The gist: UL Economist Gary Wagner predicts around 1% job growth for Acadiana this year, a rate that would beat statewide projections but still lag behind the nation. Speaking at The Acadiana Advocate’s Economic Summit Wednesday, Wagner was joined by a panel of business leaders optimistic about the region’s economy going forward.
Over the last year, Lafayette’s MSA has seen some of the best job growth since 2013, according to Wagner. “This recent growth is consistent with the long-run average growth in the region,” he said.
Oil and gas jobs are still down 40% since 2014. And Wagner said growth in oil and gas jobs is flat.
But healthcare has been picking up some of the slack. Wagner believes the industry will soon be the largest sector of the local economy. Oil and gas, once the largest industry in the area, is now fourth.
The biggest risk to his projections is a national recession. The U.S. economy is experiencing a record 126 consecutive months of growth, which is why there’s been a lot of talk about an inevitable recession, potentially soon. If a national recession does happen in 2020, Wagner said it would lower his projections for local job growth.
“We need to create more jobs with higher pay at a faster pace,” Wagner continued, chiming in on a discussion of his research into the causes of severe outmigration patterns in Louisiana. More than 90,000 residents have left the state over the last few years.
Business leaders are generally optimistic. “With the fall of oil and gas, we should be going down,” said John Bordelon, CEO of Home Bank. “But we’re not because of the resiliency of our people.”
Hotel/motel occupancy has been rebounding. While not fully recovered from 2014 highs, occupancy has been up in eight out of the last 11 months, according to Ben Berthelot, president and CEO of the Lafayette Convention and Visitors Commission. He credited some of that growth to public investment in sports complexes in Broussard and Youngsville, which have attracted sporting events, and LCVC’s recruitment of events to this area.
There’s still hope for growth driven by Opportunity Zones. Opportunity Zones are low-income areas where special tax breaks have been designed to encourage investment in development and companies. One Acadiana President and CEO Troy Wayman cited Lafayette General Health’s fund for Oil Center investment as one example. And commercial Realtor Flo Meadows shared her belief that 2020 will be the year to watch for Opportunity Zone investments, citing $500 billion in available capital in the program nationwide.
Oil execs blamed lawsuits and warned that a slow down in Texas could hurt local companies. Art Price, CFO of Badger Oil, linked an “all-time high” in the number of suits, which seek restitution for environmental damage from decades of drilling, to depressed drilling activity in the state. While the number of oil rigs has doubled nationally since 2015, Louisiana’s share has tanked and failed to recover. Most Louisiana activity is concentrated in the Haynesville Shale and deep waters. Price also warned that a recent bonanza in Texas’ Permian Basin could cool off, potentially hurting the many Lafayette companies that have deployed personnel and equipment there. The bottom line: Price projects 2020 to be more of the same stagnation as was seen in 2019 in Lafayette’s oil and gas sector.
GDP, personal income, employment, retail and real estate sales are all increasing, but without oil and gas recovering our economy is trending towards mediocrity.
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.
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.
Are they TIFs? How much are the taxes? Where are the districts?
Setting aside the philosophical argument about EDDs in general, the way these particular districts are designed is problematic.
Council Preview: paying for pay raises, Girard Park rezoning, Coca-Cola redevelopment, and daiquiris delivered
Tuesday is the City-Parish Council members’ second-to-last meeting ever, and they’re not phoning it in. Here’s what on the agenda for Dec. 3.
The gist: The City-Parish Council approved pay raises for the fire department, public employees, and the marshal’s office Tuesday. In total, these raises increase annual expenses for the city general fund by $3.7 million and the parish general fund by another $60,000. Without offsetting revenue gains or cuts to expenses, both the city and parish general funds are projected to go broke in the next few years.
Get caught up quickly: Earlier this month the council approved $3.8 million in raises for the Lafayette Police Department. Combined with funds approved Tuesday for city employees, the city general fund is projected to have to tap into more than $18 million of its $45 million fund balance over the next fiscal year. If nothing else changes, that puts the city general fund on track to go broke by 2023, according to numbers provided by LCG Chief Financial Officer Lorrie Toups. Parish general expenses will only increase $60,000, but that will reduce its projected fund balance by 60% and put it in the red by 2021.
