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.
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.
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.
Years of kicking the infrastructure can down the road has finally caught up with us.
The gist: Economist Loren Scott projects that the Lafayette economy will add 7,200 jobs over the next two years, according to his annual outlook presented Wednesday at an event hosted by One Acadiana. Scott’s rosy forecast rests on what he calls “heroic assumptions” about the growth of the U.S. economy and the prospect of more drilling activity in the Gulf of Mexico.
Spending millions of city dollars to build a road through a cane field isn’t a new idea. We can’t afford to keep making the same mistakes.
The gist: As expected, Mayor-President Joel Robideaux vetoed a council budget amendment that would have kept $7 million in a project to complete Louisiana Avenue. Instead the money will go into a stormwater diversion fund he proposed at budget introduction. The council could override the veto with a six-member majority, an unlikely outcome.
The gist: Last week, the City-Parish Council restored $7 million in funding to extend Louisiana Avenue, narrowly passing an amendment to next year’s budget that blocked the mayor-president’s proposal to move that money to undetermined drainage projects. Mayor-President Joel Robideaux is expected to veto the amendment and send the issue back to the council where a supermajority vote would be needed to overrule him.
Political discourse in Lafayette has veered so far off the rails that we can’t even agree on the basics. And now we have a whole host of thorny issues that we have to unpack while splitting one council into two.
The gist: Lafayette General Health announced the launch of a new $10 million innovation fund with investments from Acadian Companies, LHC Group, Ochsner and the Schumacher Family Foundation. The goal of this fund is to make investments in health care startups that can deliver good return and improve services for the system and its partners.
This is Healthcare Innovation Fund II. Was there a Healthcare Innovation Fund I? Yes, it deployed $3 million of LGH’s investment capital along with a match from the state into seven companies. All of those companies are still operating, and one of them, HealthLoop, was purchased by GetWell last year.
The investments have been successful. LGH is actively using products from five of the companies and working on the other two. The funds provide LGH an opportunity to earn income as an investor, supporting the organization as a whole, but also gives the system access to new concepts and innovations in health care.
Now LGH is taking its investing to a whole new level. For the new fund, LGH is increasing the size of its investment pool to $10 million and is bringing along some heavy hitter investment partners in Acadian, LHC, Ochsner and Schumacher.
“You’ve got a billion dollar not-for-profit health system in Lafayette General, a publicly traded home health company worth almost four billion dollars, one of the largest employee-owned company and ambulance service providers in the country, the guy who started one of the largest emergency room management companies in the country, and another $3 billion statewide not-for-profit health system in Ochsner,” says Cian Robinson, LGH’s executive director of innovation, research, and real estate investments. “So you’ve got some really smart people, subject matter experts, sitting around the table that are very quickly able to vet if this is good for their company,” he adds. “For me what that does is lessen risk, in particular execution risk.”
This fund will make investments ranging from $250,000 to $1 million per startup. LGH is looking for startups that offer solutions that drastically improve patient care/experience, accelerate the move toward value-based payments, innovate backend automation/productivity, or use data or deep learning to affect health care delivery.
But LGH and its investment partners aren’t just providing cash. “All of the folks mentioned as investors have agreed to open up their ecosystems,” says Robinson. “So the startups we invest in get to work with our CIOs and senior VPs to help them with product-market fit. And we help them with going into the market. It’s truly a sandbox for health care startups to thrive in.”
LGH is also looking for additional investors. Robinson says they’ve raised $6 million of the fund’s $10 million target, so there’s still $4 million available. Minimum buy in is $250,000 with the maximum investment being $2 million. LGH charges no management fees, as it’s covering the cost of operating the fund. Interested investors can reach Robinson at email@example.com, as can startups seeking investment.
The system is also running a real estate fund that’s actively investing and in the coming months is planning to launch a $50 million Opportunity Zone Fund, which will primarily focus on developing real estate on LGH’s campuses located in Opportunity Zones, like the Oil Center.
Why this matters: LGH is Acadiana’s largest not-for-profit health system, so these funds are important just from the perspective of strengthening its bottom line while providing access to innovations that improve operations. But it’s also important because it’s an opportunity for Lafayette to leverage its economic strengths by combining the efforts of some of its most significant employers. And all this energy is focused on health care, one of Lafayette’s industries with the greatest potential to make up for the billions in GDP lost in the oil and gas industry.