Lafayette may not be able to afford the Guillory administration’s plan to pay for a new 1,000-bed jail through a public-private partnership. Billed as a way to finance construction without raising taxes, the deal may be too expensive for parish government to fund.
Guillory won approval from the Lafayette Parish Council in July to seek out a deal to replace the aging jail Downtown, which houses roughly 700 inmates, with a new facility through a private leaseback arrangement. One of the firms selected helped shape the Guillory administration’s pitch and has ties to Baton Rouge businessman Jim Bernhard’s private equity firm that tried to take over management of Lafayette Utilities System in 2018.
Under the plan, Lafayette Consolidated Government will pay a team led by Johnson Controls Inc. up to $10.5 million annually for 30 to 40 years to build and maintain a new jail and juvenile detention home near the sheriff’s office complex on Willow Street.
But LCG’s $10.5 million budget comes with a big asterisk, since the vast majority of that money is currently spent on costs LCG won’t be able to offload onto Johnson Controls, leaving a more realistic sum of about $1.5 million a year for the leaseback agreement.
That doesn’t begin to cover the costs Johnson Controls and its partners will incur just building the new jail, estimated at $100 million, let alone the cost to finance its construction and maintain it for several decades at a profit.
LCG’s costs won’t go away
The financing arrangement is uncommon but not unheard of. In essence, the private team will pay the upfront costs of building the facility. LCG will own the jail but pay the Johnson Controls team a fee to use it. Sheriff Mark Garber would still run the jail and staff it with local deputies.
Crucially, the Johnson Controls team is responsible for building maintenance only. The bulk of the operational costs will remain with LCG, specifically parish government, which would likely have to tap into reserves to make this deal work.
The vast majority of the money Mayor-President Josh Guillory would tap to pay LCG’s share currently go toward costs that won’t go away if LCG builds a new, privately maintained jail.
Of those revenues, almost 90% is tied to annual expenses LCG is stuck with under the proposed agreement, like $1.9 million in jailer services, $2.3 million in payroll and $3.2 million for inmate costs.
Those costs would leave just $1.5 million in this year’s budget for expenses the new jail’s lease payment would cover, excluding capital spending that typically comes out of savings and not annual revenue.
That’s well short of what’s needed to finance the construction cost of a $100 million facility on a 40-year term.
Parish government would be left to foot the bill with $10 million it has in reserves.
Nearly all other parish government revenues are legally dedicated to exclusive purposes, like drainage or road maintenance, leaving most of the parish’s other revenues untouchable.
The precarity of the plan has turned the idea from a budget-saving blessing into a fiscal Hail Mary of sorts in the minds of at least two Parish Council members who have led efforts to replace the aging Downtown jail.
“I’m excited that we are looking at exploring all options to find a solution to this. Once we receive this contract, if the numbers make sense, both for building and operating the jail, I’m in full support of it,” says Parish Councilman Josh Carlson.
“And if they don’t, that’s OK. We’ll go back to the drawing board because this is a problem that we do need to address. And we need to explore all options.”
Johnson Controls won a contract it helped shape
Guillory’s administration has already entered negotiations with a partnership led by Johnson Controls Inc., a massive multi-national company that won a no-bid contract from Louisiana State University early last year.
Johnson Controls scored part of an $810 million deal with LSU after joining forces with energy company Bernhard LLC, whose parent company Bernhard Capital Partners was at the center of former Mayor-President Joel Robideaux’s controversial exploration of privatizing Lafayette Utilities System. BCP sold Bernhard LLC in December 2021.
Bernhard entities have an interest in the new jail proposal as well. Two of Johnson Controls’ partners in the bid — The Lemoine Company and GHC Architects — are partially owned by Bernhard Capital Partners, according to The Advocate. The bid also includes Lafayette-based ADG Engineering.
The Guillory administration’s pitch for a leaseback arrangement to build a new jail relied heavily on materials and information from Johnson Controls after City-Parish Attorney Greg Logan sought input from the company about these types of deals prior to putting the idea before the Parish Council in July.
Logan says LCG’s choice wasn’t influenced by Johnson Controls and that the only other respondent to LCG’s solicitation was CoreCivic, a national private prison company, which was ruled out for failing to disclose litigation.
“It wasn’t precooked for Johnson Controls. They did provide me with all the education background…The information did come from Johnson Controls, but we are hiring an independent consultant to help us with the contract [negotiations],” he says.
Negotiations to iron out a deal with Johnson Controls are expected to take several months and have to be approved by the Lafayette Parish Council.
But if negotiations reach an annual lease payment of just a fifth of the $10.5 million tentatively authorized for the deal, LCG may face serious financial concerns trying to fund the new jail project.
For now, Parish Council members are waiting hesitantly to see what kind of deal Guillory’s administration can reach with Johnson Controls on annual lease payments and whether the idea is at all feasible.
“As soon as we get that back, it’s definitely going to be a discussion. And we might find that all we can afford is a 300-bed jail,” Parish Councilman Kevin Naquin says.
“So, we might not be able to pull this off. I don’t know. That is my concern.”