If the public doesn’t have all the facts, it’s in part because he’s not providing them. The bottom line is Robideaux’s account raises some red flags. Here are a few of the big ones.
The gist: For a couple of months, it seemed Lafayette’s “monument to indecision” was finally about to come unstuck. A deal to sell the old federal courthouse Downtown for private redevelopment was presented to the City-Parish Council Tuesday night, and the council tabled it until Nov. 20, sending the deal back to the administration for wholesale revision. The proposition now seems in jeopardy.
Some background: While we usually single out the old federal courthouse, the 2-acre site along Jefferson Street is really three structures owned by the city — a former library, a police substation and the old AOC facility. The property is generally considered a blight on Downtown’s main drag and has sat unused for the past decade while leaders argued whether to put it into private commerce or use it to site a new parish courthouse. Mayor-President Joel Robideaux moved the ball farther than any previous effort, negotiating a deal to sell the property for $1.4 million to a group fronted by Downtown developer Jim Poche and financially backed by E.J. Krampe. The group, selected unilaterally by Robideaux from five respondents, proposes a 68-unit mixed residential and commercial development. The deal came before the council for final vote and was expected to pass at long and laborious last. Then things went awry. Now you’re caught up.
Council members have three basic problems with the contract:
- Asbestos cleanup and some electrical work would be paid by the city out of the $1.4 million it earned on the deal
- Those costs could go up unchecked, and the council won’t have any say in it
- The city would pay for sewer upgrades, guesstimated at $400,000, to accommodate the development while other developers are often required to pay for their own upgrades.
“I’ve heard a lot about those dreams over the past 11 years,” Councilman Jay Castille said of the vision for the redevelopment. “I don’t see any of that in these documents.”
CARLEE. IF YOU’RE WATCHING. PLEASE ANSWER. Seemingly no one, save Assistant City-Parish Attorney Steve Oats, was there to speak for the deal or offer definitive answers to the council’s inquisition. Oats summoned former LCG Planning Director Carlee Alm-LaBar, not in attendance, to answer some questions from the council, at one point asking aloud, as if to the heavens, “Carlee, if you’re watching, please answer.” Robideaux was conspicuously absent from the proceeding, leaving the measure without a real champion. Council members were clearly concerned that the contract offered power to the mayor-president to approve cost overages without their input, yet Robideaux was not there to settle their stomachs on the issue. Communication between the council and administration is a festering problem.
If you can’t flush a toilet you can’t do development. That’s the way a local architect explained the Downtown sewer problem to me. “The Romans figured that out over 2,000 years ago,” he added. The urban core’s lack of sewer capacity is a key variable in this deal, and Robideaux has sought to leverage a public asset to address what’s become a sticky problem for Downtown development. As I’ve reported previously, 100-year-old sewer lines are nearly maxed out and unable to accommodate more residential development in the urban core. Developers have walked away from projects after LUS sewer officials told them the lines can’t handle the stress. Robideaux’s idea here is to flip the old federal courthouse and use the proceeds to invest in badly needed sewer infrastructure. Oats told the council the improvements tentatively planned would expand capacity beyond Downtown. In principle, that seems to make a lot of sense. Council members said that was unfair.
The vote count was always going to be tight. In hindsight, it shouldn’t come as a surprise that discussion didn’t go smoothly. Clearly, council members felt unequipped to move forward with information presented to them, and more or less the same block that has always opposed redevelopment of the site remains, led by Jay Castille and Kenneth Boudreaux. But even members most likely to support the deal in principle raised eyebrows. “I love the idea of this, but I have some concerns about how it’s written now,” Liz Hebert said. That’s a communication problem — and it appears to be on Robideaux.
The gist: If the Bernhard Capital Partners/NextGEN proposal to take over operations of LUS has any council support at this point, it was hard to see it at Tuesday night’s council meeting. In an encore performance, this time before the whole council, NextGEN’s management team attempted to make the case for how a private company can do a better job than government running Lafayette’s 120-year-old municipal utility company.
