Audit: Lacassine mill cost taxpayers $71M Audit: Lacassine mill cost taxpayers $71M Sugar cane facility put in use for only one month MICHELLE MILLHOLLON| email@example.com July 15, 2014 Comments Taxpayers lost at least $71 million on a failed state-built syrup mill in Lacassine that ground sugar cane for one month before falling idle. The Louisiana Legislative Auditor’s Office tallied up the public dollars spent on the Jefferson Davis Parish venture and issued a report Monday. A recent sale of the mill’s assets fell far short of recouping what the state spent on the project. State workers built the mill, expending their sweat on a facility that eventually would be sold for scrap. The report traces the mill’s tangled history and points to problems in a cash flow statement that concluded the southwest Louisiana project would be a financial success. “Our review of the cash flows statement revealed that it (1) did not consider potential revenue from sales of excess electricity, (2) assumed a $41 million project cost, and (3) assumed steadily increasing levels of sugar cane production. During the mill construction, sugar cane production declined and remained below the levels assumed in the cash flows analysis,” the auditor’s office wrote. Add in the 2005 hurricanes, state-backed bank loans, defaults and a Colombian family’s doomed efforts to produce ethanol, and the result is an accounting book filled with negative digits. The state incurred $77 million in costs, partly from unexpected additional expenses, and received $5.8 million in payments. The result is a net loss of $71 million. The mill was a pet project of long-serving state Agriculture and Forestry Commissioner Bob Odom. Odom, who died earlier this year, saw the plant as a way to produce syrup that would be shipped east for processing into sugar. Much of the idea for the mill stemmed from southwest Louisiana farmers’ complaints about transportation costs. Odom also talked big about building the syrup mill into an ethanol plant. Odom’s successor, Mike Strain, characterized the mill as a boondoggle when he successfully ran against the long-serving commissioner. Certainly, the mill became a financial failure. Plans for the plant started moving forward in 2003. Actual construction launched in 2004. Soon, the Louisiana Agricultural Finance Authority — an arm of the state agriculture structure — began throwing in John Deere tractors and backing bank loans to make the venture a success. The mill operated for a single month between the 2007 and 2008 harvest seasons without producing a profit. It then ground to a halt. A group of farmers through the Lake Charles Cane-Lacassine Mill LLC entered into a lease-purchase agreement with the state for the plant in 2006. The LLC only paid $400,000 on what was supposed to be a more than $60 million transaction. Cementos Andinos S.A., a Colombian company helmed by the wealthy Santacoloma family, acquired 80 percent of the controlling interest in the LLC in August 2006. Cementos planned to fulfill Odom’s vision of building an ethanol plant at the mill. Within a few years, the LLC was in default to the state. Strain seized the mill and began dismantling it. The Peru-based Gloria Corp. bought the mill itself, carting off the pieces. Porocel leased two dozen acres at the site to manufacture a catalyst for the oil industry. “We estimate the minimum loss of taxpayers’ funds associated with the mill were $71 million,” the audit report concluded. Follow Michelle Millhollon on Twitter, @mmillhollon. For more coverage of Louisiana government and politics, follow our Politics Blog at http://blogs.theadvocate.com/politicsblog.