DALLAS — Louisiana spent $72 million over 14 years on a failed syrup mill while receiving only scant returns from its investment, including $45 million of revenue bonds issued in 2004 by the Louisiana Agricultural Finance Authority.
The mill, which refines sugar cane into syrup, has been idle since it was completed, except for two-month periods in 2007 and 2008. It never served more than 30 sugar cane farmers and never obtained the output that had been promised, legislative auditor Daryl Purpera said in his report.
“It appears that the payments made by the state to address the sugar cane farmers’ needs were not commensurate with the value received,” the LAFA report said.
Insufficient documentation makes it impossible to determine if $650,000 expended from the authority’s pesticide fund went to debt service on the bonds or to construction cost overruns, the audit report said.
The $45 million of variable-rate bonds issued by the agency were to be supported by mill revenues and proceeds from casino slot machines dedicated to the Department of Agriculture and Forestry.
However, the entire $28.8 million in principal payments and $11 million of interest payments have come from the state and LAFA, the audit said.
“There was no formal, comprehensive and independent study performed to support the economic or financial feasibility of the Lacassine syrup mill project” before the bonds were sold in 2004, Purpera said.
The mill and the rail line were promoted by former agriculture commissioner Bob Odom to assist an effort by a local agricultural cooperative to switch area farmers to sugar cane cultivation from soybeans.
The outstanding debt is $16.2 million. The bonds will mature in September 2014. The 2009 Legislature appropriated $15 million for debt service. The bonds were converted to a 3.8% fixed rate in November 2009. The cost of the mill was estimated at $41 million, which the report said was “overly optimistic.”
State employees helped build the mill after the estimate proved too low, Purpera said. The state also contributed $383,000 for cost overruns. Louisiana sold the facility to Lake Charles Cane-Lacassine Mill LLC in 2006, with no money up front and a $60 million promissory note.
The agriculture department put the mill into default on March 23 after the company did not make a Dec. 31, 2011, installment of $3 million on the purchase agreement.
Agriculture Commissioner Mike Strain, who was elected in 2007 after making the Lacassine project a major issue in his campaign against Odom, said he agreed with the findings in the auditor’s report, and clarified that the decision to build the mill was made before he started his term.
