Over the last ten years, spending on virtually every government function has risen — except Public Works.
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.
The interim Lafayette school superintendent wants to make her job permanent.
The gist: From the jump, the new mayor-president is moving on his campaign promises. He’s got big plans to streamline consolidated government in the face of mounting financial pressure on both the city and parish budgets. Now sworn in, along with two brand new councils, Josh Guillory promises he can do more with less.
“We face a host of challenging conversations, and we are ready,” Guillory said Monday in his inauguration remarks. He framed 2020 as a pivotal year for Lafayette Parish, saying its “future as a family-friendly, business-friendly place hangs in the balance.”
It all starts with restructuring the Public Works Department. He proposed splitting transportation and drainage off from the agency into two separate departments, each with appointed directors of their own. Guillory argues that siloing the divisions will force focus on common sore spots for the public: traffic and stormwater management. Exactly how the reorganization will work in practice remains unclear, particularly when it comes to areas where the departments would overlap. Still, the proposal moved ahead and will be up for final adoption later this month.
“I haven’t had time to study the details on how this might play out,” interim Public Works Director Chad Nepveaux, appointed this week, said in responding to questions from newly seated council members. The plan eliminates four currently vacant positions — two mechanic and two environmental inspectors — and would zero out the associate director position currently held by Terry Cordick, who will retire later this year. Guillory said the savings realized from removing those positions from the budget would free up, at minimum, $67,000 for other purposes despite the added expense of new directors. Here are the proposed new salaries:
- Transportation Director: $120,000
- Drainage Director: $108,000
- Public Works Director: $125,000
It does appear that Public Works could benefit from reorganization. Whether this particular proposal addresses the right problems within public works – including millions in infrastructure maintenance backlogs for drainage, roads and public buildings — is a separate question. One criticism of the proposal is that the most pressing issue facing the department is a lack of resources and manpower to address regular maintenance. Another is that the department is already top heavy and suffers from poor cooperation among its divisions.
“If the system was what it should be, there wouldn’t be much of an outcry,” Pam Granger, Youngsville’s city engineer, tells The Current. She sits on a transition committee convened to review Public Works and recommend changes. That committee did not produce or review the proposal introduced Tuesday night. Councilwoman Liz Hebert tells The Current she supports the administration’s proposal, but adds that she believes constituents would like to see more “boots on the ground” to shave delays on service requests; Guillory insists that the restructuring will not worsen service.
Work has also begun on reviewing the Unified Development Code. On Monday, Guillory doubled down on his campaign promise to “repeal and replace” the UDC — which centralizes a number of zoning and building regulations into one place — with something more business friendly, promising to loosen regulations and tinker with processes critics say have slowed down permitting and increased costs for development. A 40-person committee, which includes many vocal critics of the UDC alongside campaign supporters of former Planning Director Carlee Alm-LaBar, Guillory’s opponent during the election, met in late December to start work. Alm-LaBar played a key role in developing the UDC while serving under the administration of Joey Durel. How much of the existing regulations remain will determine whether the UDC is truly replaced or merely tweaked.
Guillory has also promised to pursue an independent audit of LUS. Linking the effort to the internal investigation carried out by Mayor-President Joel Robideaux in the latter half of 2019, Guillory committed to further vetting LUS’s financial practices. Robideaux’s inquiry surfaced accusations that LUS made millions in improper payments to LUS Fiber in an attempt to prop up the municipal telecom. Just before leaving office, Robideaux suggested Fiber’s business model isn’t working. The results of the inquiry are now in the hands of the Public Service Commission, which has limited regulatory oversight over Fiber.
Lowell Duhon and Kayla Miles will remain interim directors of LUS and LUS Fiber. Robideaux appointed Duhon, then his chief administrative officer, and Miles to those positions to carry out the inquiry, at one time inaccurately claiming the leadership shakeup was linked to requests by the PSC. Questions have been raised about Duhon’s and Miles’s qualifications, along with the pay increases that accompanied the appointments. Robideaux’s rebutted concerns of LUS’s consulting engineer, retained as a bond-holder requirement, about the appointments by arguing that they were temporary and meant only for the purposes of the review. The review wrapped with the release of his report in December.
What to watch for: How the new administration works with the new councils. Robideaux was widely criticized for poor communication of his initiatives, which ultimately soured his relationship with the council and other parish elected officials.
The gist: Lafayette Police Chief Toby Aguillard formally resigned earlier this week, ending what appeared to be a brewing standoff between the short-tenured chief and his would-be boss, Mayor-President Josh Guillory. The new administration is planning further restructuring of the police department, which could result in the ouster of Deputy Chief Reggie Thomas, according to several sources familiar with the administration’s thinking who spoke on the condition of anonymity.
The gist: Get stoked, readers. There are three council meetings Tuesday night. The 2018 charter amendments creating separate city and parish councils kick in this week with the first-ever meetings of the new bodies, sandwiching a joint meeting — also the first such convening.
A note about scheduling. Going forward, the two councils will meet on the same days, typically on the second and fourth Tuesdays. The parish council will convene first with the city council to follow. If a joint council is set, it meets in between.
Top of the agenda: Splitting up Public Works. This is the first big initiative from incoming Mayor-President Josh Guillory. As proposed, it would break off two new departments — each with their own new director — in a significant makeover of the Public Works Department. In essence, the shakeup breaks off separate drainage and transportation departments from Public Works, leaving behind a smaller general operations department. This item is up for introduction only.
Housekeeping: The joint council will also establish rules of order, formally appoint a clerk of council and vote in the professional services review committee — an advisory body that recommends contractors to the administration.
Not sure how the council split works? Check out this explainer.
The city and parish councils will separately vote to appoint a new city-parish attorney. For the most part, the agendas look pretty similar because the councils are just getting started. But we do get a view on how things will get divided.
Each council will appoint five-member zoning commissions. The amended charter creates separate zoning commissions for the parish and the city of Lafayette. The divided councils will thus make separate appointments.
The parish council is appropriating $650,000 for a sewage grinder for the parish jail. The money had been budgeted for three years without being spent, so it expired. By state law, maintaining the Lafayette Parish Correctional Center, which is in Downtown Lafayette, is a parish government responsibility. Jail sewage grinders is parish council territory.
The city council will take up some zoning changes and annexations. Again, these are introductory changes to the unified development code to accommodate a restaurant on S. College Road and annex an industrial property into the city, among other items. Under the previous consolidated configuration, council members outside the city of Lafayette would have also voted on these changes to land use and planning within the city.
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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.
“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.
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.
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.
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.
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.
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.
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.