Mayor-President Josh Guillory’s new pace of government may have Lafayette out $22 million for a massive drainage project that Louisiana’s state government says it will not reimburse over lack of documentation.
Lafayette Consolidated Government was in line to get $48.6 million from the state for its massive Bayou Vermilion Flood Control project, which centers on two sets of detention ponds: four on the Vermilion River by Homewood Drive and four on Coulee Ile des Cannes near Duhon Road.
The state has been reimbursing LCG since April for work on the project, to the tune of $19 million so far, according to Jacques Berry, communications director for the state’s Division of Administration.
But since late June, issues with the project and LCG’s payment requests have caused the state to lock up the funding, leaving $22 million worth of reimbursements requested by LCG unpaid until the state government’s questions are answered.
What’s the problem?
“We’re not seeing the communication we need to see from them in order to be able to reimburse,” Berry said this week.
“We’re not paying it. It’s not like we’ll sit on it for three weeks and then sign off,” he added. “No, we need very specific pieces of information. And we’re trying, and we’re not getting it.”
So far, LCG has not gotten a final notice from the state government that it will not be reimbursed for the project, and Berry said the window for LCG to rectify its requests will remain open for the foreseeable future.
But until LCG meets the state’s standards for reimbursement, it will have to continue fronting the costs for the massive Bayou Vermilion Flood Control project on its own, which could leave the local government’s finances severely impacted and raise questions with its auditors.
LCG spokesperson Tonya Trcalek said Friday that LCG is still trying to gather information about the state’s rejection of its reimbursement requests.
The state government has had issues with the Bayou Vermilion Flood Control project in the past.
LCG’s request for an $5.9 million reimbursement in May was held up for two months after a judge ruled against the local government over its expropriation of 372 acres of land for the Homewood ponds.
That was resolved by stopping work at the Homewood site and starting at the Duhon Road location in early April.
But LCG’s quick transition to work on the Duhon detention ponds looks to have led to the current impasse between the local government and the state, as LCG’s means of acquiring some of the land for those ponds has again come under question.
How could this affect Lafayette?
Since that initial hiccup in state reimbursements following the court order, LCG has shifted millions of dollars to the project, far above the required local match for state funding.
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At least $15.5 million in federal coronavirus relief funds given to the parish have been earmarked for the project since May.
LCG CFO Lorrie Toups said Friday those funds likely haven’t been spent because LCG’s consultant Deloitte determined the Bayou Vermilion Flood Control project didn’t meet federal procurement standards and because LCG uses pooled cash from multiple funds to pay for costs it expects will be reimbursed. If the costs aren’t repaid by the state, LCG’s budget will have to be rebalanced to accommodate for that loss, she said.
The federal COVID-19 funding move was initially thought to be a stopgap between the first round of state funding ($26.6 million) and the second round ($22 million), which LCG would be reimbursed for once the state’s budget passed this year.
But LCG has spent $42 million on the Bayou Vermilion Flood Control project, and only $19 million of that has been reimbursed by the state.
How can it be fixed?
After moving to the Duhon Road site in April, LCG’s contractor, Rigid Constructors, immediately began digging on a 44-acre lot that was central to the layout of the series of ponds to be built there.
But LCG didn’t own that land. Neither did Rigid Constructors, until June 30.
LCG’s initial attempts to buy the 44-acre lot, owned by members of the Breaux family, fell flat after it appraised the land at $260,000 in January, too low to make a deal with the land owners.
The local government is allowed to negotiate the price of land it buys under state law, but it cannot pay more than the land’s appraised value, according to opinions from the state Attorney General’s Office.
That put LCG and Rigid in a bind when work was halted at the Homewood site in April, and their solution appears to be central to the state’s decision not to reimburse at least some of the $22 million it is withholding from LCG.
Rather than expropriate the Breaux property, like it previously did for other detention pond sites, LCG allowed Rigid to excavate over 1 million cubic yards of dirt from the property — at least $10 million of work — under a servitude agreement that the contractor made with the land owners that spring.
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At the end of that agreement, Rigid paid the land owners $453,395 for the property and gave LCG a servitude on the condition that the local government would buy the land from its contractor at an undetermined price on a later date.
But LCG’s lack of ownership of the land, and its decision to pay Rigid to dig the land out before having a clear right to the property, have become sticking points for the state government.
“We want to see Josh (Guillory)’s signature on letterhead that says we have an agreement to purchase this land on this date at this price,” Berry said. “Not just a gentlemen’s agreement for a later date.