Council to Robideaux: It’s time to state your intentions. Councilman Bruce Conque was insistent Mayor-President Joel Robideaux — who left the meeting long before it was over — state his position on the proposal and whether the effort to privatize LUS will be opened up to other potential suitors (Entergy and CLECO are both interested). Absent Robideaux’s willingness to put his own political capital behind this new direction for LUS’s future, Conque said the administration should move forward on hiring a top-notch director, one who should be attracted with a highly competitive salary.
Right now, LUS is run by an interim director, following the early retirement of longtime Director Terry Huval. Conque’s language was added to a resolution formalizing an agreement between the council and the administration that a new director not be named until the smoke clears on the idea of outside management of LUS.
William Theriot put a pressure cooker time limit on the deal. After NextGEN’s presentation — which Councilman Jared Bellard asked for but requested be abbreviated to less than 20 minutes from the LPUA version — Councilman William Theriot turned to City Attorney Paul Escott and directed him to draft a resolution that would effectively wash the council’s hands of the NextGEN proposal or any others like it for the time being. That resolution, also aimed at easing anxiety the NextGEN proposal has caused for LUS employees, will state that LUS is not for sale, for lease or open to any takeover of its operations and management.
While non-binding, the resolution would ice potential suitors with a clear statement of the council’s position on monetizing LUS. Council members have complained that public criticism has been trained on them, despite not initiating LCG’s flirtation with NextGEN.
Theriot, a staunch and vocal conservative, put his foot down to defend a government-owned monopoly. After months talking with “the owners and consumers of LUS,” he tells The Current he was ready to nip this deal in the bud.
“This is not what the people want,” he said. “Then why are we going through the motions?”
What happens now? We’ll know in two weeks where Theriot’s eight fellow council members really stand on NextGEN’s proposal. He only needs four more votes to effectively kill the deal.
The gist: At last week’s presentation to the Lafayette Public Utilities Authority, NextGEN officials indicated with confidence that LUS’s hundreds of employees need not worry about their civil service protection if NextGEN takes over management of the public utility.
“We don’t have any specific intention to replace civil service employees with non-civil service employees,” said Jeff Baudier, who joined NextGEN’s parent company, Bernhard Capital Partners, in April after almost two years with CLECO.
And to make the company’s position perfectly clear, BCP founder Jim Bernhard chimed in: “We don’t want to weasel around it that the civil service employees that do their functions today will remain. And with some attrition we’ll hire another civil service employee. That’s not going to change. It’s not our intent. It’s what we’re committed to.”
Not so fast, says Adam Marcantel, municipal civil service director. “From what I’ve seen, it’s just not going to be permissible,” he says of continued civil service protection, like job security and equitable pay, for LUS employees under the proposed management contract with NextGEN. “That’s not to say a way doesn’t exist out there that I haven’t considered or thought of. But from what I’ve looked at and the ideas I’ve tossed around in my mind in trying to figure out how can we make this work, I don’t see that there’s going to be a resolution as long as the management structure is that the [civil service] employees would answer to an employee of NextGEN.”
Marcantel says civil service employees are able to perform their duties without political pressure. “Civil service positions exist to serve Lafayette Consolidated Government and by extension serve the public. That’s what we do, and that’s why we enjoy the protections that we have,” he explains. “To have civil service employees serving the interests of a private company is not compatible with that.”
What’s next? Marcantel plans to attend Tuesday’s council meeting, where NextGEN will again make its pitch — though email records show that Councilman Jared Bellard asked that the company cut the lengthy presentation it made before the LPUA to a summary of 20 minutes or less. Marcantel is prepared to explain his position to the council.
If the NextGEN proposal moves forward, the director says the municipal civil service board would get involved and likely seek a legal opinion from its attorney, George Armbruster. “I’m waiting to see what happens,” Marcantel says.
File this in the “curious” category: The retention of civil service classification doesn’t appear in NextGEN’s 35-page proposal to manage LUS, a deal that would give LCG $140 million in cash and relieve $184 million in LUS debt, along with providing $920 million in continued in-lieu-of-tax payments and up to $64 million in conditional payouts.
