Month: December 2019

News + Notes

Exiting office, Robideaux casts doubt on LUS Fiber

The gist: LUS Fiber’s business model is broken, outgoing Mayor-President Joel Robideaux argued in a presentation Tuesday that wrapped up his months-long investigation into the municipal telecom’s finances. Robideaux will self-report to state regulators millions, most of which is disputed, in overcharged or unwarranted payments he says were intended to prop up Fiber in violation of state law. 

5 min read

“It cannot continue the way that it’s structured,” Robideaux told the City-Parish Council in his final meeting as mayor-president this week. “To ignore the reality is not doing anyone a service.” 

He alleged another $2 million in “questionable” payments. This time for “dark fiber” services that he will report to the Louisiana Public Service Commission, which has limited oversight over LUS Fiber. Robideaux claimed Fiber charged LUS more than three times what it billed private customers for the dark fiber connection, identifying the disparity as a theme in Fiber’s billing practices. 

All told, so far this year Robideaux has flagged roughly $10 million in payments. That’s on top of the $1.5 million in erroneous charges for unconnected sewer pump communication lines that were self-reported by then-LUS Director Terry Huval in 2018; Fiber reimbursed LUS with interest. The erroneous sewer pump payments led to a PSC audit, which in turn prompted Robideaux’s internal review. Earlier this year, Robideaux self-reported $8 million in payments for a Power Outage Monitoring System he said was overpriced and unnecessary. Huval, the architect of Fiber, disputes Robideaux’s central claims about POMS and vigorously defended the service in a press conference last month. The administration has not yet reported the $2 million in dark fiber services revealed this week. 

Robideaux went further and called into question Fiber’s business model. Robideaux’s narrative suggests that without LCG, Fiber’s biggest customer, the telecom would be insolvent. Fiber’s business model is hemmed in by the four corners of the Louisiana Fair Competition Act, which defines how Fiber can operate. Introducing his findings, Robideaux said he discovered a “pattern of revenue manipulation that is hard to ignore,” calling it “naive” to think the practices were intended as anything other than subsidies for Fiber, which if true would run afoul of the Fair Competition Act. The state law was enacted to prohibit a financial crutch for the telecom and protect the private companies that fought Fiber’s creation. Still, Robideaux insisted he wasn’t claiming that anyone connected had done anything illegal. 

Huval continues to defend the transactions. “As to the recent presentations, it should be noted that all LUS and LUS Fiber activities were brought to the City Administration, the City-Parish Council, and the Lafayette Public Utilities Authority for budgetary and overall approval,” Huval says in a written statement. He goes on to say that every LUS and LUS Fiber transaction complied with the Fair Competition Act, and was annually reviewed by the PSC.

Robideaux pointedly pulled punches on his accusations. Despite falling short of accusing the former director of breaking the law, he nevertheless attempted to paint a damning picture of the business practices overseen by Huval, who publicly opposed Robideaux’s shadowy bid to privatize management of LUS in 2018. Robideaux said the transactions hurt LUS ratepayers by increasing costs, but didn’t offer evidence of where it impacted utility customers directly. The last rate increase LUS sought was approved in 2016 to pay for a massive capital improvement package, which included a $120 million power plant that was later scrapped. The rate increases have not been rolled back. In closing, however, the mayor-president argued that Fiber was a net benefit for Lafayette, saying it was the city’s “calling card.”  

Fiber does hold tremendous debt. The system became cash positive a few years ago, but owes $105 million on bonded debt as of 2018 and another $27 million on loans from LUS. By law, LUS backstops Fiber’s debt to bondholders. Should Fiber default, which could come as a result of an illegal payment, LUS and its ratepayers would be on the hook. 

Robideaux’s allegations are now the future administration’s problem. While no timeline has been set out, Robideaux told the council he would deliver the new charges to the PSC before leaving office in early January. It’s the PSC’s discretion to pursue the issue any further. The commission’s audit of the sewer pump charges took about a year.  

The PSC has distanced itself from Robideaux’s investigation. Robideaux at one time said the PSC requested his review, which the PSC disputed in interviews with The Current. His story evolved to pin the origin of the inquiry on a conversation with a commissioner, who again disavowed any connection to the investigation. Public records indicate LCG was billed more than $35,500 for legal services related to the inquiry, conducted primarily by attorney Larry Marino. 

“I would like to have seen what he imagined were the next steps,” Councilwoman Liz Hebert says. Hebert has called for a “forensic” audit of the system, one with “no ties” to LCG, LUS or the mayor-president, to ferret out the controversy at Fiber and LUS. Critics have questioned the mayor-president’s motivation, characterizing the conduct of his inquiry as one-sided. Hebert says incoming Mayor-President Josh Guillory intends to go forward with her suggestion. 

