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Parish President Joel Robideaux speaks to the LPUA regarding the sale of Lafayette Utilities Systems on Tuesday, October 9, 2018, at City Hall in Lafayette.

Mayor-President Joel Robideaux on Wednesday admitted to some missteps in his handling of proposed changes to the Lafayette Utilities System.

Specifically, Robideaux said he should have publicly discussed the concept of private management before allowing a single company, Bernhard Capital Partners, privileged access to Lafayette Utilities System facilities and data.

“I could have done a better job of rolling out the discussions, in engaging the council and the public, but I didn’t,” Robideaux said in an interview Wednesday. “So we need to push the reset button and start these conversations over. With other entities now showing interest, I think that’s the way to go.”

Moving forward, Robideaux said he wants to meet with all potential suitors and, if there is enough interest, issue a formal solicitation for competitive bids.

Councilman Kenneth Boudreaux, meanwhile, is pushing a Lafayette Public Utilities Authority resolution requiring procurement of any LUS management contract through a “request for proposals,” or RFP.

Robideaux conceded he should have pursued an RFP in the first place.

“That’s certainly where we need to be now, which would suggest that’s also where we should have been from the beginning,” Robideaux said.

Bernhard, acting through an affiliate company, publicly proposed a 40-year management contract arrangement this month, prompting Entergy and Cleco to follow with letters requesting the same access and consideration afforded to competing companies. Entergy and Cleco both said they would be open to management agreements that don’t involve a sale or lease.

Robideaux said he spoke to Entergy and Cleco about privatization last year, at the same time he spoke with Bernhard, but that Bernhard was the only company interested in a deal that allowed the city to maintain ownership.

He said he shelved the idea until February, when the City-Parish Council refused to authorize a $240 million bond issue for capital improvements. The council opted instead for a $70 million bond issue.

That would have been the right point to solicit other non-sale proposals, Robideaux said, but he didn’t because no other groups were interested in that stipulation.

“There was no discussion from anybody about that,” Robideaux said. “There was only one interested party.”

Robideaux resumed talks with Bernhard, culminating in a nonbinding letter of intent allowing the company access to LUS facilities, books and documents. The Bernhard engagement was kept quiet until the online publication The Current broke the news in July that privatization was in the works, catching Robideaux and his Bernhard counterparts off guard.

Robideaux said he wants to gauge the interest of Entergy, Cleco and any other potential suitors in certain conditions before moving forward with an RFP, which, he said, would be done with input from council members. Those conditions include retaining local ownership, protections for current LUS employees and capital investment plans.

Robideaux said he won’t necessarily move into exclusive contract negotiations with Bernhard even if there is no formal solicitation. The Bernhard proposal “does not include specifics about what’s the actual spend on upgrades to our infrastructure.”

“What’s that going to be? When is that going to occur? What commitments are being made in that regard?” Robideaux said. “There’s still a lot of conversations that need to be had.”

Management contracts can take a variety forms, and capital investment is a key variable that is often overlooked at the front end, said Manny Teodoro, a Texas A&M University public policy expert who specializes in municipal utilities.

Paying for upgrades often translates to raising rates, something local politicians sometimes try to avoid by shifting the responsibility to private operators, Teodoro said. But private operators can be inclined to invest too rapidly for their own benefit if they can recoup those costs through higher rates.

“You have a perverse incentive in either direction,” Teodoro said. “The private operator has an incentive to invest a lot. The public operator has an incentive to invest too little.”

Bernhard officials have stressed the utilities authority would retain ultimate control over rates, but they have also acknowledged disagreement with LUS over the cost of complying with U.S. Environmental Protection Agency orders in April to address excess sewage discharges and other safety shortcomings.

Confusion over what, if anything, will happen to LUS has reigned since Bernhard’s involvement became known, and public comment at council meetings has been overwhelmingly negative.

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Bernhard officials have twice been granted a public audience before the council, but have struggled to gain traction on their proposal, which includes $324 million in upfront cash and debt relief and $23 million in annual payments. The annual payments are comparable to those LUS currently provides to the City of Lafayette in lieu of taxes.

“There truly is no next step,” said Councilwoman Liz Hebert, who chairs the utilities authority, referring to the Bernhard proposal. “No one has any intention of bringing this forward.”

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Follow Ben Myers on Twitter, @blevimyers.