating a longtime staffer within Fiber.
Get caught up, quickly. LUS and its sister company LUS Fiber have been under fire for a pair of potential violations of a state law that prohibits government dollars from propping up the municipal telecom. The most recent of the two, $8 million paid for a power outage monitoring system, was self-reported by the mayor-president in July. Last year, Robideaux put LUS and LUS Fiber under the authority of separate directors, following the exit of longtime Director Terry Huval, who retired early partially in protest of the mayor-president’s effort to sell management of LUS to Bernhard Capital Partners. Robideaux appointed Huval lieutenants Jeff Stewart (LUS) and Teles Fremin (LUS Fiber) as interim directors of the now independent divisions.
The shakeup was sudden. The directors and the Lafayette Public Utilities Authority, the council sub-agency that oversees LUS, were informed Friday afternoon, shortly before a press release was circulated announcing the decision.
Fremin and Stewart remain with LUS and Fiber. Robideaux temporarily put CAO Lowell Duhon in charge of LUS, and Fiber business administrator Kayla Miles over LUS Fiber, moving LCG Communications Director Cydra Wingerter to fill in for Duhon. Both civil service employees, Fremin and Stewart have returned to the positions held prior to their interim appointments.
Robideaux suggests the move was requested by the Public Service Commission. The PSC is a state agency that has limited regulatory authority over LUS Fiber, primarily for the purposes of enforcing a state fair competition law passed to protect incumbent telecoms when Fiber was created more than a decade ago. A press release sent out Friday claims the PSC requested an “internally unbiased” review of transactions between Fiber and other municipal agencies.
“It is important that we provide the PSC with assurance that this review process removes any internal bias that might be associated with long-term employees,” Robideaux says in the release. “The best way to accomplish that is with fresh sets of eyes.”
The PSC produced an audit in June. It was spurred by the 2018 discovery of $1.6 million in payments to Fiber for services that were never connected. Fiber reimbursed those payments before the PSC audit. The audit report went to an administrative judge in August. The judicial review is ongoing, and the PSC hasn’t taken action since July, when Robideaux self-reported more questionable payments.
Lagniappe. The Advertiser reported what it claims are more suspicious payments totaling $4 million over eight years. The report, published shortly after Robideaux’s press release, centers on charges for a set of communications hubs used by LUS, for which Fiber bills the utilities system $680 a month. It’s unclear whether the payments violate state law — Fiber is audited annually with transactions examined by LCG’s finance department — or if the administration intends to report them. The administration did not respond to requests for comment.
Christie Maloyed unpacks what went down during the jungle primary and what’s to come in the runoff.
The butterflies migrate south through late fall, feasting on milkweed and other local flowers.
The gist: We’re not going to pretend that we do this better than the Public Affairs Research Council. But we can definitely do it faster. There are four constitutional amendments on this year’s ballot. Here’s a hasty guide for voting yes or no.
Amendment 1: Waives property taxes on offshore drilling equipment bound for the outer continental shelf
Vote Yes: Oil companies shouldn’t pay property taxes on equipment that’s headed outside of Louisiana territorial waters because the U.S. Constitution says they don’t have to. Recently, some parish governments have unconstitutionally forced them to pay up, and this law corrects it.
Vote No: The state already has a bunch of tax exemptions, many of which benefit the oil and gas industry. Local governments need the revenue. If it’s unconstitutional, that’s for the courts to decide, friend.
Amendment 2: Adds new recipients to a state fund that supports education
Vote Yes: The new recipients — two lab schools, a state-funded boarding school and a production house for educational programming — are exactly what the $15 million fund was intended to support. And it doesn’t really cost a whole lot more to throw them in there.
Vote No: Using the constitution to distribute money is crazy inefficient and troublesome. There’s got to be a better way to do this. It’s exactly why Louisiana is last in everything.
Amendment 3: Empowers the state tax appeals board to determine constitutionality in tax disputes
Vote Yes: Tax law is super complex, and involving experts can make disputes go much faster. Most other states do it this way, and it’s much more efficient. Besides, the courts can still weigh in if folks don’t like what the board decides.
Vote No: Questions of constitutionality are supposed to be determined by the courts, and there’s no reason to think they’re not doing a good job of it with tax law. Plus, the board members are political appointees. Not cool.