What to watch for: What 2020 holds. There’s some indication that Guillory will continue to look into the issue, but it remains unclear to what extent that will be a priority. Guillory will need to install new directors for both LUS and Fiber, now distinct departments, and make his own determination about the agency’s solvency and business plan. Robideaux has spent the better part of a year prosecuting LUS and Fiber, finding the sister utilities to be in disrepair, but has not offered up a way to fix them. 

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New parish-level data highlights Lafayette’s continued economic struggles

The gist: For the first time ever, the Bureau of Economic Analysis has released parish-level gross domestic product data. Previously, local GDP data was only available for Lafayette’s metro area, which includes four neighboring parishes. The more precise geographic data gives better insight into the parish economy’s performance from 2001 to 2018. Not surprisingly, this new data further highlights Lafayette’s economic struggles.

3 min read

Lafayette fell behind Calcasieu in GDP rankings. In 2015 Lafayette Parish generated $14.1 billion in GDP, fourth in the state. But in 2016 the parish dipped to $13 billion and into fifth place, behind Calcasieu Parish. Lafayette posted $13.5 billion in GDP in 2018, still firmly behind Calcasieu’s $14.3 billion

The oil and gas industry has been cut in half. At the peak in 2014, oil and gas contributed $2.6 billion to parish GDP. In 2018, it’s languishing at $1.3 billion, which is lower than it was in 2001, the furthest back the parish-level GDP data goes. The decline has leveled off over the last couple of years, but it’s also showing no signs of recovery, despite the U.S. as a whole seeing record amounts of oil and gas production.

Construction is down almost 25%. In 2015, construction generated $618 million, but in 2018 posted $473 million in activity. This shouldn’t be surprising given the downturn in new housing construction and commercial construction permits.

Information industries are down about 35%. While there’s a lot of hope placed in information-based jobs powering the future of the Lafayette economy, these numbers tell a different tale. According to this new data, Lafayette’s information industries peaked at $495 million worth of GDP in 2007. They fell to $316 million 2012 and haven’t topped $331 million since. Despite some recent gains, the sector has not yet taken off.

It’s not all bad news. Some sectors are either showing recovery or never stopped growing. Manufacturing is making a comeback, posting $1.2 billion in 2018. Retail grew to $1.2 billion in 2018, tracking continued population increases over that same timeframe. Accommodation and food services has regained ground lost, recovering from a 2016 low of $487 million to hit $497.

Lafayette’s economy continues its transition from producing goods to providing services. This has been a national trend as well. In 2014, Lafayette produced $4.6 billion in goods and provided $9.7 billion in services. In 2018 that gap had widened. Goods produced fell to $3 billion while services provided rose to $10.4 billion.

Lafayette Parish dominates the MSA’s economy. The parish of Lafayette generates twice as much GDP as the four other parishes in its MSA (Acadia, Iberia, St. Martin and Vermilion) combined.

Why this matters: Now we know what we’re dealing with economically. With this new data in hand, we get a much clearer picture of what’s happening in the parish economy. It doesn’t vary dramatically from what we already knew, but it does clarify the scale of the area’s economic challenges. 

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News + Notes

Council Preview: LUS/Fiber review, new taxing districts, corrections funding and pay raises

The gist: This is it — barring any special meetings — the last-ever meeting of the Lafayette City-Parish Council. Wasting no political opportunity, the agenda is chocked full of hot-button items. 

3 min read

Six new taxing districts. With the EDDs likely to be the biggest showdown of the bunch, the council will take up separate votes on these new sales and hotel taxes to raise money for development around the Northgate Mall, Acadiana Mall, the University Avenue corridor, and Downtown, as well as redevelopment projects at the Holy Rosary Institute and the former Trappey’s canning plant. Incoming Mayor-President Josh Guillory just announced publicly opposition to the districts and urged the council to punt them to next year. Here’s an explainer on the ins and outs.

Robideaux’s report on LUS/Fiber. Outgoing Mayor-President Joel Robideaux will wrap up an eight-month investigation into “questionable” payments between consolidated government agencies and LUS Fiber. Along the way, Robideaux has suggested impropriety on the part of retired LUS Director Terry Huval, namely that millions were spent unlawfully under his watch to prop the municipal telecom up. The Louisiana Public Service Commission has distanced itself from the inquiry despite Robideaux’s insistence that it began with a PSC request. 

