051719 Ascension Sewer Deal Map

GONZALES — Ascension Parish government agreed Thursday to start exclusive negotiations with a private partnership involving former Shaw Group CEO Jim Bernhard to bring a long-sought regional sewage treatment system to the parish's east bank.

Ascension Sewer LLC, whose partners include the $2 billion private equity group Bernhard Capital Management Partners, is proposing to spend $225 million to build the first phase of the new regional system. It would serve 16,000 new and existing customers in Prairieville, Dutchtown and northern Gonzales.

The Parish Council's initial step Thursday represents yet another try to consolidate the parish's dispersed and often inadequate sewer infrastructure in the face of tightening water quality regulations on the impaired Bayou Manchac and other waterways that receive treated sewer effluent.

The agreement also represents the third time in eight years that the parish has tried a public-private partnership to finance, build and operate the massive system with private capital in a bid to keep rates down and avoid new taxes.

Two prior efforts, with Integra Water in 2011 and the Ascension Environmental partnership in 2015, ended in failure.

Barker Dirmann, president and CEO of the Ascension Chamber of Commerce, told the council his organization has a five-year vision plan calling for regional sewer in the parish and supported approval of the initial negotiation agreement.

"This is a win-win for everybody," Dirmann said. "Not only will it impact the environmental quality in the parish but the quality of life for residents, for businesses, but we also see it as an economic development benefit for us all."   

Under the new deal that backers hope can be fully negotiated over the next 90 days, Ascension Sewer would finance, build, operate and maintain the future system and recoup its investment over 30 years of sewer fees.

But the agreement approved Thursday also locks the parish into exclusive negotiations for two years with Ascension Sewer without any sort of initial request for proposals.

Some residents have questioned the need for such a long, exclusive period, but backers say they need it to ensure good faith negotiations on a deal they could spend up to $2 million to develop.

Kim Christy, a candidate for Parish Council this fall, told the council she was not for or against the agreement but believes a shorter exclusive negotiation period should be established.

Parish officials previously told a council committee that the District Attorney's Office reviewed the negotiation deal and did not find that a competitive proposal process was necessary because the parish would spend no money for Ascension Sewer's offer.  

In addition to Bernhard Capital Management, GSA Consulting Engineers, Hartman Engineering and Ascension Wastewater Treatment are the partners in Ascension Sewer.

Backers say they will be able to finance the program with sewer rates comparable with what residents already pay in Ascension or Baton Rouge. The plan also leaves the rate setting authority with the Parish Council. Earlier plans that the council rejected in years past had required the council to back minimum rate increases to ensure the private backers earned a return.

The council voted 10-0 Thursday to start negotiations with Ascension Sewer and to seek proposals for a firm to help vet the financing. Councilman Benny Johnson was absent due to work obligations but has previously voiced his support for trying to negotiate a deal. 

The new plan, which needs a construction-and-operation agreement worked out to become final, would build a 5 million gallon per day plant off La. 73 and near River Road to start with to discharge wastewater to the Mississippi. The river is where state regulators prefer treated wastewater to be dumped. The shift would remove 2.3 million gallons per day of wastewater from Bayou Manchac.

A key to all of the sewer partnership deals through the years has been Ascension Wastewater Treatment, the leading private sewer provider in the parish and a critical source of rate-paying customers for any parish system.

Ascension Wastewater backed out of the two earlier deals but is a partner in this one.

Tom Pertuit, the president and founder of the company, told a council committee May 7 his company is excited about this deal and has already entered into an agreement in principle with Bernhard.

"We have been to this table before, but never with a partner like this," he said.

If parish government and Ascension Sewer do reach an agreement, thousands of Ascension Wastewater customers would no longer have their rates set by the state Public Service Commission but by the Parish Council.

An east bank parish utilities district would also own all of Ascension Wastewater's infrastructure and combine it with other subdivision systems already in the parish's hands.

Jeff Baudier, managing director of Bernhard Capital and a former utility executive, said the group will capitalize on Ascension Wastewater's experience and the lessons of past partnership efforts in Ascension that did not succeed.

"We will effectively be merging the public and private systems to create one consolidated regional Ascension sewer system on the east bank," Baudier told the committee earlier this month.

Follow David J. Mitchell on Twitter, @NewsieDave.