I emailed Baudier late Monday afternoon for clarification on this issue and haven’t heard back.
▸ The gist: At long last, the public got to see NextGEN Utility Systems/Bernhard Capital Partners’ proposal to run LUS on full display. NextGEN representatives discussed the findings of the startup firm’s months-long assessment of LUS at a briefing Tuesday, arguing that the system is stuck in the 20th century but primed to make technological leaps. Here are some big takeaways:
- It’s a 40-year contract
- There’s $140 million in cash and $184 million in debt relief on the table, plus $920 million in continued in-lieu-of-tax (ILOT) payments and $64 million in conditional payouts. Total compensation here is $1.3 billion.
- LUS employees would remain in civil service.
- NextGEN intends to headquarter its operations here and grow it to run 50 utilities. Lafayette would be the first.
- Jim Bernhard was born in Lafayette and used to eat at Judice Inn.
- Cleco, Slemco and Entergy are sniffing around now.
- NextGEN thinks LUS is reliable and affordable but stuck in the 20th century.
▸ Stuck in the 20th century? Is that right? Sure. The critique that LUS is slow to adopt innovation and is handcuffed to aging power generation is not new. In fact, some local electrical nerds (I say that with both love and self-loathing) —Lafayette’s Electrical Discussion, well worth the Facebook follow — last year circulated its “State of LUS” with many similar findings. I’ve actually reported on this a little myself. LUS was nearly burned in the last decade on decisions to reinvest in a coal plant the utility co-owns with Cleco. Cleco runs the plant on LUS’s behalf, even though it’s a minority owner.
Jim Bernhard, the BCP principal, hammered the point that LUS already contracts out for the bulk of its power generation, which is certainly true. In doing so, he implied Lafayette precariously lacks local generation capacity. Yes, only 40 percent of power used by LUS customers comes from generation that LUS owns, and virtually all of that comes from LUS’s coal plant. But to be clear, LUS owns plants capable of generating most of its peak demand should the need arise, like a hurricane. The plants are just so old and inefficient that they generally aren’t called upon to be used. Instead, LUS buys most of its generation very cheaply at market, the result of a strategic decision made in 2013.
In its defense, LUS upped its renewable portfolio this year through a purchase agreement to buy wind energy from the Midwest. The utility has installed smart meters, which Bernhard’s team say are underutilized, and has pursued plans to build new natural gas generation, although Bernhard and others say the type of plant considered is too expensive and outdated. There’s a legitimate policy debate to be had about LUS’s approach to new technology. LUS could become a “utility of the future,” to borrow NextGEN’s buzz phrase, but the bigger question is whether LUS needs NextGEN to get there.
“There’s nothing in this proposal that can’t be accomplished by hiring a highly skilled and experienced director,” Councilman Bruce Conque tells me. “Everything in there is about management.”
▸ Gee, $1.3 billion seems like ILOT of money. It is! But there’s some contention here. Most of the $1.3 billion (71 percent!) is achieved by $920 million in ILOT payments, which LUS already pays to make up for the fact that it doesn’t pay taxes. NextGEN projects its ILOT substitute willl average $23 million per year over the contract’s lifetime. That’s about what the ILOT currently pays. But some argue LUS’s ILOT payments would outgrow the projected average offered by NextGEN, even as utility revenue has more or less flatlined in the last few years. It’s unclear how NextGEN would calculate the payments year-to-year. Even if NextGEN’s version of the ILOT grows, however, it’s hard to call it a net gain. It’s probably best to think of this as a $324 million deal — the cash payment ($140 million) plus the debt relief ($184 million).
▸ NextGEN may need us more than we need NextGEN. Even presenting a management team in place with extensive experience, Bernhard acknowledged that Lafayette would be the first utility managed by NextGEN on its quest to Fortune 500 status and acquisition of 50 utilities. Julius Bedford, an associate with Bernhard Capital Partners, marveled at LUS’s customer service reputation, workforce and revenue stability. “It’s not every day that you come across an asset or company like LUS,”he said. An investor-backed startup like NextGEN needs a win to signal to investors and other utilities that its model works. That means Mayor-President Joel Robideaux ought to have a lot of leverage to negotiate better terms if he chooses to go forward with the proposal.