New funding agreement for city prisoners. The administration is moving money around — including selling a parking lot — to pay in part for a $1.25 million intergovernmental agreement to house city prisoners at the parish correctional center. Three separate ordinances cover a fund balance transfer, the parking lot sale and execution of the IGA, which stipulates that the money go to capital improvements at the jail. Note: This doesn’t address the funding dispute between the sheriff and parish government.

Restoring funding to the juvenile assessment center. Sheriff Mark Garber shuttered the juvenile assessment center, among other so-called diversion programs, citing budget problems. An ordinance by Councilman Kenneth Boudreaux, who works under contract for LPSO and has taken criticism for a conflict of interest, would restore $600,000 to JAC by transferring some fund balance out of the juvenile detention center.

5% pay raises for City Court employees. This is the last of a batch of pay raises for public employees passed recently. It adds another $55,000 in personnel costs to the city budget, which is facing more and more financial pressure. The council has adopted millions in increased salaries for the police department and other public employees.

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Charter transition committee struggles through the stickiest part of consolidation

The gist: Nearly wrapped up after three months of biweekly meetings (the every other week kind), the committee charged with smoothing Lafayette’s transition to government by two councils wrestled with the essence of consolidation: cost allocation between city and parish funds for common services. Members lamented political tension to come. 

3 min read

Hold up. What’s cost allocation? Glad you asked. It’s basically how LCG splits the check between city and parish money. LCG has one public works department, one planning department, one finance department, etc. But the law requires that city funds go to city services and parish funds to parish services. About two dozen accounting methods are used to determine how much each general fund — a pool of unrestricted dollars — should pony up to run the government. 

“People’s salaries are charged all over the place,” LCG Chief Financial Officer Lorrie Toups told the committee Tuesday. That about sums up the challenge. Cutting or adding cost from either budget — i.e. by either council — isn’t necessarily straightforward. 

The big elephant. That’s what Tax Assessor Conrad Comeaux called cost allocation. Essentially, observers expect that unlocking allocation is a pandora’s box for dysfunction in consolidated government. Both city and parish funds are constrained now, and adjusting allocations between two bodies could be the theater of political conflict going forward.  

City taxpayers bear most of the cost of consolidation. Around 80% of shared costs are paid for by the city general fund. Since Mayor-President Joel Robideaux took office, the city’s share has increased $20 million because of changes in allocation. The parish share fell $9 million. 

“It was a noble gesture to create this new form of government,” District Attorney Keith Stutes said in closing remarks. Stutes probed whether the city and parish general funds could be mixed into one account but backed away from the recommendation, instead pleading for the incoming administration and councils to find common ground. “I have to say it’s disconcerting to see that it’s devolved into a combat,” he said of city-parish budget tension. In 2016, Stutes sued LCG for not adequately funding his office, a cost on parish government mandated by the state, but later dropped it.

The committee will produce a memo of questions and recommendations. The committee meetings have often been an education in existing problems in consolidation. The transition kicked off late in the year, convened in August by Robideaux after a protracted legal battle left the charter changes in limbo. It appears the new councils will likely need their own education on how to move forward, and will do so under intensifying financial pressure. The final committee meeting is Dec. 18.

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LPTFA steps in to pay for stopgap sewer fix Downtown

The gist: The board of a Lafayette public trust voted to front the cost of adding a new sewer pump Downtown as an intermediate fix to the district’s nagging sewer capacity problem. 

2 min read

Clogged up. Downtown and Lafayette’s urban core in general suffer from aging and inadequate sewer infrastructure that developers say limits their ability to add apartment complexes and townhouses. The problem is particularly acute Downtown. Longterm, LUS is working on a $7 million infrastructure upgrade that would fix the problem and then some. But that’s not fast enough to accommodate what’s believed to be immediate demand for Downtown living. 

LPTFA stepped up with a stop gap. The deal calls for the Lafayette Public Trust Financing Authority to spend just under $1 million to build a lift pump station on Grant Street property owned by LPTFA. LUS will reimburse the trust. 

“We feel it’s in the interest of Downtown for us to step up,” Rebekke Miller says. Miller is the program coordinator for LPTFA, which is in the process of building a 70-unit market rate project near Downtown.  

1,800 beds. That’s the total new capacity expected to be unlocked by the lift pump, according to LUS. A 2017 market study estimated Downtown could support up to 1,110 residential units. Downtown Development Authority CEO Anita Begnaud says the station would be complete by December 2020, in time to accommodate several new developments, including the old federal courthouse. 

“I think you’re going to see another 200 units once [developers] see the capacity,” Begnaud says. Developers have been unable to secure financing for projects without commitments from LUS that the developments will have sewer facilities. Several smaller-scale developments are waiting in the wings behind the roughly 200 units of new housing currently underway. 