No one questioned that these raises are warranted. While none of the votes to approve these raises were unanimous, not a single member of the public or council or the administration argued against the merits of giving them. Interim City Marshal C. Michael Hill went so far as to suggest that the pay increases for his deputies weren’t even raises. That’s because they hadn’t received pay increases in four years, yet their costs for expenses like health insurance premiums had gone up. So that means their take home pay has actually been decreasing over the last four years.
But there was no discussion about how to pay for these increased expenses. At the Nov. 5 meeting, Councilman Jared Bellard introduced a measure to eliminate all budgeted but vacant positions to free up money for raises for first responders, but the measure was deferred until the next meeting on Dec. 3. Approving these raises, the last consolidated council has set the next city and parish councils on a difficult path for their first term.
And there still might be one more raise to come. The only dissenting voice on the matter of giving raises to LCG’s civil service employees was City Judge Doug Saloom. While he didn’t speak out against giving these raises, he instead argued that his 36 employees shouldn’t be left out just because they work under the judicial system. He was encouraged to submit an introductory resolution by today’s noon deadline to get onto the agenda for the next council meeting and indicated he planned to do so. Given the number of employees, though, any additional expenses incurred by giving these raises should be modest relative to the size of the financial challenges now facing the city’s budget.
What to watch for: Just how bloody next year’s budget cycle looks like for both the city and the parish. The parish has already cut budgets year after year, struggling to maintain even a $100,000 balance in its general fund. Now there will be even less room to maneuver with these increased expenses. The city was projected to tap into its general fund to maintain baseline operations for the next few years before the pay raises were added. Now the city general fund will be projected to fall below the 20% minimum fund balance set by LCG’s fiscal policy by 2021 and be completely zeroed out by 2023. Given that neither the parish nor city general fund balance can legally go below zero, more cuts are likely coming.
The gist: Outgoing officials want to go out with a bang. Tuesday’s council meeting, one of the last of the year, is chockablock with major initiatives. On the table: the LUS inquiry, more pay raises and six new taxing districts, one of which would finance developing a river walk on the Vermilion.
Robideaux opens the books on his LUS inquiry
At a special meeting of the Lafayette Public Utilities Authority, Mayor-President Joel Robideaux will unpack the findings of his ongoing inquiry into alleged improper payments at LUS Fiber. Robideaux intimated in an email last week that he would unseal interviews with LUS and Fiber staffers conducted by LCG lawyers. LPUA meetings are held at 4:30 p.m inside city hall.
Get caught up, quickly. LUS and 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 Robideaux in July. In October, 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 connected the review to the power outage monitoring payments. The PSC denies any involvement and has distanced itself from Robideaux’s attempts to link his efforts to its limited oversight. The controversy spurred terse exchanges between Robideaux and Councilman Jay Castille.
$3.7 million in new pay raises up for final adoption
Earlier this month, the council approved $3.8 million in new raises for city police; now it’s got three more raises to consider:
- $2.6 million for Lafayette Fire Department
- $1.1 million for all other LCG employees
- $137,000 for the city marshal’s office
If all of these raises get approved and these increases aren’t offset elsewhere in the budget, the city’s formerly flush general fund will be depleted in very short order. A proposal to eliminate currently vacant positions from the budget, in a bid to free up dollars for the pay raises, is also up for final adoption.
Six new taxing districts proposed, including one for a riverwalk
Robideaux has proposed setting up six new economic development districts that would levy 1% sales and 2% hotel occupancy taxes in each tax increment financing district to pay for infrastructure meant to spur development. The ordinances include cooperative endeavor agreements with various public and private partners. One proposal would create a TIF district to finance the development of a riverwalk promenade along the Vermilion near the old Trappey’s canning plant. The measures are up for introduction and would not be up for final vote until December. Here’s the list:
- Downtown Lafayette Economic Development District
CEA with Downtown Development Authority
- University Gateway Economic Development District
CEA with Townfolk Inc., and Oasis Community Coterie
- Trappey Economic Development District
CEA with Trappey Riverfront Development LLC
- Northway Economic Development District
CEA with Pride Opportunity Development Developers
- Holy Rosary Institute Economic Development District
CEA with Holy Rosary Redevelopment
- Acadiana Mall Economic Development District
No partner identified
EDDs are special taxing districts where additional taxes or fees are collected, and that money is then dedicated to projects benefiting those districts.
