The challenges facing Lafayette’s economy may seem overwhelming but you can help right the ship by spending money or making it, and that means more than just shopping local.
The gist: In an effort to help fight community spread of the coronavirus, Gov. John Bel Edwards ordered the closure of all bars statewide and the closure of all dining rooms in restaurants until April 13. The order goes into effect at midnight. Restaurants can still serve takeout and drive-through (so please do what you can to support our local establishments), but these changes create major challenges to our area’s servers and bartenders.
$18,000 is the average annual wages of bartenders, waiters, dining room and cafeteria attendants, bar helpers, and hosts and hostesses in the Lafayette area, according to the Bureau of Labor Statistics.
$21,000 is the survival budget for single adults in Lafayette Parish as calculated by the United Way of Acadiana in its ALICE report, which set out to quantify the working poor, or those people who have jobs but don’t earn enough to cover the cost of living in their area.
5,870 are the number of bartenders, waiters, dining room and cafeteria attendants, bartender helpers, and hosts and hostesses who work in the Lafayette area, according to the Bureau of Labor Statistics.
$1,500 is the amount each one of these workers stands to lose in wages if bars and restaurant dining rooms stay closed for a month — though it may be more than that since the next month is often a prime time for dining out because of events like Downtown Alive! and Festival International. And because we’re in the heart of crawfish season.
And this shutdown may last more than a month. The CDC has provided guidance that all Americans should avoid any event with more than 50 people for the next eight weeks.
The Louisiana Restaurant Association is encouraging workers whose employment has been affected by the coronavirus to reach out to the Louisiana Workforce Commission. It’s working to expedite applications for unemployment assistance, and you may be eligible to start receiving payments.
The gist: On Monday, the price of oil had its greatest one-day plunge ever, and coronavirus officially arrived in Louisiana. Markets tumbled nationally, with signs pointing toward a global recession on the horizon. These developments pose threats the Lafayette economy is particularly vulnerable to.
Since launching 2008, LUS Fiber has missed its financial projections by $70 million. That puts it in a vulnerable position.
The gist: This week’s agenda is notable for what’s not on it. The council has blocked from the agenda the mayor-president’s bid to repeal five special taxing districts created in February. Other legislation takes aim at the mayor-president’s authority over council procedures and proclamations. The kumbaya between the new administration and new councils appears to be fading.
The gist: Only a few weeks in, and the new Parish Council is beginning to grapple with its budget woes. Consolidated government’s chief financial officer painted a bleak picture: Funds for the jail and courthouse will dry up, and there’s no money to add more early voting locations.
Efforts to save hundreds of thousands of dollars by consolidating IT departments could create risks that cost Lafayette millions of dollars. We need experienced leadership in place first before considering this proposal.
▸ The gist: The city and parish councils have another slow night scheduled for their meetings on Feb. 4 with a smattering of housekeeping. The only big items on the agenda are two resolutions to approve restoration tax abatements for redevelopment projects.
▸ Tax breaks. There are two resolutions on the agenda to approve requests for restoration tax abatement. This state program allows owners to invest in restoring their properties without having to increase their property taxes for a period of time because of the increased value of their restored property.
- University Place Apartments. These apartments were purchased for $12.5 million by Alpha Capital Partners of Pennsylvania through its Opportunity Zone Fund last year. The plan is to invest $7.5 million in renovating the interior and exterior of this building. If approved, this five-year restoration tax abatement would mean that this property will forego generating an additional $564,995 in property taxes.
- Park Place Surgery Center. This property was purchased for $4.1 million by local investment group Imperial Property Holdings last year. The plan is to invest $5 million in renovating and expanding the building for a new surgery center. If approved, this five-year restoration tax abatement would mean that this property will forego paying an additional $675,995 in property taxes.
If both are approved, over the next five years LCG will be giving up more than $1.2 million in additional property taxes. Both projects were announced last year as moving forward with no mention of the need for potential restoration tax abatements to be financially viable.
▸ A new Professional Services Review committee. This five-member committee reviews and recommends approval of contracts with LCG. The amended chartered required a reconfiguration of the committee. Each council will nominate one member, both to serve through the end of 2023. The mayor-president has one appointment, and the other two seats are taken by the public works director and the utilities director.
▸ An intergovernmental agreement to give city fire department equipment to parish fire protection. This agreement allows the parish to use 10 outdated radios that the city fire department isn’t using anymore. But determining how the parish is allowed to continue using city equipment given the split councils is an issue that will need to be addressed moving forward.
▸ Donating adjudicated properties to Holy Family School. The two properties in question are at 139 S. Bienville St. and 213 S. Bienville St.
Lafayette’s roads suck and both our city and parish budgets are in disarray. But that doesn’t mean we can’t do something about this problem. We just need to reprioritize maintaining the infrastructure we already have.
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.