Why this matters. Downtown has been stuck in a development quagmire for years while advocates clamor to bring urban living to Lafayette. This year, employer announcements — Waitr and CGI — stoked optimism for a boom. But infrastructure limitations remain an obstacle. Downtown officials are pushing to create a new sales tax district to finance infrastructure improvements, which the City-Parish Council will vote on Dec. 17.

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Controversial political advocacy attracts new elected officials to fundraiser

The gist: Hardline conservative advocacy Citizens for a New Louisiana, which began life as a Facebook gadfly, attracted several incoming officials, including the mayor-president-elect, to a fundraiser and social gathering last week. 

4 min read

Five incoming councilmembers and the mayor-president-elect appeared. Michael Lunsford, Citizens’ executive director and the organization’s front man, says 60 attendees showed up for a social affair that spilled out of his office Downtown, in the refurbished Gordon Hotel building on Jefferson Street. The event was ticketed with a suggested donation of $150. Josh Guillory gave a short speech in a relatively brief appearance, according to Lunsford. During the campaign, Citizens called into question Guillory’s conservative bonafides and authenticity. 

Lunsford outlined a vision for growing the organization in remarks to supporters. He has added a part-time staffer to help with administration, and he intends to take on issues in neighboring parishes, with the long-term vision of replicating the Citizens “model” around the state. Lunsford himself does the bulk of the work, along with what he describes as a network of volunteers. He indicated some growing financial support, but declined to give figures. In 2018, Citizens took in $130,132, mostly from six unidentified contributors, according to a public tax filing provided by Lunsford. 

Council members say they were getting to know their constituents. Democratic Councilman Pat Lewis, an incumbent and the only incoming city councilman to appear, couched his interest as not one of support but of an open mind. Incoming parish Councilman John Guilbeau, a Republican, acknowledged the group’s controversy and lamented growing political strife in Lafayette Parish. Guilbeau described Citizens’ work as well-intentioned if overheated.

“Let’s stop this damn divisiveness,” Guilbeau says, conceding Citizens’ reputation. Guilbeau was one of four incoming parish council members who appeared. “But it goes both ways. Sometimes their rhetoric or information is a little sketchy. 

Citizens has been rebuked for divisiveness and misinformation, and at one time was the subject of a state ethics investigation. Sparked by a complaint filed anonymously to the board, the investigation sought out whether Citizens received contributions specifically to pay for a 2018 ad campaign overtly opposing a tax renewal for the parish library system and failed to disclose its donors. Citizens’ nonprofit structure doesn’t require releasing information about donors, but funds directly related to political activity would be subject to campaign finance disclosure. Lunsford’s group filed finance reports with the ethics board, claiming expenses related to that political campaign but listed itself as the only donor. The Current reported the investigation on Sept. 11 after obtaining court records related to it, which are typically confidential. The Louisiana Board of Ethics decided not to pursue the matter a month later and closed the file, saying in a letter addressed to Citizens’ attorney that the board had found “no evidence” that Citizens received money requiring campaign disclosures

“They reviewed the facts and they found us in compliance, which we knew we would be,” Lunsford says, calling the underlying allegations in the anonymous ethics complaint “a bunch of hooey.” 

Even council members who took fire from Citizens RSVP’d. Councilwoman Nanette Cook, who is currently on the consolidated council and beat out a candidate more closely aligned with Citizens for her incoming seat on the city council, says she wanted to hear what Guillory had to say — a rare opportunity for an audience with a busy public official. (Lunsford says Guillory rehashed campaign talking points. A request for comment from Guillory was not returned.) Cook and fellow incumbent councilmember Kevin Naquin, headed for the parish council, were at one point advertised as confirmed guests but were unable to attend. Both have taken shots from Citizens.

“We have a new government, and regardless of what they think of me, I’m ready to get on board and move this community forward,” Cook says. She anticipates blowback on her support for six economic development districts before the council Dec. 17. Lunsford will sit on a panel Wednesday evening organized in opposition to the districts. “We don’t really agree on a lot of things,” Cook says.

Why this matters. Citizens has been near the center of big local controversies, most prominently digging in on major tax propositions, often with misleading information, and stoking intolerant outrage on lightning-rod social issues. Now, with a shingle hung Downtown, it’s become a brick and mortar organization that attracts attention from local officials.

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Experts sound the alarm over Garber’s cuts to diversion programs

The gist: After what his office called “repeated attempts to secure critical funding for daily operations,” Sheriff Mark Garber confirmed Tuesday that he is cutting 42 mostly corrections jobs from his workforce of 748. A press release announcing the reduction in personnel included more cuts to diversion programs started and expanded under his predecessor and long held up as successful […]

6 min read
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