Girard Park Drive rezoning for new apartments
The rezoning will allow for the construction of a 140-unit apartment and office complex by Lafayette General. The rezoning has already received significant pushback from nearby neighbors who say a development of this size will hurt the character of their neighborhood. The zoning commission voted against recommending the changes.
The City-Parish Council’s decision to authorize $3.8 million in pay raises for the Lafayette Police Department was unanimous but not without complication. While the move is a victory for police, who said the new money was needed to stop a crisis in officer turnover, the added costs have put a spotlight on a weakening of the city‘s finances. And there […]
The gist: The public innovation trust created by the mayor-president is targeting Downtown and the Oil Center as potential anchor points for a new innovation district. Trustees discussed options last week at the body’s fifth and final meeting of the year.
Get caught up, quickly. Mayor-President Joel Robideaux spearheaded the creation of the parishwide Lafayette Public Innovation Alliance last year. Its focus is growing Lafayette’s innovation economy. There is still no clear plan for how to fund these activities or execute upon these visions.
Uh. What’s an innovation district? Innovation districts are a national trend. The idea is to find the part of your city with the highest potential for nurturing startups, designate it an innovation district, and then try to stack as many economic incentives as you can to give companies that locate there the best opportunity to succeed. Examples include cities like Chattanooga, Tenn., and Cambridge, Mass.
Robideaux wants LPIA to lead the process of establishing this innovation district. He worked with LEDA staff to conduct an initial analysis of where an innovation district should be located in the city of Lafayette. The results of this analysis, presented Wednesday, suggested the best locations would be Downtown or the Oil Center.
But designating an innovation district will require council approval. Today that means the City-Parish Council, but come January Robideaux believes it will mean the City Council. One added wrinkle is that LPIA was set up with the parish as its beneficiary, so the Parish Council has authority over nominating and removing LPIA’s trustees.
Details of what Lafayette’s innovation district will ultimately mean “still has to be determined,” according to Robideaux. Trustees Bruce Greenstein, Chris Meaux and Ramesh Kolluru discussed the need to conduct some comparative analysis and economic modeling and to garner feedback from companies that might move here to better understand what incentives should be offered in this innovation district.
Robideaux and his political consultant Joe Castille have been pitching major companies. The United Bank of Switzerland, KPMG, Deloitte and Medici Ventures were some of the companies that Castille, also a campaign consultant to mayor-president candidate Josh Guillory and the local Republican Party, mentioned in his remarks to trustees.
They’ve been pitching a vision for transforming Lafayette into a techno-utopia. That vision could involve everything from setting up an e-residency program so entrepreneurs can claim residency here and start businesses in Lafayette without actually moving here to making LCG a testbed for digital ledger technologies that are trying to improve the delivery of public services, to LPIA even issuing its own cryptocurrency.
Robideaux plans to start meeting with interested VC funds to better understand their needs. Castille believes there are hundreds of billions of dollars in investment capital available to be deployed into these types of technologies. He suggested that some of the companies he’s met with with have already indicated they want to establish a presence in Lafayette, if LPIA and LCG come together to make this vision a reality.
What to watch for: Where the innovation district ultimately lands and what role the trust will play under a new administration. Robideaux, who appointed himself chair, will stay on despite leaving office.
The gist: In early October, Lafayette Parish Sheriff Mark Garber filed suit against Lafayette Parish and Lafayette Consolidated Government, asking the court to decide what costs the parish is responsible for to run the parish jail. Filed in state district court, the suit claims the parish hasn’t been paying its fair share, and if Garber’s right, parish government is in an even deeper financial hole than anyone realized.
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.