Can LCG legally fund private projects?

   

On Tuesday, April 21, 2020, the City Council unanimously approved a gift (read loan) of $1,535,000 to a brand new LLC, Lafayette Bottle Art Lofts. That private organization has a single officer: Historic Restoration, Incorporated (also known as HRI).

During the council meeting, many mistruths were spoken, which we will get into later on. However, the number one question we have for the city attorney is, may the City of Lafayette loan money to a private organization? As far as we know, it has never happened before in the history of the city or parish of Lafayette. In fact, last time we alluded to the constitution’s calling this entire mess into question, it did not draw a response.

The Louisiana State Constitution forbids loans

While the terms laid out in the ordinance make it difficult to determine if this is a loan or a gift, it turns out the state constitution covers it either way. It’s in Article VII, Section 14 (A):

Prohibited Uses. Except as otherwise provided by this constitution, the funds, credit, property, or things of value of the state or of any political subdivision shall not be loaned, pledged, or donated to or for any person, association, or corporation, public or private.

If reduced to just the part relevant in this case, it says: The funds of any political subdivision shall not be loaned or donated. If the City of Lafayette is a political subdivision, which the Constitution clearly forbids from making loans, then how did this ordinance get through LCG’s legal department and allowed to come before the council?

Of course, there’s always an exception

Article VII, Section 14 (B) has a long list of exceptions to this general rule. (B)(1) appears to be the only one even close to this scenario. It reads: Nothing in this Section shall prevent the use of public funds for programs of social welfare for the aid and support of the needy.

Perfect! Artists are needy, and in need of social welfare, so this project qualifies, right? Not so fast. If this ordinance is really about supporting the needy, wouldn’t the ordinance say so with at least a semblance of specificity? Failing that, should we expect it to at least include a purpose as ambiguous as “to help the needy”?

What does the ordinance say?

There are two separate ordinances, actually. The first one, O-216-2019, has zero mention of social welfare or support of the needy. It only says the project will remove blight and preserve a historic building (the old Coca-Cola bottling plant), and that the project has “requested a loan.” Similarly, the “justification for request” section only states that the city council wishes to grant a loan.

Similarly, ordinance CO-025-2020 explains that it’s moving money around, and further justifies its creation only for financial reasons. Not only does it not mention social welfare or support for the needy, it doesn’t even mention blight.

Is it legal?

Several attorneys have looked at both of these ordinances, and the state constitution’s Article VII, Section 14. None of them have been able to identify how the City of Lafayette gets around the law. Where does the City of Lafayette’s attorneys stand on this issue? So far, they’ve remained eerily quiet.

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