Sewer deal discussed without vote; Cointment and three councilmen-elect express reservations

Parish President-Elect Clint Cointment

It took three-hours, plus for Ascension’s Parish Council to get through a single agenda item on Thursday:

(8) Utilities Committee Recommendations:
a) Review of negotiations of Construction, Operation, and Cooperative Endeavor Agreement between ACUD #2 and Ascension Sewer, LLC

Still insufficient according to skeptics including numerous citizens and four newly-elected officials including Parish President-Elect Clint Cointment.

“None of my concerns were addressed,” asserted Cointment whose preliminary list numbered 22-items, “many of them major issues which could be devastating to Ascension Parish in the coming years.  I looked at the financing and liability provisions, which are continually changing by the way, none of which were discussed tonight.  It is the people of Ascension Parish who bear the risk, the citizens who will pay and pay a lot.”

He would concede the Construction and Operating Cooperative Endeavor Agreement before the council is a cumbersome document “full of legalese” difficult for laymen to digest and understand.

“Which is why I have, and will continue to urge public meetings where our citizens can ask any questions they’d like and, hopefully, get answers in a less formal setting that prohibits the asking of those questions,” Cointment stressed.

Council procedure precludes the asking of questions by public speakers limited to three minutes at the microphone.

Prominent among the future parish president’s concerns is the “Operator Termination Fee” which was not discussed by any council member, the current parish president, any expert retained by Ascension Parish; nor was the provision found in an appendix to the agreement mentioned by any representative of Ascension Sewer.

LAME-duck council legacy is BANKRUPTCY if Ascension Sewer deal gets done

There has been a rewording of Appendix IV but to minimal, if any, effect according to Cointment.

According to David Fleshman of Breazeale, Sachse & Wilson, retained by Ascension to advise on contractual negotiations, rate-setting provisions “have been substantially reworked.”

David Fleshman (l) with Stephen Auton Smith of Ernst & Young

The current working draft does now provide the possibility for rate decreases if construction costs are less than anticipated.  $10,750,000 in cost overruns would, if the current draft agreement is approved by the council, trigger Ascension Sewer’s ability to seek a rate increase in the first decade of operation.  A $57.90 beginning monthly rate, with annual 4% increases the first ten years is retained in the agreement.

That initial rate is predicated upon the parish putting up $15.8 million, which necessitates a $2.5 million loan from the parish General Fund.

“Construction costs, whether or not there are overruns, are totally up to Ascension Sewer,” Cointment asserted.  “The parish has zero control over the process which is not subject to Louisiana public bid law.  They can hire whoever they choose, including any of the firms under the Bernhard Capital umbrella, and pay that firm as much as they like.”

Bernhard Capital Partners is the money behind Ascension Sewer, a consortium with Ascension Wastewater Treatment and two engineering firms included.

“Incentives to build up more and more debt, because the rate of return is a percentage on the debt, mean Ascension Sewer benefits by investing more and this agreement places no limit on debt accumulation,” Cointment explained.  “Ascension residents will feel it in rate increases; and the parish will feel it worse when the time comes for Ascension Sewer to cash out whether that’s in thirty years or earlier.”

Nine days of negotiation since the November 12 Utilities Committee meeting and outgoing Councilman Benny Johnson wanted to know if any “incentives to control costs” had been added to the draft agreement.  David Fleshman of Breazeale Sachse answered in the affirmative because there is a general “obligation to construct in accordance with all laws.” Which has nothing to do with contractual provisions which do not include “liquidated damages” or any other means to ensure/encourage “timely performance of subcontractors.”

“I think it could be more cleanly laid out in the agreement,” a seemingly reticent Fleshman would concede rather than stating the obvious (no, there are no incentives to control costs).  “The parish is protected substantially more than it was (nine days ago).  That’s not to say there aren’t areas which can’t continue to be improved.”

“Is this a one-sided document” favoring Ascension Sewer with the parish and its citizens bearing all the risk?  Outgoing Councilman Randy Clouatre, an ardent supporter of adoption even though his St. Amant constituents are some of the least affected, asked David Auton Smith of Ernst & Young.

“It’s more symmetrical…than it was a week ago,” Smith sort of answered.  “The risk is more balanced.”

Not exactly a ringing endorsement.

“Let’s hit the brakes, involve the public,” Chase Melancon, set to succeed Clouatre in six weeks, urged “public meetings.”

Chase Melancon

Melancon was joined by two councilmen-elect on Thursday.  The agreement’s most ardent supporter among the current membership, Councilman Daniel “Doc” Satterlee, will see his tenure expire on December 31.

“This sewer contract needs to pass the smell test,” quipped District 4’s next representative, Corey Orgeron.

Corey Orgeron

“It does not as far as the public is concerned,” he added, citing “ambiguity and vagueness in the terms which require a lot of trust.  When we’re talking about half-a-billion dollars it’s hard to trust without verification.”

Joel Robert, the next District 2 council representative did not pull any punches in urging deferral.

Joel Robert

“Some of the contractual terms are almost insulting,” he said.  “They can sell the company, even declare bankruptcy and we have to pay all that debt off.”

Ascension Sewer’s closer, Bernhard Capital heavy hitter Jeff Jenkins was batting clean-up.

“We’re making a significant economic and personal commitment to solve  very serious environmental issues that this parish faces,” he declared, warning that Ascension will “continue to grow…because it’s got a great school system, it’s got great leadership.”

Jeff Jenkins

(He) “doesn’t think there is one item that has come up that we haven’t taken very, very serious and tried to address in a practical manner,” Jenkins claimed while ignoring the Operator Termination Fee causing consternation to a lot of individuals not affiliated with Ascension Sewer, or President Matassa’s (great leadership?) administration, or the parish’s retained experts, or a certain number of current council members.

The ultimate question is whether that group of council members numbers six.