Amendment 4: Allows New Orleans to exempt property taxes to develop more affordable housing
Vote Yes: The state shouldn’t control local property taxes, and New Orleans has a housing affordability problem. It’s their crawfish; let NOLA decide how to boil them.
Vote No: Again, the state constitution is lousy with tax exemptions and New Orleans has no shortage of ways to make big, easy money for developers.
In total, the one mayor-president, five city council members, five parish council members and nine school board members we’re electing will decide how $5 billion will be spent in our community over the next four years.
Photographer and filmmaker Ron Stanford’s black-and-white photographs are documentary vignettes, technically precise and delightfully soulful.
The gist: While the Louisiana Watershed Initiative’s $1.2 billion federal grant may be attracting the most attention, reps with the program say its real aim is changing how Louisiana lives with water. Program lead Pat Forbes says the initiative is prepared to earn buy-in from a beleaguered public who want dirt moved immediately.
Get caught up, quickly: The Louisiana Watershed Initiative is a statewide program, commissioned by Gov. John Bel Edwards, to redefine how Louisiana manages flood risk. Dividing the state into eight regions mapped along the state’s major watersheds, the initiative was launched to lift flood management decision-making above politics. A major catalyst for the program is a $1.2 billion grant authorized by the U.S. Department of Housing and Urban Development intended to fund transformative projects and programs that make Louisiana less prone to stormwater disaster. Lafayette Parish and the Teche-Vermilion Watershed are part of Region 5, a zone made up of 16 parishes and dozens of municipalities.
“$1.2 billion is not a tenth as much as we need to address flood risk in the state, which is why we’re using it to leverage a new approach,” Forbes tells The Current. Forbes is the executive director of the Office of Community Development, the state agency responsible for the HUD grant.
Local officials want projects funded fast. And it doesn’t look like the program is designed for speed. In many cases, projects may not be funded for several years, moving further and further away from the catastrophic flooding in March and August of 2016 that spurred the initiative. At a hearing in September, parish and municipal representatives from Region 5 peppered LWI about releasing funding for projects in their communities, frustrated with the initiative’s long time table and emphasis on further study.
“Their concerns, their fears are very well founded in the sense that until you can feel and see and touch a thing it shouldn’t really give you a great deal of comfort,” Forbes says of the initiative’s deliberative rollout. The program has stalled while waiting for federal rules to be issued on how the HUD grant will work. That guidance was delivered in August.
A draft plan for how to spend the money was released earlier this month. The document lays out basic guidelines for how the LWI will work within the funding rules attached to the HUD grant, which was authorized by Congress in 2018 but won’t be released until next year. Major themes in the plan emphasize developing science and engineering first and building regional governing structures within watersheds to promote projects and even-out land use planning practices. The Department of Transportation and Development is in charge of contracting firms to build watershed models that can test project concepts and determine impacts up and downstream. Roughly 10% of the HUD grant will go to modeling, which is projected to be completed in the next two years.
Critics have raised concerns that the money will pass small towns by. Sea level rise related to climate change and coastal erosion are identified as the most probable threat to the state in the action plan, and that hazard affects coastal parishes the most. The draft action plan points out that 39% of Louisiana’s population lives in that zone, raising the possibility those areas would see the most benefit from the initiative’s spending.
“Our process is to get funds out there to reduce risk,” Forbes says. “We won’t accomplish that if we let the money and resources go to those most populated areas.”
There’s a natural tension between the new approach and how things have historically been done. Forbes says state disaster funding has typically been allocated piece-meal, addressing specific needs as they arise. Moving away from project-specific funding is designed to make the process less political and encourage collaboration. But that approach could cause friction.
“This a break from the way we used to [allocate funding],” Forbes says. “So consequently it’s completely understandable that people at the local level, who are facing a brand new paradigm, are somewhat disconcerted over the process. I’m not concerned we won’t ultimately get folks into the fold.”
What’s next? Two immediate funding opportunities will be available in the next few months. First, the state will distribute $400,000 to each region to build staffing and capacity for project and policy development, money that will likely go to regional planning agencies like the Acadiana Planning Commission. Next, LWI will issue the first $100 million tranche out of the HUD grant for “no regrets” projects. Each region will see $5 million out of that pot, with the remaining $60 million distributed competitively. Forbes says LWI will outline the criteria in a grant notice later this year.