▸ What to watch for. Whether and how this progresses. The council sent a clear signal on Tuesday that it won’t take the initiative on Bernhard’s bid to run LUS, although NextGEN will reprise its performance at an Oct. 16 council meeting. The ball appears be in Robideaux’s court if he wants to get a deal done. The next step would be a contract brought to the City-Parish Council in the form of an ordinance. But bear in mind there are now other interested parties. Representatives from Cleco, Entergy and Slemco were in attendance, and Entergy reps confirmed they want a shot at the action. Both Cleco and Entergy have broached the topic with Robideaux before, though he says they pursued full buyouts of LUS, not management agreements.
“If [Robideaux]’s gonna pursue this, he’s going to have to state it,” Conque says. “And open up the process to anyone that may be interested.”
▸ The gist: C. Michael Hill, one of the Lafayette Bar Association’s “go-to guys” for continuing education presentations on ethics and professionalism, was sworn in Tuesday morning to replace embattled — and now multiply convicted — City Marshal Brian Pope. While Pope appeals his felony perjury and malfeasance convictions, he is automatically suspended without pay and has lost all the benefits of his office; City-Parish Councilman Bruce Conque said Pope can retain his city health insurance if he pays 100 percent of the premiums.
▸ The ordeal had to be really challenging for marshal employees. Let’s go out on a short limb here and assume it was a “you’re either with me or against me” atmosphere at the marshal’s office over the past few years. No one — especially a public employee, much less one in law enforcement — should be put in that position, and it could not have been easy for the employees of the marshal’s office to endure this level of anxiety resulting from their boss’s self-inflicted legal wounds. The unfortunate situation the employees were in was recognized repeatedly by the city judges — who appointed Hill — and Hill himself. The message was clear: Marshal employees’ jobs are safe, they’re a competent lot, and they should all be breathing a collective sigh of relief.
▸ Hill, a former federal magistrate judge now in private practice, says he’s not yet considered whether to seek permanency of the interim post but made clear he will be a hands-on marshal. “I’m not the kind of person to sit and watch things going on around me when I’ve got the ultimate responsibility,” he said after being sworn in. Local leaders have concluded that the law requires the city-parish council, as governing authority, to name the interim appointment to serve until Pope’s conviction is either upheld or overturned, and anyone interested in the post has to submit an application. This intriguing tidbit from The Advertiserconfirms that Pope could qualify for re-election in 2020 if the appeals process is still underway.
▸ Next steps. Years of legal troubles ignited by The Independent’s public records lawsuit are far from over for Pope, who is staring down seven new felony counts of malfeasance in office for lining his pockets with civil fees (he’ll be arraigned Oct. 23). Public records show that Pope continued to pay himself thousands of dollars in civil fees that are supposed to support the office operations even after the AG opined in January that state law prohibits him from supplementing his income. Pope had been taking in $220,000 a year, more than any elected official in the state. In interviews outside of the parish courthouse last week after Pope’s conviction, prosecutors confirmed ongoing investigations into Pope’s conduct.
▸ At his swearing in, Hill was not even sure what his own salary would be (“I have no clue”) — he said he answered the call to serve that came Friday, two days after Pope’s conviction — but was adamant that he would not take the fees in question. “That’s not going to happen,” he said. — Leslie Turk
What’s Jim Bernhard’s bid to run LUS really worth?
Dark money is poised to have considerable influence at the state and especially local levels.
Robideaux said through his spokeswoman that conversations with Entergy have continued intermittently since at least June of this year.
Chief among them: Can we get out of it?
Billed as a $4.1 billion deal, the offer is heavy on assumed indirect economic impacts.
City-Parish Councilman Bruce Conque says the appointment of former federal Magistrate C. Michael Hill as interim city marshal is a temporary replacement pending final action by the Lafayette City-Parish Council.