$30 million trapped while auditor probes LCG

Homewood Regional Detention Project
More than a year after a judge ordered LCG to stop work on its massive Homewood Drive detention pond project, work is expected to resume this month. Photo by Travis Gauthier/Flight courtesy Southwings

The Louisiana legislative auditor’s investigation of Lafayette Consolidated Government has Mayor-President Josh Guillory’s administration facing financial straits over $30 million in reimbursements the state government is withholding, at least until the investigation is complete.

Louisiana Division of Administration spokesman Jacques Berry confirms that roughly $30 million in reimbursements for LCG’s beleaguered Bayou Vermilion Flood Control project will not be disbursed until the investigation is complete.

“It’s looking like we’re going to wait for any result of whatever investigations are happening before we make any more decisions,” Berry says. “We don’t have any involvement in the investigation, but certainly we’ll wait to see the findings.”

The missing reimbursements stack on top of a potentially massive legal liability stemming from a so-far-successful suit brought by landowners to claw back nearly 400 acres of land LCG seized near Milton for the project’s signature drainage project on Homewood Drive. 

The $81-million Bayou Vermilion Flood Control project was slated to get roughly $65 million in state funding before that suit stopped work at Homewood Drive and prompted the state to halt reimbursements for work at its Duhon Road location along Coulee Ile Des Cannes last summer. 

But LCG forged ahead with work in the months since. The project’s detention ponds along Coulee Ile des Cannes were all but completed last year while work remained stopped by court order since May on the Homewood Drive ponds along the Vermilion River.

Guillory’s Deputy Chief of Staff Jamie Angelle was unsure Tuesday how much LCG had spent on the project to date, but records show that as of September LCG had paid $42 million to contractor Rigid Constructors and been reimbursed for just $19 million when payments from the state first stopped. Over the past year, LCG paid Rigid a total of approximately $60 million for work on that and other projects.

The Division of Administration initially halted the reimbursements last summer over a lack of documentation from LCG, including proof that it owned the land the Duhon Road ponds were being built on. But LCG does not own a 44-acre lot at the Duhon Road site where millions of dollars of work was performed by Rigid Constructors

Instead, Rigid made a deal with the land’s owners to dig LCG’s detention pond on the lot then buy the land from them for $453,000 after LCG’s attempts to purchase it at its appraised price of $260,000 were rebuffed. Rigid granted LCG a servitude to keep the pond on the land, but the state has insisted that LCG must own the property to be reimbursed for the work done there, which amounts to at least $10 million in excavation alone.

Angelle says LCG is confident that it will be able to unfreeze the state funds by resolving the ownership issue with Rigid within the next few months, though he could not provide details. “We’re very confident that we’ll clear up the issues with the state and then have that money released to us and be able to continue,” he says.

Overhead shot of Coulee Ile des Cannes detention project
Work on the Coulee Ile des Cannes detention project in June, the same month Rigid Constructors’ CEO bought a 44-acre tract to continue working on the project. That purchase caused the state to halt millions in reimbursements to LCG.

Whatever LCG’s solution may be, it appears to come too late, as the state’s reimbursements now stand to be withheld indefinitely while the legislative auditor’s office conducts its investigation. 

LLA Executive Counsel and Assistant Legislative Auditor for Investigations Roger Harris would not reveal the nature of the investigation when it was launched last week. 

The auditor’s office is looking into some of the same issues that are currently under investigation by Lafayette’s City Council, which include dealings with Rigid Constructors on the spoil banks removal in St. Martin Parish and the Bayou Vermilion Flood Control project, among others.

After LCG budgeted federal dollars for the project, consulting firm Deloitte determined that LCG’s process for selecting Rigid to build the project was not competitive enough to comply with federal procurement standards, forcing LCG to abandon plans to partially fund the project with coronavirus relief money disbursed through the American Rescue Plan Act. 

The investigation’s outcome threatens to permanently cut LCG off from the $30 million in pending reimbursements and could even leave LCG on the hook to repay some or all of the $19 million that it has already been reimbursed for. 

That sum far outstrips the parish’s meager cash reserves, which currently amount to just shy of $1 million. Meanwhile, the Parish Council has set about budget revisions to swap the $15.5 million in ARPA funds appropriated for Bayou Vermilion Flood Control to other projects. 

The outstanding reimbursements could also threaten the City of Lafayette’s budget, since LCG has been fronting the funds for the project from an account where both city and parish tax dollars are pooled, similar to a joint checking account.

Without reimbursement from the state or an influx of new parish tax dollars to replace the money spent on the project, Guillory’s administration will be on the hook to determine exactly how much of the city’s money was used and then get both councils to retroactively authorize that amount. 

Parish Councilman Josh Carlson, who is leaving his council seat to run for the Legislature, says he is confident the issue will be resolved positively based on repeated assurances from Guillory’s administration. He also says that until a conclusion is reached on the state funding, too many variables remain unknown to speculate ways to replace it, if that should become necessary. 

“It’s not something I’ve really weighed seriously, because I think there are too many unknowns,” Carlson says. 

“I think it’s good to plan and project. But I also don’t want to theorize, ‘What if we have to write a check for $30 million?’ That’s a big ‘what if?’ and it doesn’t take a lot of things into consideration. So I think at this point, it’s too early to speculate.”